If you’re like me, you hate paying for stuff that you don’t use regularly. But insurance is one of those things that I’m willing to grit my teeth and write a check for because it’s a crazy world out there.
That doesn’t mean you should just go with the first quote you get, or just blindly accept the recommendations of your insurance guy. Auto insurance is expensive. In some cases, it can be as much, if not more expensive than your actual car payment.
Here are a few things you should know about auto insurance policies and a few tips that could save you a few bucks every month on your coverage.
So much of your auto insurance premiums are determined by risk factors. Things like your credit score, your driving history, where you live and how much you drive are a huge factor in determining what you will pay for your policy.
It’s a cold science. Younger people get into traffic accidents more often than people in their 40s and 50s. If you’re driving more often, or live in a high-crime area, you’re more likely to file a claim. If you have a poor credit score, insurance companies see that as a predictive factor in determining your future claims history.
You can’t help things like age, but you can improve your credit score and driving record. Both are slow processes, but will pay dividends.
The Loyalty Factor
Being loyal to your current insurance provider can both help and hurt you.
It helps if you “bundle” your policies. You’ve seen the ads. Having your Homeowners/Renters, Life and Auto policies through the same provider can save you a lot of money. It works like a volume discount would. Insurance companies want to sell you multiple policies, so they give you a break on the price for buying multiple policies.
But just because you bundled your policy doesn’t mean you’re getting the best price out there. Don’t be afraid to shop around and get the best prices. It’s not the most entertaining way to spend an afternoon, but it’s worth it. I just switched my insurance provider and ended up getting better coverage for less money. That’s a twofer!
Know Your Policy
By the time you’re factoring in behaviors, where you live and the car you drive, your opportunities to save big start to dwindle. But, if you’re realistic about what you need, you can ring some more cash from the savings sponge.
First, your deductible: the higher the deductible, the lower your cost. Look, no one likes to pay out of pocket when you make a claim. If you’re a safe driver, you might do well to consider raising your deductible to $500 or even $1,000. Sure, it stinks when you have to write a check. But if you don’t file a lot of claims, you’re essentially paying for something you (hopefully) won’t use.
Also, look into what collision coverage you have. If your policy is “Broad Form” that generally means you don’t have to pay your deductible under certain circumstances, like when you’re not at-fault (make sure to check with your provider). But that might not be worth it if you’re paying extra. Run the numbers and see if it makes sense for you.
Finally, be sure to ask about what special policy discounts your provider might offer. Some auto insurance companies will give you a discount for belonging to certain clubs, or being a college graduate, some might even give you a break if you drive around with a device that monitors your driving habits. Don’t be afraid to ask. Saving a percent or two on your policy could add up to a pretty nice chunk of change.
Saving on auto insurance involves a little homework, some time and possibly a change in your driving behavior. But most importantly, make sure you’re balancing the risks and rewards of a lower policy. Some people don’t mind paying more for peace of mind. Others would be fine with a less expensive policy with fewer perks and a higher deductible.
Which insurance option do you prefer?