Six Ways to Save on Car Insurance

Here's a piece from USA Today that lists six ways to save on car insurance. Their suggestions:

• Raise your deductible.
• Take advantage of discounts.
• Consult your insurance agent before you buy a car or truck.
• If you're considering switching insurers, start looking for a new policy well before your current policy comes up for renewal.
• Don't even think about driving without insurance.
• Shop around.

This is basically a good list in my opinion, but I'd list them a bit differently in order of importance. Here's my take on each of their suggestions based on my own personal experience:

1. We have our deductible as high as it can go since we only plan on claiming significant expenses on our insurance. As a result, we've upped our emergency fund to cover the higher deductible so there should be no problem if you do need to come up with it. This is a HUGE money saver. Don't believe me? Ask your agent to quote you insurance rates at various deductible levels.

2. Of course. We get safety, low mileage (on my wife's car), and multiple-policy discounts. And I regularly ask if there are any new ones that we qualify for.

3. I'm "ok" with this suggestion, but I don't love it. Up to a certain point, you can get guidance on which cars are more expensive to insure, but I don't want to be stuck with a vehicle I hate for 10 years just so I can save a bit on my car insurance.

4. Goes without saying. NEVER cancel a current policy until a replacement policy is already in place.

5. Again, goes without saying.

6. This is the best tip of all -- why did they hide it at the bottom? We regularly quote out our insurance to a few different agencies when our policies come up for review. It's a good way of seeing the going market rates as well as keeping our current insurer honest.

How about you? What car insurance saving tips do you have?

Comments

[JB]

4 and 5 have nothing to do with saving money on car insurance. I agree with all the other tips though... I would just say to make sure that you have the 'right' amount of insurnace. Don't go overboard and be over insured - but make sure you have enough if you happen to hit a high-dollar car!

[rwh]

I've had the same insurance agent for over 20 years and don't shop around. Whenever we've had a claim he's come through for us and that is ultimately why we buy insurance.

[Angie]

By shopping around every 6 months I was able to go from $730/6-month at minimum coverage (25k/50k on most of the categories) to $550/6-month with 4 times the coverage (100k/300k on the SAME categories).

On top of that, I have gotten better, and more personal, service. Explain to me how that works. I've actually been able to call and speak to a PERSON and ask what he thinks about how to handle claims even when they aren't on my policy.

[Matt]

rwh,

Presumably there's some limit to how much your relationship with your insurance agent is worth to you. For instance, if it would cost $10,000 less per year to insure with, say, Geico, that would be hard to ignore, wouldn't it? Obviously the difference won't be that large, but the point is there must be some dollar amount you can place on it. Think about what that amount would be.

Now it doesn't hurt to shop around. At least take a few minutes and see what Geico or Progressive quote you. Then at least you'll know, in dollars, exactly what you're paying for your relationship with your agent.

If it turns out the real cost difference is smaller than the relationship is worth to you, then good for you, you'd be sure you're getting a good deal. If the difference is larger, you could try using that as a bargaining chip with your agent. But if you don't take a few minutes to find out, you can't be sure.

[sahm]

OK, they forgot the most obvious one- don't file those stupid, little claims. Well, I guess this goes with the high deductible. As a former underwriter, we would scrutinize just how many times we saw these little claims (even $0 paid out) because that was just a sign that something bigger was to come. Every time you file a claim, you remind the company that they need to check that driving record of yours...hmm, do you really want them finding out about the 3 speeding tickets you've had???

[Dave]

My advice is to speak to agents in person. They can find many more discounts when they're talking directly with you, as opposed to plugging your data into an online spreadsheet. Things like being a college alumni, professional associations, etc mean discounts that the online site didn't ask about.

[Christopher Smith]

Actually, number 4 does have something to do with the price of car insurance. I'm coming off of my parents' insurance policy in a few weeks, and I've been calling a few agents I know as well as checking online. According to one agent (whom I've used for other insurance and has always been honest and upfront), if you're shopping for insurance at least two weeks before the date you need coverage to start, you can get better prices, since the companies know that you have flexibility to shop around.

You can shop around at any time. If you are in the middle of a policy and find a better price you can sign up the same day. Just cancel your original insurance and they are obligated to give you a retroactive refund for all remaining days on your policy. Even if you get new insurance and neglect to call the old insurance for a few days, they have to refund the days with overlapping coverage.

[Leroy Ang]

Hi. I am from Singapore and I do have some personal experience and an alternative view to share.

With reference to Point 1 in the blog entry, having a high deductible in your car insurance may not be a wise choice after all, IF, your emergency fund is lower than your desired target level. I presume "deductible" here means the $$ amount the insured will still have to fork out for repairs in cases of vehicle accidents. In Singapore, we term this deductible as "Excess" to our car insurance policy.

I was personally involved in four vehicle accidents previously, over a span of more than 10 years of driving. Of these four accidents, three involved another vehicle crashing into mine while I was driving. The last and most recent one, I rammed into the rear of a BMW. (I shall not elaborate the details here as it is not relevant to the discussion. The examples provide the context for discussion)

The excess, aka deductible, in my previous car insurance was peg to a max of $1,000. As the fault of the accident arised from the other parties, my insurance premium was kept constant. After the first 3 vehicle accidents, i came to realise that the excess forms an important part of my vehicle protection plan, even though I may be a higher-than-average safe driver. My decision was to opt for a higher premium protection and I decreased my excess to only $500. And I am glad and relief that I'd done that before my recent 4th accident. The total repair cost for my vehicle and for the BMW was at the "OUCH" level.

Of course, the premium that I've to pay now was higher than before the accident (as risk arising from driver increases) but I am glad that there will always be a $500 parked in my emergency fund to meet this unforeseen incident.