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How to Save Money on Your Auto Insurance

Written by: Jon Mitchell Jackson

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Posted over 3 years ago. Applies to California, 1 helpful vote, 0 comments

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You Need To Ask Questions To Get The Best (price and service) Insurance Coverage

How large of an insurance premium you pay depends on many important factors, so read the following carefully and consider your choices wisely. And remember, in most cases, you'll have to specifically ask about the rate reductions for which you may qualify. It’s been our experience that most insurance agents don't volunteer this information so remember to ask as many questions as possible. Your smart questions will save you money! Take a good look at the following factors and information.

Types of Insurance Coverage

Types of Insurance Coverage- Before we get started, here is important basic information about what types of coverage actually make up an auto policy. Generally speaking, your auto policy includes 6 different, but important, types of coverage. This coverage may be priced separately and/or be less expensive if purchased all together. You absolutely need to ask your insurance agent for a price breakdown. The types of coverage include:

Bodily Injury Liability

For injuries the policyholder causes to someone else.

Medical Payments or Personal Injury Protection (PIP)

For treatment of injuries to the driver and passengers of the policyholder's car. At its broadest, PIP can cover medical payments, lost wages and the cost of replacing services normally performed by someone injured in an auto accident.

Property Damage Liability

For damage the policyholder caused to someone else's property.

Collision

For damage to the policyholder's car from a collision. The collision could be with another car, a light post, fire hydrant, etc.

Comprehensive

For damage to the policyholder's car that doesn't involve a collision with another car. Covered risks include fire, theft, falling objects, missiles, explosion, earthquake, flood, riot and civil commotion.

Uninsured Motorist Coverage

For treatment of policyholder's injuries as a result of a collision with an uninsured driver. Underinsured motorist coverage can also be included in an auto policy. Underinsured motorist coverage comes into play when an at-fault driver has auto liability insurance, but the limit of insurance is inadequate to pay for your damages.

Each State is Different

Each state requires that you have certain types of coverage with minimum liability limits. And, the insurance industry recommends that your bodily injury liability limits be $100,000 per person and $300,000 per occurrence. The chart at the end of this special report discloses each states minimum liability requirements. Now that you have a better feeling about what types of coverage your auto policy consists of, let’s take a closer look on how you can save money each year by shopping around and comparing rates and discounts.

To Save Money, Start by Comparision Shopping

The first thing you should do is comparison shop. Prices for the same coverage can vary significantly from company to company. We suggest that you get at least three different quotes. Call your state insurance department for ideas about companies and agents to contact. To find a listing for your state’s department, you can visit the National Association of Insurance Commissioner’s (NAIC) web site at: http://www.naic.org/consumer/state/usamap.htm or, see the chart found at the end of this special report.

Prices Will Vary between Companies

Understand that prices for the same coverage can vary by hundreds of dollars from company to company, so it pays to shop around. You may want to visit these great links offered by the Insurance Information Institute at: http://www.iii.org/links.htm, or even contact your state insurance department which can be found at: http://www.iii.org/other_places.html

Check the Financial Ratings of Insurance Companies

While you doing this, you might also want to check the financial ratings of insurance companies who’s names you’re not familiar with but who may be offering attractive rates. The following provide free information on the claims-paying ability ratings of companies: A.M. Best at http://www.ambest.com Standard & Poor’s at http://www.standardpoor.com Duff & Phelps Credit Rating Co. at http://www.dcrco.com Moody’s Investor Service at http://www.moodys.com

Ask for Higher Deductibles to Save Money

Another important factor in calculating rates is balancing the cost of your deductible with the annual expense of the insurance you need or want. You deductible is the amount of money you must pay before your insurance company pays a claim. In most cases, by requesting higher deductibles you can lower your insurance costs substantially. For example, increasing your deductible from $200 to $500 could reduce your collision and comprehensive cost by 15% to 30%.

Combine Policies to Save Money

If you have more than one car, you can probably save a substantial amount of money by insuring all the vehicles with one insurance company under one policy. Recently get married or has one of your children just purchased a car? Then make sure all the cars are covered under the same policy. If you have a teenager with a good driving and academic record, see if you can add the teenager to your policy as the occasional driver of your least expensive car - and make sure he or she drives that car only.

