Everyone talks about saving money on auto insurance, but do you really know how to go about doing this? Many people are confused as to exactly what their premiums cover and how they are figured.
By doing a little research, you can probably save money over what you are already paying for car insurance, and still have the coverage you need for your vehicle.
Here are five ways to be sure you are getting the lowest price possible on your automobile insurance:
1) Shop around. We are all creatures of habit, and we tend to use the same companies and products which have served us well in the past without really questioning if they are still right for us.
However, with today’s insurance market being so competitive, you are throwing money away if you do not at least consider comparing rates from other companies.
You can start with an online “quote machine” to get an idea of what companies are charging for similar coverage. You can even use this information to approach your current agent; many will lower prices or re-figure your coverage if they believe you have a lower offer from another company.
You should assess your coverage and get competitive quotes every two years, or any time you experience a life-changing event such as marriage, divorce, or placing a child on your automobile insurance.
2) Examine your current coverage. You may be making the mistake of keeping comprehensive and collision coverage on a car simply because you have always had it, but you could be paying for coverage which will not really benefit you if your car is older.
As an example, if you have a fifteen-year-old car whose book value is $1,500, and you are carrying comprehensive and collision, which cover theft and body damage, at the rate of $250 every six months, with a deductible of $1,000, it is easy to see that in one year you could save enough to pay for the car yourself if it was stolen or had body damage from an accident.
This is not to say that these policies do not have their place, and generally prices for this coverage go down as your car ages; however, you should examine your premiums carefully and calculate what you would really get if your car was stolen or wrecked.
Similarly, many people take on policy add-ons they do not really need. If you already have AAA or towing protection through your cell phone or work, why pay $25 every six months for this feature on your insurance?
3) Clean up your credit. In most states, credit scores are used to figure your automobile insurance premiums, and poor credit can hit you harder than an accident or speeding ticket in terms of price. Check your credit report—you can do this for free once a year—and be sure no incorrect information is sending your score down and your premiums up.
4) Avoid points on your license. We all have the occasional speeding ticket, but points on your license are a red flag to your insurance company. If appearing in court and paying the fine will have the points removed from your license, it is worth your time to do so.
5) Exclude drivers with bad records from your policy. In some states, you can exclude family members who have DUIs or even poor credit if their inclusion in your policy would significantly increase your premiums. Examine the people you are covering; should you still be paying your twenty-two-year-old son’s automobile insurance after his five speeding tickets?
Some of these decisions may be uncomfortable, but making the tough choices about your coverage will lead to much lower rates. Use these savings to build a fund to pay your deductibles, or to put toward a newer car at some point.