Auto Insurance Tips and Advice

2008-02-01

How to Lower Your Insurance Premium

1. Discounts Add Up to Big Savings

If you are like most people you probably don’t expect auto insurance to go on sale. But with a little “know-how” it is possible to save big by taking advantage of discounts when purchasing car insurance. Whether you are buying your first policy, renewing an existing policy or just comparison shopping, use this handy checklist to get the best available price on your policy.

1. Safe Driver Discounts. If you haven’t had any tickets or violations ask about “Safe Driver” discounts. Many insurance providers have a discount for those who have a safe driver status for three or more years.

2. Club Discounts. If you are a member of a large club, organization or even employer plan, be sure to review your membership benefits. Insurance discounts can range from 5% to 20% for members!

3. Low Mileage Discounts. This varies by the insurance provider but if you drive a vehicle less than 15,000 miles per year you may be eligible for a sizable discount. If you drive less than 7,000 miles per year then it can dramatically decrease your insurance rates.

4. Multiple Policy Discounts. If you are a homeowner, business owner or buy other insurance from the same provider be sure to inquire about a multiple policy discount. 

5. Driver Education Discounts. If you are a new driver or plan to put a teen on your policy then ask about Driver Education Discounts.  Not only will it set your mind at ease but it can also save you money on auto insurance.

6. Security Discounts.  Have a car alarm? How about anti-lock brakes or automatic seat-belts? You might be eligible for further discounts. Make a list of your vehicles security features before calling to compare rates.

2. Buy Right – Save Big

Thinking about buying a new car? By planning ahead you can also use this as an opportunity to save on auto insurance. Less spent on auto insurance means more to spend on your vehicle, so use these helpful tips to get the most car for your money.

1. Make a list of your top choices. Include the make, model, year and features of the car or truck then call your current insurance agent to get an estimate of what a new policy will cost.

2. Shop for safety features. Sometimes it is worthwhile to spend slightly more on a car with anti-theft device, automatic seat belts, daytime running lights or other safety and security features, in order to save money on your auto insurance.

3. Sticker Shock. Part of the insurance premium for your new or used car will be based upon the price of the car and/or amount financed. To save money on auto insurance consider buying a slightly used vehicle with upgraded safety features or eliminate extras on a new vehicle.

4. Check the Safety Record. Cars, trucks and other vehicles have safety records that will govern how much you pay for car insurance based upon the amount of damage or injury sustained to the vehicle. Not only will buying a safer vehicle lead to greater peace of mind for you and your family, but it can also save money on insurance premiums. To check the safety rating of your car visit www.ConsumerReports.org or Edmunds.com. Be sure to have the make, model and year available for each vehicle under consideration. Remember, even the same make and model can differ from year to year!

5. Consider the type of car. Sports cars tend to have higher insurance premiums than trucks. New cars cost more to insure than used cars but it varies widely so do your homework.  The cost to repair, safety rating, theft record and other characteristics of each model can make the cost of ownership for one convertible much higher or lower than another.  To check out which cars are stolen most (or least) visit the National Insurance Crime Bureau (NCIB) at www.ncib.org.

3. Comparison Shop

The good news is that comparison shopping for auto insurance can save hundreds of dollars on your annual car insurance premiums. The bad news is shopping for insurance is often confusing, time consuming and tedious. By following these quick tips you can save money and still have time to go for a Sunday afternoon drive in your favorite car.

Comparison shopping for insurance used to require a phone book and the better part of a day off work.  Thankfully, modern technology has put an end to that! Instead of spending your time off calling insurance providers, being put on hold and then waiting for a call back, use one of the numerous online insurance comparison websites. Most insurance websites provide a quote almost immediately. Simply fill out a form to compare several insurance companies at a time when using an independent website like www.carinsurance.com or other commercial quote services. When using these tools, keep in mind they earn commissions and referral fees from those companies willing to pay for the referral. The lowest rate shown might not be the lowest rate available to you – just the lowest rate among the carriers they represent!

When comparison shopping for auto insurance, remember to look at more than just price: Service matters too! Nothing is worse than actually having to file a claim only to find your insurance company has a long list of complaints, irregularities or other problems. Before making your final selection, take some time to visit the National Association of Insurance Commissioners (NAIC) website at www.naic.org/state_web_map.htm. This great tool will link to the insurance department for every state in the nation; use it to find your state to research agents, companies, new laws and other important information related to your insurance rights and responsibilities.

What You Will Need:
• Drivers License Number
• Contact Information
• Social Security Number
• Current policy information including type of insurance and coverage
• Vehicle Identification Number or VIN

4. Start Saving Now

One of the fastest ways to reduce the premiums on your auto insurance is to increase the deductible and make sure you aren’t paying more than what the car is worth. For example, by raising the deductible from $250 to $1,000 it is possible to reduce your auto insurance rates by 25% to 40% - in addition to other discounts like Safe Driver or Anti-Theft and Security Discounts! 

Closely related to this is spending more on comp and collision than the car is really worth.  Comp and Collision insurance is that portion of the premium that covers your vehicle if it is damaged or there is a complete loss. In the event of a claim, the insurance only covers the actual value of the car – not what it will cost you to buy another one. For example, let’s assume you have an old work truck you use for grubby jobs and as a second vehicle.  As a general rule of thumb, if the vehicle is worth less than 10 times the premium then it might be a good idea to drop the comp and collision coverage.

Before you increase your deductible or reduce comp and collision coverage there are a few things to keep in mind:

1. Always have a cash reserve in savings to cover the deductible amount. If you intend to increase the deductible to $1,000 then have that money set aside in a savings account in case of a claim….then leave it alone! It is for emergencies only.

2. Know the actual value of your vehicle. You can look up the value of your car at Kelley’s Blue Book at http://www.kbb.com.

3. Make sure you can cover the loss before reducing or eliminating comp and collision coverage. Sure, that old work truck might not be worth much for resale value but if it is the vehicle that takes your spouse to work each day then the value to you is much more than the resale value. Insurance is designed to help you cover your losses – having too much insurance just wastes money but having too little insurance means you are at more risk than necessary.  Buy only what you really need to save on your auto insurance.

5. Credit Counts to Lower Auto Insurance

Many people are surprised to learn that credit matters when it comes to buying auto insurance. One way to lower your auto insurance rates is to make sure your credit score is accurate and in tip-top condition.

Before shopping for car insurance, take time to review your credit score to make sure everything is accurate. If more than one person is going to be on the policy be sure to check their credit score too. By law, everyone is entitled to a free credit report once each year. To obtain your free report visit www.annualcreditreport.com or call 1-877-322-8228. You can also request a free credit report by visiting www.ftc.gov/bcp/conline/edcams/credit and filing out the appropriate form. 

In addition to your credit, take time to check out the credit of the insurance company itself! Yes, companies have credit ratings just like people so make sure the insurance provider is willing and able to pay your claim should the need arise. When searching for auto insurance it is important to comparison shop for competitive rates and service. Look for companies with high ratings by visiting www.ambest.com or Standard & Poor at www.standardandpoors.com. 

Finally, visit your state’s Insurance Regulation website to verify the good standing of the agent, broker or company before doing business with them. Many of these state sites will also provide free price comparisons. To locate your state Insurance Regulator visit http://www.consumeraction.gov/insurance.shtml.

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