Get a Multi-Vehicle Discount

You may also get a multi-vehicle discount if you insure a trailer or recreational vehicle on the same policy as your car. Another trick is to reduce your auto premium by buying other coverage from them, such as homeowners' and life insurance. Make sure you make your insurance agent show you all the numbers before switching or canceling policies. Overall however, this is a good strategy to use if you want to save money.

Older Car?

If you have an older vehicle, then you may not want or need comprehensive coverage. If the true value of your car is less than $1,000, then it really may not be cost effective to have collision or comprehensive coverage. Any claim you make would not substantially exceed your annual cost and deductible amounts. To determine the value of your car, call your bank or refer to the Kelley Blue Book to car buying, available at a library or at http://www.kbb.com

Buy a Low Profile or Low Maintenance Vehicle

Cars that are expensive to repair, or that are favorite targets for thieves, have much higher insurance costs. So, the smart thing to do is simply purchase a new or used car that costs less to insure. Did you know that expensive cars are not only more costly to repair, their premiums can run two to three times higher than most cars. To see which cars are the most popular to thieves, check out the National Insurance Crime Bureau at http://www.nicb.org/theftstudy.htm or go to the Highway Loss Data Institute at http://www.carsafety.org/

Low Mileage Discounts

If you don’t drive too much or live close to work, many companies offer discounts. You’ll need to shop around to see which insurance carrier can offer you the biggest discount, but it may be worth it!

Location Considerations

Insurance premium costs tend to be lowest in rural communities, and highest in cities. You want to take this factor into consideration if you’re in the process of moving.

Automatic Seat Belt and/or Airbag Discounts

From our perspective as accident and injury attorneys, we can tell you without any hesitation, these items can save your life. Air bags for both driver and passenger can reduce injury, and costly medical bills in an accident, and may qualify you for a discount. Additionally, many insurance companies also provide discounts if you have automatic seat belts and/or airbags.

Anti-Lock Brakes

Anti-lock brakes improve steering control and stability when a car is brought to a stop, thus reducing accidents. Some states such as Florida, New Jersey, and New York require insurers to give discounts for cars equipped with anti-lock brakes. Other companies have nationwide discounts in place. Make sure to call and ask your agent if this applies to you.

Alarm Systems

An approved alarm system or other devices that deter thefts can get you a savings of five to ten percent. Before you spend any money on an alarm system, ask your insurance agent which systems your insurance company will approve.

Maintain a Good Driving Record

Good drivers get good rates. If you haven’t had any claims or traffic tickets for 36 months, then ask your insurance carrier to lower your rates. Or, start shopping around to see if its competition can beat your premium price. Also, drivers over the age of 50 with a clean driving record may also claim a rate reduction.

Public Transit or Carpooling

Use public transit or a carpool to get to work. Drivers who hold their driving below 7,500 miles a year generally qualify for a discount, and lessening or eliminating your use of a car to commute can trim your premium.

Teenage Drivers

Having a teenage driver in your home with a good academic record can qualify you for a discount. Also if your child attends a college that is more than 100 miles from home and doesn't take a car along, that may qualify you for a discount. If you own more than one vehicle (and your insurance company allows it), add the teenager to your policy as the occasional driver of your least expensive car - and make sure he or she drives that car only.

Driver Training Courses

Some insurers offer discounts for a variety of other qualifications like passing a certified “driver training course.” Ask your agent. An afternoon or weekend course may not only make you a better driver, it may also save you hundreds of dollars a year in premiums.

Specialty Coverages

Adding supplemental insurance coverage like towing and labor or car rental reimbursement to your basic auto insurance policy may save you money. For example, for an average of $1 or $2 a month added to your auto insurance, you could purchase coverage that will pay for your rental car while your car is being repaired from an accident. If you have this or some other specialty insurance, be sure to remind your insurance company or agent when you file a claim.

Conclusion

We know that automobile liability insurance is expensive and trust you will use the provided information to not only save money, but to also protect both you and your family in the most intelligent and economical fashion. Please feel free to give us a call with any questions or comments!