The price you pay for your auto insurance can vary by hundreds of dollars, depending what type of car you have and the insurance company you buy your policy from. Here are some ways to save money.
1. SHOP AROUND
Prices vary dramatically from company to company, so it pays to shop around. But, you don’t want to shop by price alone; select an insurance company that has a reputation for good customer service and is financially stable.
First put together a list of highly recommended auto insurance companies. Start by consulting friends, relatives or business associates—ask them if they have had an auto insurance claim and whether it was handled well. Remember, it is when you actually have to file a claim that you’ll really be using the product. Then check consumer publications and your state insurance department for customer satisfaction surveys and add any highly regarded auto insurance companies to the list. If you already have an insurance company you’re happy with for your home or business, find out if the company also sells auto insurance and add them to the list too.
Once you’ve compiled your list, you can check whether the companies on it are financially stable, through rating companies such as A.M. Best (www.ambest.com) and Standard & Poor’s (www.standardandpoors.com/ratings).
With your list of highly rated insurance companies in hand, it is time to start shopping. You should compare at least three companies, but looking into more may yield better savings. You can get prices online or contact the companies directly.
Get quotes from different types of insurance companies. Some sell through their own agents. These agencies have the same name as the insurance company. Some sell through independent agents who offer policies from several different insurance companies. Others do not use agents and sell directly to consumers over the phone or via the Internet. Pick the type of professional arrangement that suits your needs and comfort level. If you like to handle your finances on your computer at times that are convenient for you, you may prefer an insurance company that works in this manner. However, if you prefer to work with a person directly in person or over the phone, take this into account too.
Then carefully compare price and coverage. When shopping for insurance, it is important to be consistent in comparing the amount and type of insurance you are purchasing. And don’t be afraid to ask questions—it’s worth checking if an insurance company offers any special services, discounts or enhancements to the policies.
Your final selection should be based on price, coverage, special service and your overall comfort level with the company or person who will be providing the auto insurance for you. Remember, you will be contacting them during a crisis, such as an accident or a stolen vehicle, so you want to be sure you’re happy with the level of support they offer.
2. BEFORE YOU BUY A CAR, COMPARE INSURANCE COSTS
Before you buy a new or used car, check into insurance costs. Car insurance premiums are based in part on the car’s price, the cost to repair it, its overall safety record and the likelihood of theft. Many insurers offer discounts for features that reduce the risk of injuries or theft. To help you decide what car to buy, you can get information from the Insurance Institute for Highway Safety (www.iihs.org).
3. ASK FOR HIGHER DEDUCTIBLES
Deductibles are what you pay before your insurance policy kicks in. By requesting higher deductibles, you can lower your costs substantially. For example, increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage cost by 15 to 30 percent. Going to a $1,000 deductible can save you 40 percent or more. Before choosing a higher deductible, be sure you have enough money set aside to pay it if you have a claim.
4. REDUCE COVERAGE ON OLDER CARS
Consider dropping collision and/or comprehensive coverages on older cars. If your car is worth less than 10 times the premium, purchasing the coverage may not be cost effective. Auto dealers and banks can tell you the worth of cars. Or you can look it up online at Kelley’s Blue Book (www.kbb.com). Review your coverage at renewal time to make sure your insurance needs haven’t changed.
5. BUY YOUR HOMEOWNERS AND AUTO COVERAGE FROM THE SAME INSURER
Many insurers will give you a break if you buy two or more types of insurance. You may also get a reduction if you have more than one vehicle insured with the same company. Some insurers reduce the rates for long-time customers. But it still makes sense to shop around! You may save money buying from different insurance companies, compared with a multipolicy discount.
6. MAINTAIN A GOOD CREDIT RECORD
Establishing a solid credit history can cut your insurance costs. Most insurers use credit information to price auto insurance policies. Research shows that people who effectively manage their credit have fewer claims. To protect your credit standing, pay your bills on time, don’t obtain more credit than you need and keep your credit balances as low as possible. Check your credit record on a regular basis and have any errors corrected promptly so that your record remains accurate.
7. TAKE ADVANTAGE OF LOW MILEAGE DISCOUNTS
Some companies offer discounts to motorists who drive a lower than average number of miles per year. Low mileage discounts can also apply to drivers who car pool to work.
8. ASK ABOUT GROUP INSURANCE
Some companies offer reductions to drivers who get insurance through a group plan from their employers, through professional, business and alumni groups or from other associations. Ask your employer and inquire with groups or clubs you are a member of to see if this is possible.
9. SEEK OUT OTHER DISCOUNTS
Companies offer discounts to policyholders who have not had any accidents or moving violations for a number of years. You may also get a discount if you take a defensive driving course. If there is a young driver on the policy who is a good student, has taken a drivers education course or is away at college without a car, you may also qualify for a lower rate.
When you comparison shop, inquire about discounts for the following:*
- Antitheft Devices
- Auto and Homeowners Coverage with the Same Company
- College Students away from Home
- Defensive Driving Courses
- Drivers Ed Courses
- Good Credit Record
- Higher deductibles
- Low Annual Mileage
- Long-Time Customer
- More than 1 car
- No Accidents in 3 Years
- No Moving Violations in 3 Years
- Student Drivers with Good Grades
*The discounts listed may not be available in all states or from all insurance companies.
The key to savings is not the discounts, but the final price. A company that offers few discounts may still have a lower overall price.
Source: Insurance Information Institute, “How Can I Save Money On Auto Insurance?”
iii.org website. Accessed March 2, 2018. http://www.iii.org/articles/how-can-i-save-money.html
© Copyright 2018. All rights reserved. This content is strictly for informational purposes and although experts have prepared it, the reader should not substitute this information for professional insurance advice. If you have any questions, please consult your insurance professional before acting on any information presented. Read more.
