How to Save Money on Your Car Insurance
How To Get The Most For Your Money
So you’re shopping around for auto insurance. What do you need to know? Well, there are lots of ways – at least 12 – that you can save money. Many of these money-saving ideas may apply to you.
One Insurer, Multiple Policies
Do you have a homeowners or renters insurance policy? If so, is it with the same insurance company that provides your auto insurance? If the answer is no, you’re paying too much – for both policies. Almost every insurance company that sells auto insurance wants its policyholders to also buy homeowners or renters insurance from that company. These insurers offer so-called multi-policy discounts. Usually, these discounts are at least 10% and some insurers apply the discounts to both the auto and the homeowners/renters policy. Talk to your agent about multi-policy discounts.
Good Driver, Good Price
It’s no secret that the better your driving record, the less you will pay for auto insurance. However, did you know that most people qualify as “good drivers” and are eligible for discounted premiums?
Many auto carriers are actually a collection of several insurance companies that cater to various types of drivers. Meaning that one carrier can place the insured into a variety of tiers based on driving their driving record. As an individual shopping for insurance, you will not have knowledge as to where a particular carrier put you. Working with an agent who understands what carriers have the correct tiers for your driving record can save you a lot of money.
Telematics
Most carriers now offer telematics to track your driving habits. Telematics can be in the form of something you plug into your vehicle, but most of the time it’s a simple app you download on your phone. To participate in these programs, each driver in the family must have and use the app while driving. These devices might be a bit intimidating, you should be sure to ask your agent if your carrier has a possible rate of increase for events considered to be distracting.
For most carriers you will receive an immediate discount for participating in the program and then you could be eligible for an additional discount at your renewal based on your driving habits. Telematics track things like hard stops, sudden starts, time of day driving, and most importantly no cell-phone use (swiping, texting, calling, and some can mark you down for hands-free use as well).
Learn more about telematics from a few of our preferred carriers.
Auto Pay
Setting auto pay can often save you an instant 5% on your policy. This can vary by carrier, but auto-pay has more benefits than discounts. It can protect you from non-payment cancellation. We’ve all been there, life happens and you forget. Maybe not intentionally, possibly you were out of town or out of cell/internet range. With auto-pay you will never miss a payment and it will also save you money. Ask your agent or carrier how to setup auto-pay. This can be done at anytime.
The Beauty of the Bus (or Other Mass Transit)
Do you drive to and from work? If you do, you are literally paying a premium to do so. Insurance companies charge you significantly higher premiums if you drive to work. And, the longer your commute (in miles, not minutes), the higher the premium. Consider taking the bus, subway or an Uber if available in your area to keep your overall commute miles down and to reap the savings in fuel and lower insurance costs.
Low Mileage, Low Price
On average, people drive 1,000 to 1,250 miles a month. That is what insurance companies consider average use. If you drive less than the average, you could be eligible for low-mileage discounts, which some insurers offer.
High Profile, High Cost
The type of car you drive is a major factor in what you pay for insurance. Is your vehicle a magnet for thieves? Is it more expensive to repair than most cars? If the answer to either of the last two questions is yes, you’re paying more than the average car owner for insurance.* Note. To get detailed information on your vehicle(s) – or a vehicle you’re thinking of buying checkout the Insurance Institute for Highway Safety to learn more about statistics related to the type of vehicle.
Raise Your Deductible
The deductible is the amount you pay before insurance kicks in if you have a claim. For example, if you have a $250 deductible and you have an accident in which your car sustains $1,000 in damage, you pay the first $250 and your insurer pays the balance, $750. The lower the deductible you choose, the more you pay in premiums. If you have assets, you can probably afford to absorb at least $250 – $500 if you have a claim. If it’s been years since you’ve had an accident, you may be better off raising your deductible and paying less each year for insurance.
Drop Unnecessary Coverages
Let’s say you have an older car, one not worth very much. There’s really little point in having collision and comprehensive coverages. You don’t have much to protect. Remember, too, that you have to subtract your deductible from any potential payout you might get. As a general rule, any car worth less than $1,000 shouldn’t have collision and comprehensive coverage. Between the deductible and the extra expense of these coverages, the cost is probably greater than the benefit. How much is your car worth? Kelly Blue Book is a great online free resource to lookup the value of your vehicle.
Discounts, Discounts, Discounts
Auto insurance companies offer several discounts for a variety of reasons. The car has automatic seat belts, airbags, anti-lock brakes, anti-theft devices, etc. The driver is a good student, which is especially valuable if you have teenage children who will be on your policy. Ask your agent what discounts your carrier offers and discuss what might apply to you.
Low-Cost and High-Cost Areas
Are you planning to move? If you are, you should take into account the cost of insurance. Generally, the more urban the area, the higher the premium. The costs can vary even within a community. Fact…Rates can vary greatly from state to state. For example, someone living in New Jersey, Massachusetts or Hawaii pays several times more, on average, than someone in North Dakota, South Dakota or Idaho or Oregon.
Credit Where Credit Is (Or Is Not) Due
Is your credit record better than your driving record? If you have a good credit record, you could be eligible for discounted premiums from several auto insurance companies.
Many insurers now use your credit history as a major factor in determining what to charge you for auto insurance. In some cases, with some companies, you could save money by shifting your business to an insurer that uses credit as a rating factor – even if you have a so-so or poor driving record. There is another side to this coin. If you have had a poor credit history, and its improved get an updated credit report. Insurance companies do not run your credit rating after you have signed up with them. You could save money just by updating your credit report.
