5 Ways to Reduce Your Car Insurance Bill

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.

1. Be Careful on the Open Road.

While this is obvious, it's worth stressing. The very best and most basic way to reduce your car insurance bill is to exercise caution when you are driving. A good driving record means a lower rate on your car insurance. You can exercise more control over your record by doing the following:

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. Pull over if you need to do these things.

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. This might mean that you need to allow extra time for driving so that you can arrive at your destination on time, but it will keep your insurance rates down. Driving under the limit can also increase your miles per gallon.

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.

Following these tips will make you safer behind the wheel and help you to avoid moving violations and accidents, which in turn will keep your car insurance bill lower than it otherwise would be.

2. 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.

3. Research Insurance Costs BEFORE You Buy a Car

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.

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.

For example, the Insurance Institute for Highway Safety performs slow speed (3 to 6 mph) bumper crash tests and determines the cost of repairs. In the Institute's front full test, the Volkswagen Rabbit's repair costs exceed $4,000. You can check out all the test results and other helpful auto insurance information at the Institute's website.

4. 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.

5. 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.

Bonus Tip--Increase the Deductible

As a bonus tip, I'll add that you should consider increasing your deductible. An insurance deductible is the amount the insured must pay before the insurance company will begin paying on a claim. Auto insurance deductibles are typically in the $100 to $250 range. But for many, while we'd rather not shell out a couple hundred dollars, we could if we had to. The point is, it may not be cost effective to pay higher premiums to insure amounts we could pay on our own.

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.