If there is one item in my budget I hate more than everything else it has to be auto insurance. If you think about it, you can go years or maybe even your entire life without ever having to make a claim so it feels like you’re throwing good money away, but it will help your C.L.U.E Report. At the same time, this is really no different than every other type of insurance. You hate paying the premiums if you aren’t using it, but when something happens where you do need to rely on your insurance it can literally save your financial life.
So, since auto insurance is pretty important (and even required in most states) we have few options to escape the premiums. But, that doesn’t mean you should be paying more than you have to for coverage. Auto insurance is a competitive industry and there are dozens of companies looking for your business. If you shop smart and only get the coverage you need you can save big. Here are eight things that you can do to help keep your auto insurance costs to a minimum.
1. Comparison shop.
Not only do you have to rely on local insurance companies for coverage, but you can now browse the web for countless providers. In fact, many of the online companies may offer steep discounts compared to your local agents because they don’t have to staff as many local offices. So, take some time to shop around and get quotes from a variety of sources. It’s good to review your policy annually and see if there are better deals out there.
2. Drop collision and/or comprehensive coverage on older cars.
If you own a car that’s worth less than a few thousand dollars, you’ll probably pay more for the coverage than you would ever collect on a claim. Your bank can tell you how much your car is worth, or check out theKelley Blue Book for an estimate. There is no need to shell out costly comprehensive coverage premiums to insure something that’s relatively worthless.
3. Ask for higher deductibles.
When you file a claim, the deductible is the amount of money you pay before your insurance company kicks in. Higher deductibles mean lower premiums. For example, increasing your deductible from $200 to $500 on collision coverage could reduce your cost by as much as 30%. That is a significant savings when you factor in the likelihood of actually filing a claim.
4. Ask About Multiple Policy Discounts.
If you own a home or have other property insured, be sure to check with them to see if there would be a discount by adding your vehicle. Most insurers offer substantial discounts that can range anywhere from 10-20% just for carrying multiple policies with them.
5. Drive an Inexpensive Vehicle
Generally speaking, the more valuable something is, the most expensive it will be to insure. Want to drive that shiny new luxury vehicle? That’s fine, but expect to pay a significantly higher premium than an older and less expensive model. There are plenty of benefits in buying a used car or something a little less fancy and lower insurance premiums are just one of them.
6. Location Matters
Did you know that living in a rural area instead of a city can make your auto insurance premium lower? That’s because insurers know that there is generally higher traffic, higher crime, and the greater chance of making a claim when living in a city. Now, are you going to pick up and move to the country just to cut your auto insurance bill a little bit? Obviously not. But if you are thinking about moving anyway it could be worth getting some quotes to compare the cost difference.
7. Inquire About Low Mileage Discounts
If you don’t have a very long commute and put fewer miles on your car than the average person, you might be eligible for a low mileage discount. If you aren’t on the road very much the insurer knows that there’s less of a chance of having a claim, so you can often get a discount.
8. Don’t Ignore All of the Safety Features
There are discounts for virtually every safety feature that comes on your car. Anti-lock brakes, front airbags, rear airbags, automatic seat belts, and even security systems can all be used to keep your premium lower. Usually, when you enter your make and model or VIN with the insurance company they will already know what most of these features are that come with your vehicle, but sometimes they are not all included or you may have added aftermarket products. Make sure you’re getting credit for everything you’re entitled to.
Author: Jeremy Vohwinkle
My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.
