10 Ways to Save Money on Your Car Insurance

Now that you know the basics of an auto insurance policy, here are 10 ways you can pay less. In many cases, you can get the same level of coverage for fewer dollars.

  1. One Insurer, Multiple Policies — Do you have a homeowners or renters insurance policy? If so, is it with the same insurance company that provides your auto insurance? If the answer’s no, you’re paying too much — for both policies. Almost every insurance company that sells auto insurance wants its policyholders to also buy homeowners or renters insurance from that company. These insurers offer so-called multi-policy discounts. Usually, these discounts are at least 10% — and some insurers apply the discounts to both the auto and the homeowners/renters policy.
  2. Good Driver, Good Price? — It’s no secret that the better your driving record, the less you will pay for auto insurance. But did you know that most people qualify as “good drivers” and are eligible for discounted premiums? Some good drivers pay a lot more than others; however, many auto insurers are actually a collection of several insurance companies that each cater to a certain type of driver. The worst drivers go in one company, the best in another, and a lot of people wind up in one of the middle companies. These middle poeple pay less than the worst drivers, but more than the best. The thing is, many of these middle people have driving records that are just as good as good as those who are in the companies that offer the lowest rates. Yet, they are paying more. Why? The usual reason is that they don’t know any better. No one thold them which insurance company in the gorpu had the best prices. And, probably, no one told them there was even a group of insurance companies. If you have a spotless driving record, there’s no reason you shouldn’t be paying the lowest price a group of insurance companies has to offer.
  3. The Beauty of the Bus (or Other Mass Transit) — Do you drive to and from work? If you do, you are literally paying a premium to do so. Insurance companies charge you significantly higher premiums if you drive to work. And, the longer your commute (in miles, not minutes), the higher the premium. Consider mass transit. Yes, there’s a price there, too. But you will reap the savings of gas and lower insurance costs.
  4. Low Mileage, Low Price — On average, people drive 1,000 to 1,250 miles a month. That is what insurance companies consider average use. If you drive less than that, you could be eligible for low-mileage discounts, which some insurers offer.
  5. High Profile, High-Cost — The type of car you drive is a major factor in what you pay for insurance. Is your vehicle a magnet for thieves? Is it more expensive to repair than most cars? If the answer to either of the last two questions is yes, you’re paying more than the average car owner for insurance. To get detailed information on your vehicle(s) – or a vehicle you’re thinking of buying – write to the Insurance Institute for Highway Safety at 1005 North Glebe Rd., Arlington, VA 22201 and ask for the “Highway Loss Data Chart.”
  6. Raise Your Deductible — The deductible is the amount you pay before insurance kicks in if you have a claim. For example, if you have a $250 deductible and you have an accident in which your car sustains $1,000 in damage, you pay the first $250 and your insurer pays the balance, $750. The higher the deductible you choose, the less you pay. If you have assets, you can probably afford to absorb at least $250 and probably $500 if you have a claim. And, if it’s been years since you’ve had an accident, you’re probably better off raising your deductible and paying less each year for insurance. (Please note that the deductible does not apply to damage caused in accidents that are not your fault, except when the other driver doesn’t have insurance. In that case, the deductible on your Uninsured/Underinsured Motorist coverage applies. However, if the other driver has insurance, you get “first-dollar” coverage for you damages.)
  7. Drop Unnecessary Coverage — Let’s say you have an older car, one not worth very much. There’s really little point in having collision and comprehensive coverage. You don’t have much to protect. Remember, too, that you have to subtract your deductible from any potential payout you might get. As a general rule, any car worth less than $1,000 shouldn’t have collision and comprehensive coverage. Between the deductible and the extra expense of these coverage’s, the cost is probably greater than the benefit. How much is your car worth? An auto dealer can tell you, or there are plenty of books that have values of vehicles going back many, many years.
  8. Discounts, Discounts, Discounts — Auto insurance companies offer several discounts for a variety of reasons. The car has automatic seat beats, air bags, anti-lock brakes, anti-theft devices, etc. The driver is a good student, which is especially valuable if you have teenage children who will be on your policy. Are you taking advantage of all the discounts available to you? This is a question I can answer easily.
  9. Taking the Defensive — Many insurance companies also offer discounts to those who have taken defensive driving courses recently.
  10. Low-Cost and High-Cost Areas — Are you planning to move? If you are, you should take into account the cost of insurance. Generally, the more urban the area, the higher the premium. The costs can vary even within a community. And they can really vary from state to state. If you’re living in New Jersey, Massachusetts or Hawaii, you’re paying several times more, on average, than you would in North Dakota, South Dakota or Idaho.