Saving Money on Auto Insurance
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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