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The first step in saving any money on a personal auto insurance policy (PAP) is a review of your current policy. If you’ve never had a policy before, ask a friend or family member if they don’t mind you familiarizing yourself with their policy’s ins and outs. Typically, you should do this annually right before the policy period ends. This is the time for changes. There are several reasons for a change: your family status changed (got married or divorced, had children, etc.), your property increased in value, your net worth increased in value and/or you have purchased a new or additional car.
When comparing policy terms and conditions, use a similar policy. Consider policy cost and the kind of customer service provided. My current auto insurance company won me over with reasonable prices and excellent customer service. Most insurance companies have web sites or 1-800 numbers at your disposal 24 hours a day. Customer service includes the way in which claims are paid. The reputation of almost any insurance company can be verified in A.M. Best, Moody’s, Standard & Poor’s and/or Duff & Phelps. These institutions periodically rate insurance companies.
So, you’ve reviewed the policy. Now it’s time to shop around. What kind of deductibles do you currently have for collision and comprehensive? When I purchased my first new car, I raised my deductibles to $500 each and saved a bundle of cash in premium payments. However, that money is in my emergency fund in the event I’m involved in an accident. It’s not a safe bet to not have those funds saved somewhere. It’s not IF an accident will happen, it’s WHEN it will happen.
Consider narrowing your coverage scope. Look at your limits and amounts throughout and evaluate them to see if they can be reduced. Remember that it’s not wise to drop your liability coverage amounts! If your vehicle is worth less than $1000, drop collision and comprehensive coverage. Drop options and endorsements such as towing & labor (especially if your vehicle is new!), car rental and loss of income.
Try driving less, most companies discount for this (mine wouldn’t until I was 25 though). Quit using your vehicle for business. Try driving more safely, a clean driving record saves lots of dollars. Your record must be clean for three years typically.
Buy a low-profile vehicle, a vehicle that is rated as low risk. A big change would be a move from an urban setting to a rural one, but this shouldn’t be your only reason for doing so.
Keep your car in a garage. Safety/antitheft devices such as antilock brakes, automatic seat belts, air bags, alarms and tracking systems all offer insurance discounts.
Many companies offer multi-family and multi-policy discounts. When I moved out on my own (minus the family), my insurance rates rose sharply. Other discounts are age, not smoking, using a carpool and having a covered child at a school at least 100 miles away from home.
So, start investigating and start saving. There’s nothing like an informed consumer!
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