A necessary, yet often misunderstood, individual/family expense is automobile insurance coverage. While many articles have discussed how much coverage you need, this article will review tips for lowering insurance costs.
Shop around. Prices vary from company to company, so it pays to shop around. Get at least three price quotes. You can call companies directly or access information on the Internet. Get quotes from different types of insurance companies. Some sell through their own agents or through independent agents who offer policies from several insurance companies. Others do not use agents – they sell directly to consumers over the phone or via the Internet.
Don't shop price alone. Ask friends and relatives or talk to your association leaders for their recommendations. Contact your state insurance department to find out whether they provide information on consumer complaints by company. Pick an agent or company representative that takes the time to answer your questions.
Compare insurance costs. Before you buy a new or used car, check into insurance costs. Car insurance premiums are based in part on the car’s sticker price, the cost to repair it, its overall safety record, and the likelihood of theft. To help you decide what car to buy, you can get information from the Insurance Institute for Highway Safety (www.iihs.org).
Ask for higher deductibles. Deductibles are what you pay before your insurance policy kicks in. By requesting higher deductibles, you can lower your costs substantially. For example, increasing your deductible from $200 to $500 could reduce the cost of your collision and comprehensive coverage cost by 15 to 30 percent. Increasing to a $1,000 deductible can save you 40 percent or more. Before choosing a higher deductible, be sure you have enough money set aside to pay it if you have a claim.
Reduce coverage on older cars. Consider dropping collision coverage on older cars. A good rule of thumb is that if your car is worth less than 10 times the premium, purchasing the coverage may not be cost-effective. Determine the retail value by reviewing the monthly published National Auto Dealers Association (NADA) guide at your local library, or look it up online at Kelley’s Blue Book (www.kbb.com). Review your coverage at renewal time to make sure your insurance needs haven’t changed.
Buy your homeowners and auto coverage from the same insurer. Many insurers will give you a break if you buy two or more types of insurance. You may also get a reduction if you have more than one vehicle insured with the same company. Some insurers reduce the rates for long-time customers.
Maintain a good credit record. Establishing a solid credit history can cut your insurance costs. Insurers are increasingly using credit information to price auto insurance policies. Check your credit record on a regular basis and have any errors corrected promptly so that your record remains accurate.
Take advantage of low mileage discounts. Some companies offer discounts to motorists who drive a lower than average number of miles a year. Low mileage discounts can also apply to drivers who carpool to work.
Seek out other discounts. Review with your insurance company whether any of the following discounts apply to your policy: