Yesterday I witnessed a car accident. I was headed to work on a two lane road, when I heard the car that had just passed me going the other way lay on the horn. In the rear view mirror, I saw the car smack into an SUV that had pulled out in front of it. Fortunately nobody was seriously hurt, but it offers a good opportunity to think about ways we can all lower the cost of car insurance.
Car insurance is an unavoidable expense that all vehicle owners must incur. Whether your bill arrives annually, bi-annually or monthly, car insurance is not an expense we enjoy paying. Thankfully, there are several steps you can take to reduce the costs of car insurance.
Be A Good Drive
Being a good driver can reward you with a lower insurance rate. The very best and most basic way to reduce your car insurance bill is to have a good driving record. This means you need to exercise caution when you are driving and obey the speed limit. Here are a few everyday reminders:
- Focus on the road: Don’t talk on your cell phone, send text messages or consume things that are difficult or messy to eat (like tacos or sub sandwiches) behind the wheel. Operating a GPS system behind the wheel is also dangerous. And on this point I’ll add one other thing–your kids are watching you. Do you want your 16 year old texting while they drive? They’ll will follow your lead in how to operate car. If you text, they’ll text (and I’m preaching to the choir on this one).
- Obey speed limit signs: Speeding tickets add points to your record and often result in automatic increases in your insurance bill.
- Use extra caution in residential areas, construction zones and school zones: These areas present more opportunities for accidents, and the fines for moving violations are higher.
- Drive defensively: Be aware of other vehicles in front of you and behind you. When in doubt, err on the side of caution. I suspect the car that passed me yesterday could have avoided the accident. From my vantage point, he was more interest in not letting the SUV get in front of him than he was avoiding an accident.
- Prepare in advance when driving in unfamiliar territory: Review maps prior to your trip. Pull over if you need to look at a map again or ask for directions.
Comparison Shop for Low Rates
Prices for car insurance will vary from company to company. At minimum, you should secure at least three quotes from three different companies when you are shopping for the lowest rates. You should also try a combination of local shopping with insurance companies and online shopping. When you shop local, ask coworkers, friends and family for referrals to companies that deal with auto insurance in your area. Referrals are a great way to find the lowest rates without spending a lot of time on the phone calling for quotes.
When you shop online, there are a variety of websites that will generate multiple results from different insurance companies. It’s easy to compare auto insurance quotes from several insurance companies online through companies like Insureme.com.
Often insurers offer discounts to employees of certain companies or even to entire industries. For example, a company might offer a discount to engineers because as a whole they have proved to be less risky. If you have recently changed job then it might be worth calling your insurance company to let them know.
Reduce Coverage on Older Cars
As your vehicle ages, the need for collision and comprehensive coverage begins to decline. A general rule of thumb is that if your car is not worth 8-10 times the premium rate, then full coverage may not be entirely cost effective. You can determine the general worth of your vehicle online with the services of Kelley Blue Book or by consulting with your local auto dealer or bank. Check the value of your car against the cost of your annual premiums and adjust your coverage accordingly each year.
There are also interactive online calculators that can help you determine the amount of coverage you need. You can find an easy to use coverage calculator at carinsurance.com.
Buy Home and Auto Insurance from the Same Company
Some insurance companies offer special rates to customers who insure several entities at the same time. Home and auto insurance packages are especially cost effective. You might even find special rates on insurance for other items such as motorcycles and recreational vehicles too when you purchase policies from the same company. When you purchase your policies for various coverage products through the same company, you may also be eligible for extra savings that are added on year after year in appreciation for your loyalty.
Put Your Teen On Your Policy
You will pay less for your teen to drive if you put them on your policy as opposed to putting them on their own, separate policy. It’s always less expensive to add to your existing policy.
Keep The Grades Up
If your teen or college student keeps their grades up that can mean a discount for mom and dad. This might also apply if you are an adult going back to school.
Ship Off Your College Student
Some insurance companies give a discount when your child goes to school 100 miles away and does not have a car with them. The idea is if they don’t have a car, then they won’t be as likely to get in an accident.
Don’t Pay For Things You Don’t Need
Take a good look at your policy to make sure you aren’t paying for services that you pay for elsewhere. For example, if you have Triple A then you don’t need roadside assistance with your insurance company. Plus, if you use the roadside assistance with your insurance company your premium could go up. Services like this can be separate from your insurance policy.
Choose A Higher Deductible
If you are willing to go higher on your deductible then you could save yourself hundreds. Use a savings account instead to save up for a deductible in the event you have to use it. Preparing ahead is key here. Insurance deductibles are regulated by each state. Where we live, the maximum deductible allowed is $500, and that’s what we have. Check with your insurance agent to see how much you can save by raising your deductible.
Have A Good Credit Score
Our credit scores are becoming more and more important these days. Many insurance companies calculate your rate based on how good or bad your credit score is. The better your credit score the better rate you are going to receive on your insurance.
Low Mileage Discounts
If you don’t drive much or you work from home and therefore you don’t put many miles on your car then ask for a low mileage discount. Often you will receive a discount if your mileage is less than what they consider normal. Having low mileage can pay off in the form of a lower insurance bill.
Safety Feature Discounts
If your ride has special safety features like an anti-theft device or motorized seat belts you might be able to get a discount. Even if you add your own anti-theft device like an alarm system this could give you a discount. This type of discount might be listed in the “Other Discounts” section, so be sure to ask.
Senior Citizen Discounts
Sometimes it pays to be older and wiser because many insurance companies offer discounts to senior citizens – you just have to ask!
Pay Up Front
Some insurance companies offer a discount if you pay upfront instead of electing to pay monthly. Even if you pay for the entire year upfront and decide to switch companies they must refund you. You will only be responsible for the pro-rated amount which means they will owe you a refund.
Choose Your Car Wisely
Usually when we are out shopping for a new car we don’t think much about our insurance company. However, insurance rates vary depending on the make and model of the vehicle that you drive. It is important to do some research on costs associated with insuring the type of car you are considering before you buy. Certain factors that determine the cost of insurance include the price of the car, its safety record, likelihood of theft, and the costs of parts to repair the vehicle. State Farm publishes vehicle safety ratings on their website.
Foreign vehicles are often more expensive to insure because the costs associated with repairs are much higher. There are also a variety of safety features on a car that can reduce insurance costs. When you shop for a car, look for vehicles that have daytime running lights, anti-theft devices, air bags and other safety features. You can find a great deal of information regarding vehicle safety and safety features at the Insurance Institute for Highway Safety.
There are insurance companies that view married couples as less risky and therefore grant them a discount. If your status changes be sure to inform your policy holder and ask for a discount.
Graduate from College
Many insurance companies offer discounts to certain alumni members. Check with your college or university to see if they have a list. Also, just by graduating college might even get you a discount.
Photo: Zac Wong via Flickr