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Save Money on Car Insurance

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Unhappy with what you are paying each year for auto insurance? Car insurance is one of those things topics that I'm extremely Lazy with. It seems like there are a billion factors. Sometimes it seems like you can change one area of your insurance by a small amount and save hundreds - and then in contract add a ton of coverage in another area and come away with low bill. Perhaps it's worth spending a few minutes like some insurance companies suggest.

According to the Insurance Information Institute the average person paid $817 a year in 2001 - with prices in the most and least expensive states ranging to $300 more or less than that. That might be a good starting point. If you are already far below your state's average, maybe it's best to save your time and move on. If not...

Save Money on Car Insurance:

  • Shop around - Gather quotes every six months to keep up with the rates and confirm you are getting the best one. Compare the quotes, especially what coverage you get with each and what the deductible is. A good way to get more affordable rates is to take a higher deductible, especially if you have an older vehicle.
  • Ask for discounts - Agencies offer a variety of discounts, but you will need to be proactive in asking what they offer and how you can qualify. Some offer savings for getting all your policies under them (e.g., home, car, etc.), while others offer discounts for good driving records, yet another reason to avoid getting speeding tickets.
  • Increase Your Deductible - Increasing the deductible on your insurance often makes a huge difference in the end price. Sure, you will lose out if get in multiple small accidents, but high deductibles is a great way to protect yourself from the big rare accident.
  • Keep in Touch with your Insurance Carrier - If it's been a while since you last updated your insurance carrier, you may not be getting savings you are entitled to. Making changes such as getting a job closer to home can lead to driving less and provide a discount. Always let the carrier know if there are any changes, especially if they involve driving less miles per year, buying new vehicles or moving.
  • Drive Safely - The longer you keep your driving record clean and avoid car accidents, the better insurance rates you will be offered. Good drivers are less of a risk to insurance companies. You will cost them less money in repairs, and they in turn will pass that savings on to you in the form of discounted rates.
  • Watch your Credit Rating - Insurance companies do consider your credit rating when they quote rates. If you have a low credit score you are seen as a riskier prospect and you will get higher rates. If, on the other hand, you keep your credit in good standing you will be helping ensure you get lower premiums. You should review your report at least once a year, work to fix any errors, and try to keep all accounts in good standing.
  • Drop Duplicate Coverage - For awhile I had AAA, which gave me some amount of towing... and then I found out I was also paying for it on my car insurance. Silly!
  • Explore Combining Policies - Sometimes it's better to go with the family plan... other times it's not. It's worth looking into.

With the current economic crunch in the country, you may be thinking about ditching your auto insurance. This is a bad idea and even in illegal some states. A little money in insuance now really can save you a lot in the future.

Last updated on March 8, 2011.

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4 Responses to “Save Money on Car Insurance”

  1. kosmo says:

    Yeah, I’d advise against dropping auto (liability) insurance. Even if it weren’t illegal in a lot of states, it’s just a bad idea. If you cause a big accident, do you want the victim coming after your personal assets? Not me.

    A few other thoughts:
    – Good tip about raising the deductible. There is a certain amount of overhead that is the same for each claim. You might considering taking the cost savings and boosting your coverage limit. Bear in mind that an accident victim can go after your personal assets if their damages exceed your coverage. Each level of coverage gets less expensive. For example, to go from $0 to $100,000 is much more expensive than going from $300,000 to $400,000. Why? Because the probability goes down as the limit goes up – accidents with $25,000 of damage are common; accidents with $500,000 of damage are not. If your state has a minimum amount of coverage mandated by law, remember that this is the minimum you must have. Over the course of time, the amount of coverage you have will decrease, in real dollars, due to the effect of inflation. If you haven’t adjusted your coverage in 10 years, take a look and see if it still seems like enough.

    – Are you carrying full coverage on a ’91 Taurus? Compare what you’re paying for coverage of the vehicle (collision + comprehensive) and use the Blue Book to determine roughly what you would get. It might make sense to drop the coverage. You should, however, retain liability and medical coverage.

    – Are you living in a very high crime area? One of the coverages you are paying for is theft; it only makes sense that this factor is higher when you live in a high crime area.

    – Getting married can dramatically affect insurance rates for men. I’m not suggesting that you get married just for this reason, of course.

    – Report instances of suspected fraud. This is not directly money in your pocket, but fraud is a huge expense for insurance companies (which, of course, must be passed down to the customers).

    – Bear in mind the value of the service that is provided. Company A may be more expensive than Company B, but is the process of filing a claim a lot more cumbersome? Do you want to sacrifice great service to save $50 a year? Maybe, maybe not.

    – Consider a Personal Lines Umbrella Policy (PLUP or Umbrella). This “sits on top” of existing liability coverage for auto and homeowners. For example, you might have $250,000 in auto liability and $250,000 in homeowners liability, but you may have a $1,000,000 PLUP policy. The PLUP kicks in only when the basic policy (in the case of a car accident, your auto policy) has exhausted its coverage. A PLUP can be less expensive than boosting the liability coverage of all of your basic policies.

  2. kosmo says:

    Yeah, I’d advise against dropping auto (liability) insurance. Even if it weren’t illegal in a lot of states, it’s just a bad idea. If you cause a big accident, do you want the victim coming after your personal assets? Not me.

    A few other thoughts:
    – Good tip about raising the deductible. There is a certain amount of overhead that is the same for each claim. You might considering taking the cost savings and boosting your coverage limit. Bear in mind that an accident victim can go after your personal assets if their damages exceed your coverage. Each level of coverage gets less expensive. For example, to go from $0 to $100,000 is much more expensive than going from $300,000 to $400,000. Why? Because the probability goes down as the limit goes up – accidents with $25,000 of damage are common; accidents with $500,000 of damage are not. If your state has a minimum amount of coverage mandated by law, remember that this is the minimum you must have. Over the course of time, the amount of coverage you have will decrease, in real dollars, due to the effect of inflation. If you haven’t adjusted your coverage in 10 years, take a look and see if it still seems like enough.

    – Are you carrying full coverage on a ’91 Taurus? Compare what you’re paying for coverage of the vehicle (collision + comprehensive) and use the Blue Book to determine roughly what you would get. It might make sense to drop the coverage. You should, however, retain liability and medical coverage.

    – Are you living in a very high crime area? One of the coverages you are paying for is theft; it only makes sense that this factor is higher when you live in a high crime area.

    – Getting married can dramatically affect insurance rates for men. I’m not suggesting that you get married just for this reason, of course.

    – Report instances of suspected fraud. This is not directly money in your pocket, but fraud is a huge expense for insurance companies (which, of course, must be passed down to the customers).

    – Bear in mind the value of the service that is provided. Company A may be more expensive than Company B, but is the process of filing a claim a lot more cumbersome? Do you want to sacrifice great service to save $50 a year? Maybe, maybe not.

    – Consider a Personal Lines Umbrella Policy (PLUP or Umbrella). This “sits on top” of existing liability coverage for auto and homeowners. For example, you might have $250,000 in auto liability and $250,000 in homeowners liability, but you may have a $1,000,000 PLUP policy. The PLUP kicks in only when the basic policy (in the case of a car accident, your auto policy) has exhausted its coverage. A PLUP can be less expensive than boosting the liability coverage of all of your basic policies.
    Sorry, forgot to add great post! Can’t wait to see your next post!

  3. AJ says:

    I need to review my policy. Just got a new one today.

  4. A few other thoughts:
    – Good tip about raising the deductible. There is a certain amount of overhead that is the same for each claim. You might considering taking the cost savings and boosting your coverage limit. Bear in mind that an accident victim can go after your personal assets

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