There’s a lot of wiggle room in between having enough coverage in case of an accident and not paying extra for coverage you may not need. It can be confusing to navigate the lawyer-speak in a policy. But with a little research, you can save money on auto insurance, whether you are buying or leasing, new or used.
Don’t stop at just one. Don’t call your favorite or most-well know insurance company and take their first quote. Get at least three quotes, and vary the companies you approach. Ask friends and family about their experience with companies and agents. Do your own research and approach insurance companies that sell through their own agents; those that use independent agents; and those that market policies directly to customers via phone or internet applications.
Ask questions. Do enough research on policies and costs that you can ask questions of the insurance agent (for instance, know the difference between “collision” and “accident”). Make an appointment with an agent and let the office know you are gathering information on policies so you can make a decision on agencies. Any credible agent will allow this type of meeting and happily answer questions about a policy. If the agent balks at informing you of a policy’s contents, go somewhere else. In the case of an accident or other claim, you need to have an agent who is informed and accessible. Here is a list of insurance companies to get you started. Research members of professional insurance organizations, such as the National Association of Professional Insurance Agents.
Compare auto insurance costs before you buy a car. If you are in the market for a new or new-to-you car, do your research on insurance costs before signing on the dotted line. Premiums are based partly on the car’s price, safety record, expected repair costs, and even that car model’s likelihood to be stolen. You may be able to get a discount for buying a car with safety features added, or for a car that is deemed to be a safer option. Go to the Insurance Institute for Highway Safety (IIHS) online site, and use their ratings tool to help you decide. Choose a vehicle with as many high-tech safety features as you can afford.
Consider raising your deductible. You can lower monthly premium costs by raising the minimum on your out-of-pocket deductible. If you are a safe driver with a clear driving history, this might be the way to go. A smart option would be to create a savings account to cover any additional expenses if you find you have to make a policy claim.
Lose the extras on an older car. If you are driving an older car that has little value, carrying a collision or comprehensive might not make any sense. Check the value of your car by using websites tools such as Kelly Blue Book or National Association of Auto Dealers.
Use the same company for all your insurance needs. Some insurance companies offer bundle rates to customers who hold auto, home, or other policies with the same agent or agency, or have more than one vehicle that is covered. If you are a long time customer, you might want to ask about a discount if you have had little to no claims over the years you have been a customer.
Once you have decided on an agency and obtained insurance, here are some tips to save money down the road:
Keep your credit history clean. Establishing a solid credit history can help lower insurance costs. Many insurers will use your credit information to price auto insurance policies – both when you are purchasing insurance and when your policy is up for renewal. Insurers believe that customers who work to maintain a good credit rating are less of a risk, and that these customers are likely to drive safer, maintain their vehicle, and fill fewer claims. To be sure you’re getting the good credit you deserve, it’s a good idea to check your credit record on a regular basis to be sure all information is accurate.
Never let your insurance lapse. It doesn’t matter whether the lapse is because you are getting a new vehicle, moving to a different state where insurance coverage requirements may be different, or changing insurance companies, once your policy expires, you will be considered a higher risk. As a result, your policy rates could cost more. Consider bridging your old and new coverage, even if it means paying for both policies for a few days.
Review your policy annually. You might need more liability coverage to include a new teen driver, or less theft or damage coverage as your vehicle gets older and less valuable. You could also be eligible for discounts as you age – many reputable companies offer a special price to older policy holders. But when “older” turns to “elderly” your premiums could increase.
Don’t insure vehicles you don’t drive. If you are paying premiums on vehicles that are no longer in use, being restored or stored, consider cancelling or lowering the policy. There is no need to pay collision insurance on a vehicle that is sitting in the garage or out of use. However, be sure to keep registration active and up to date. That will save time at the DMV when the vehicle is back on the road, and time is money, after all.
Ask for the special discounts. As we noted above, there might be a discount for aging drivers. But there are also opportunities for teachers, law enforcement officials, and other groups that could vary by company. Some companies offer reductions to drivers who get insurance through a group plan from their employers or from other associations. Check with your affiliated organizations to see what they offer.
Take advantage of low mileage discounts. Do you drive back and forth to work just a few miles away from home? Do you log in a small number of miles per week? Some companies will give discounts to motorists who drive less than a set average number of miles per year. Low mileage discounts can also apply to drivers who carpool to work.
Take a driver training class. Most insurance companies offer discounts for approved driver-training courses, such as those offered by the AAA, and may even require one for a new teen driver. It’s a good idea even without a premium discount. I’m a great believer in an occasional refresher lesson from a pro, who can show you accident avoidance techniques you didn’t know that you didn’t know. Taking special classes by the DMV, such as motorcycle training or semi-tractor training, can also lower insurance premiums. Not all companies do this, but it is worth a call to your agency to find out.
Drive safe. Now that you have a car that has as many safety features as you can afford, and you have purchased a policy, don’t take chances with your driving. Use defensive driving tactics, avoid road rage situations, and follow road rules to minimize the chance you’ll have to file a claim.
For more articles on saving money: