How To Save Money When Purchasing Automobile Insurance
Do not automatically renew your policy. It takes time to save on auto insurance -- but the savings can be well worth it.
- Shop around: Once a year, or at least once every two years, shop around. Get at least three offers.
- Look at the policy parts: Break down overall prices by the parts. For example, let's say Ellen is purchasing liability insurance, collision and driver's roadside assistance. instead of just learning that the automobile insurance she wants will cost $1,000 from XYZ company, it is better to find out how much is being charged for the liability insurance, the collision etc. This way you can apples to apples.
- Increase the amount of your deductible. The higher the deductible, the lower the premium. People who make small claims may find the insurance company won't renew the policy, or greatly increase the premium. You can use part of your Emergency+Fund to pay deductibles.
- Eliminate coverages which are nice to have, but are not necessary. For example, collision and comprehensive coverage if you have an older car worth less than a few thousand dollars. Some experts suggest that you do not need the coverage once its cost equals 10% of the book value of your car. No matter how well you have taken care of the car, all you will receive in the even of a loss is the book value -- unless it is an antique which should be insured separately.
- Do what you can to make your credit rating better. Credit rating is frequently part of setting a premium. (See Credit).
- See if you can decrease the number of miles you drive enough to qualify for a low mileage discount.
- Consider free "Accident Forgiveness" coverage: "Accident forgiveness" coverage provides that rates don't go up if you have an accident. Some companies charge a higher premium for this provision -- as much as 15% of the premium. Does it make sense to you to pay more money now to save money later IF something happens? There may be companies that offer this coverage for no extra charge.
- Business: Do not use your car for business related purposes for which premiums are generally higher than personal driving only.
- Choose your car with care: Buy a car which people tend to drive conservatively rather than a vehicle which is a target for thieves or vandals, or the type that owners tend to drive carelessly. Also look for a vehicle which is less expensive to fix. Safer cars tend to have lower premiums for collision and comprehensive coverage. An auto dealer can give you an idea of the difference in insurance premiums between the different models. For example, sports cars tend to have higher premiums. Between SUVs and minivans, the premiums for minivans tend to be less.
- Drive conservatively to keep, or clean up, your driving record. You need three years without a ticket or accident to qualify for lowest premiums.
- If you have teenagers:
- Discounts are available for good grades (such as a B average or better), and for attending a drivers-ed course.
- Check the difference in premium between making your teenager the principal driver of a low cost car or adding a teenager to your policy.
- Consider "loss control" by letting your teenager know about acceptable and unacceptable behaviour. A written agreement which you can customize is available free at: http://dalewisely.googlepages.com/parentingteendrivers.com
- If you have more than one car, don't let the teenager drive the more expensive one -- and let the insurer know it.
- If the child goes to school more than 100 miles from home without a car, your premium should be lower.
- Make sure your kids not only know how to drive, but are prepared for emergencies. For instance, drive with your teenager at night, in the rain and in the snow. If you can, take your teenager to a large empty parking lot when it's wet and teach him or her how to set out of a skid and to break in a hurry without losing control. If you'd rather have a professional do it, you can find courses for teens at www.kiplinger.com/features/archives/2006/11/teendrive.html .
- Maximize the discounts you receive.
- While discounts vary from insurer to insurer, and from time to time, following is a list of discounts to consider: good driver discount; good-student discount; marriage discount; low annual mileage discount; multi-car discount; farm-vehicle discount; a discount for "Like" on Esurance on Facebook; membership discounts (such as AARP, AAA or your school); up-front payment discount; budnled-policy discount; owning a home; automatic-payment discount, advanced degree discount
- If you think you could qualify for a discount that isn't included in a company's list of discounts, ask if the discount is available. Not all discounts are listed.
- Multi-coverage discount: A discount for purchasing different types of policies from the same insurer. For example, if you insure your home and car with the same company, you might get a discount on both policies. To be sure you're getting the best price, compare the total cost of the policies offered by one company with the total cost of the least expensive comparable separate policies from different insurance companies.
- Low Mileage Discount: A discount for motorists who drive fewer than a predetermined number of miles per year.
- Air-Bags or "Passsive Restraint" Systems: A discount for airbags, and seat belt systems that set automatically. (Be sure to tell the company whether your air bags are driver side and/or passenger-side and side-impact).
- Defensive Driving Course Discount: A discount if you take your state's "safe driver" or "defensive driving" course -- even if you have a perfect driving record. To find a course, check: the National Safety Council www.nsc.org/train/ddc/ or 800.621.6244, ask your auto dealer or insurance broker. Check the course with your insurance company before taking it to be sure it is recognized by the company.
- Anti-theft Devices: A discount for anti-theft devices. The amount of the discount may vary depending on the type of alarm and whether or not the system activates automatically when you leave your car.
- Anti-lock Brakes: A discount for cars equipped with anti-lock brakes. Some states, including Florida, New Jersey, and New York, require your insurers to give these discounts.
- Daytime-Running Lights: A discount for factory-installed daytime running lights.
- Family plan: Family plans cover everyone living in a household for one flat rate -- generally approximately 10% more money than for a policy just for you.
- Discount for occupations which tend to have fewer claims. For example, in Hawaii, Allstate Insurance offers a discount for police officers.
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