SURVIVING THE RISING COST OF AUTO INSURANCE
Due to the rising cost of vehicles, car insurance rates are hefty throughout the nation. The bad news is that insurance isn’t likely to lessen in price any time soon. The good news is that there are things you can do to minimize increases and put that money back in your wallet. Here are some tips to help you save money and find the cheapest auto insurance.
Insure Multiple Cars/Drivers
When insuring a single vehicle, you may end up paying a higher premium than if you insured several drivers and/or vehicles with that company. This is because insurance companies will offer multi-car discounts.
To obtain a discount, ask your local insurance agent to see if you qualify. Generally speaking, multiple drivers must live at the same residence and be related by blood or by marriage. Two non-related people may also be able to obtain a discount; however, they usually must jointly own the vehicle.
Another way to save is to “bundle” your auto insurance policy with your other insurance policies (ex. homeowner’s/renters insurance). Check with your agent to see if these discounts are available and applicable.
Keep A Clean Record
The more accidents or moving violations an individual has, the more he or she will tend to pay in premiums. Points are typically assessed to a driver for moving violations. Generally speaking, more points can lead to higher insurance premiums.
Take A Defensive Driving Course
Sometimes insurance companies will provide a discount for those that complete an approved defensive driving course. Also, sometimes a driver can reduce the number of points he or she has on his or her license by taking a defensive driving, accident prevention or other course.
Make sure to ask your insurance company or agent about this discount before signing up for a class. It’s important that the effort being expended and the cost of the course will translate into a big enough insurance savings. It’s also important that the driver sign up for an accredited course.
If your policy has just been renewed and your premium has gone up, consider doing car insurance comparisons. Working with an auto insurance broker to obtain quotes from numerous competing companies, can save you a lot of time and money.
Your insurance broker can also shop around for you every year or two, just in case there is a lower rate out there.
However, remember that cheap doesn’t always mean good and going with the cheapest auto insurance quote isn’t always the wisest decision. Rates can vary dramatically from one provider to the next. When you compare quotes, also compare the levels of coverage, deductibles, etc. that the policy offers. It’s wise to make sure you have enough coverage to protect you and/or your family.
Insurance Questions to Consider
When you sign up for insurance, the company will generally ask a number of questions. Among those questions, they may ask how many miles you drive the insured automobile each year and/or the mileage currently on your vehicle.
If you use your vehicle to commute three hours to work every day, you will generally pay more in insurance premiums than someone who only drives one mile a day. If possible, try to use mass transit to rack up fewer miles, keeping in mind that you will usually have to decrease your mileage significantly before incurring a discount. Ask your agent/insurance company about the company’s different mileage thresholds so your efforts won’t be wasted.
Select Your Vehicle Carefully
Buying a huge SUV may sound exciting, but insuring a 5,000-pound, top-of-the-line vehicle can be more expensive than insuring a small (but safe) lower-cost commuting car. Also, older cars are often cheaper to insure than their more modern counterparts. Again, speak with your agent/insurance company to find out the exact rates to insure the different vehicles you’re considering before making a purchase.
Consider Raising Your Deductibles
When selecting car insurance, you can typically choose a deductible or the amount of money you would have to pay out before insurance pays, in the event of an accident, theft or other type of damage to the vehicle. Depending on the policy, deductibles typically range from $250 to $1,000. The catch is that, generally speaking, the lower the deductible, the higher the annual premium. Conversely, the higher the deductible is, the lower the premium. Ask your agent/insurance company how your premium might be affected if you raised your deductible. In some cases, it may make the annual premium better by several percent and put some money back in your pocket; other times, the savings may be minimal.
Improve Your Credit Rating
A driver’s record is obviously a big factor in determining auto insurance costs. After all, it makes sense that a driver who has been in lots of accidents could cost the insurance company lots of money. However, folks are sometimes surprised to find that insurance companies may also consider credit ratings when determining insurance premiums.
Why is a person’s credit rating considered? The theory is that individuals who keep their financial situations in ship-shape condition will tend to be more careful when it comes to driving. Regardless of whether that’s true, be aware that your credit rating can be a factor in figuring insurance premiums and do your best to keep your credit rating high.
Drop Unnecessary Coverage
Dropping certain types of coverage can be a slippery slope. After all, nobody can predict if or when an accident will occur. However, if an individual is driving an extremely old automobile that’s on its last legs, it may make sense (depending on the cost, the individual’s driving record and other factors) to drop collision coverage. The reason for this is that were the vehicle to be involved in an accident, the insurance company would likely total the car. If the value of the car is only $1,000 and the collision coverage costs $500 per year, it may not make sense to buy it.
In any case, before making any such decision, consider speaking with your local insurance agent or broker. Remember, every situation is different and the decision is up to you.
Install Anti-Theft Devices
Individuals have the potential to lower their annual premiums, sometimes by as much as several percent, if they install anti-theft devices. Your agent or insurance company should be able to tell you specifically which devices, when installed, can lower premiums. Car alarms and LoJacks are two types of devices that you might want to inquire about. If your primary motivation for installing an anti-theft device is to lower your insurance premium, make sure to consider whether the cost of adding the device will result in a significant enough savings to be worth the trouble and expense.
Talk To Your Insurance Broker
It’s important to note that there may be other potential cost savings to be had in addition to the ones described in this article. In fact, that’s why it often makes sense for you to speak directly with your agent or a representative of the insurance company to ask if there are any special discounts that the company offers for individuals such as military personnel or employees of a certain company. The insurance company may also offer a “good student” rate or some other special savings. You never know what sort of discount pricing might be available for your circumstances, but unless you ask, you probably won’t be able to take advantage of it.
The Bottom Line
The price of auto insurance is likely to continue to rise in the future. However, there are many things you can do to reduce the sting, and hopefully these tips will have you driving in the right direction.