Lowering car insurance costs is a great way to save money. Sometimes a quick phone call is all it takes. Here are 6 ways to save money on car insurance.
Everyone is always looking for new ways to save money. Cutting expenses, trimming monthly bills, and tightening the budget are all great options. And this includes auto expenses.
So, as a companion to my other articles on how to save money on health insurance, homeowners insurance, and even life insurance, I thought I’d tackle car insurance.
What follows is a list of tips for reducing your premiums and saving a ton of money.
Keep your driving record clean
Your driving record can play a pretty big role in the premiums that you’ll pay for insurance coverage, whether shopping around for a new policy or just retaining the one you’ve had all along.
In other words, don’t get nailed for speeding like I did a few months back. I was fortunate in that it was a first offense. This meant that I was able to keep my record clean by pleading nolo contendre (no contest) and paying the fine.
However, next time I won’t be so lucky, as I’ll wind up with points on my license and higher insurance premiums. Get enough of these tickets (or a particularly bad one, like reckless driving), and your insurance company could even drop you!
Compare Auto Insurance Quotes
Increase your deductible
Your deductible is the amount of cash you’re expected to pony up if a claim is made on your own insurance policy (if there isn’t someone else whose insurance is responsible for the damage). You’ll be given a handful of options for setting the level of this when you sign up for or renew your policy.
Well, if you’re willing to bear a greater portion of the risk — in the form of a higher deductible — you can save a significant amount of money on your premiums.
Simply call your agent and ask them to increase your financial responsibility. This will likely lower your premiums a noticeable amount; the higher the deductible, the lower your monthly premium expense.
One word of warning, though: just be sure that you have enough cash on hand to cover your out-of-pocket expenses in the event of an accident. It’s not worth the monthly savings if you can’t afford that new $2,000 deductible when you get in a wreck.
So, be sure to balance the savings with what you can actually afford at a moment’s notice.
Related: Rebuilding Your Savings After An Emergency Expense
Drop unnecessary coverage
If you’re driving an older car, you might want to consider dropping your comprehensive and/or collision coverage entirely. After all, what’s the sense in paying a ton of money to insure against damage to a car that might not be worth repairing?
Note that I’m not suggesting that you drop your insurance coverage entirely, just the portion that pays for repairs on your own car. Liability insurance is still required by law, at the very least.
Bundle multiple policy types together
I can’t speak for all insurance companies, but we get a nice “multi-line” discount through USAA for carrying multiple policies with a single company.
We actually have two car policies, our homeowner’s policy, a personal articles policy (for my wife’s engagement and wedding rings), and an umbrella policy… all with the same company. In the end, it’s much cheaper than buying the same coverage through multiple different companies.
Ask about other discounts
You might qualify for discounts for being accident-free, renewing your policy, driving relatively few miles each year, taking a defensive driving course, etc. Be sure to talk to your agent and get what you have coming to you.
Assuming that you’re doing everything else right, another great way to save money on car insurance is to comparison shop. You can either call around to local agents or use an insurance comparison tool. Here are four of our favorites companies:
Whatever you do, be sure to buy from a reputable company so you won’t run into any problems if/when you file a claim.
Resource: Reducing Your Automotive Expenses
So there you have it. These simple tips for saving money on car insurance can help you trim quite a bit off of that monthly payment.
Keep your driving record clean and only keep as much coverage as you feel you really need. Be sure to compare policies and ask about discounts regularly, too — insurance products change frequently, and you could be missing out on savings if you aren’t proactive!'
22 Responses to “How to Save Money on Car Insurance”
Here’s my tip on how to save big on auto insurance! Just don’t buy it!
You can change your vehicle to “pleasure use” instead of commuting use. Should see a slight reduction.
Is there any such thing as reduction in auto insurance coverage or premiums for a newly retiree, since I will no longer be out driving daily or as much?
I’m pretty sure you’re completely fine. Your son is driving the car much less, which is why the rate is lowered (less driving=less risk).
As long as you still pay and he actually does only drive the amount of miles you say he will, you’ll be fine. If you have any worries, your company should be able to clear up anything confusing. Just make sure he still has a policy, he’ll surely be driving other peoples cars at school occasionally and you need to make sure he’s still covered for that situation.
My son is away at school so his car is parked at our house. I know the cost will be lowered – but what if he decides to take it back to college for a short period of time and he gets into an accident. What would happen?
Another tip is to gradually reduce your insurance coverage as your car gets older and depreciates in value. Be careful whether you choose “agreed value'” or “market value” for your insurance.
I saved on auto insurance by adding a renters policy. My monthly premium for renters and auto from the same company was less than my monthly premium for the car alone. Go figure.
Another discount similar to Maddy’s, is if the student lives away at school. For most companies, if the student is more than 100 miles away at school and they didn’t take the car, it’s almost like they are not on the policy. Just check with your agent or company.
For those who work from home, check to see if your insurance provider offers a discount when your vehicle is not used for driving to work. This saves me about $50 a year.
Another good discount to ask for is the “good student” discount. Usually it’s associated with having a GPA of 3.0 or higher.
It’s an easy insurance deduction!
Somewhat off topic, but I’ve had several attorneys tell me to be sure that my auto coverage is NOT coordinated with my medical insurance.
Ever wonder why coordinated auto plans cost less? Because coordinated coverage means that your auto insurance company does not have to start paying medical expenses until after your medical insurance is used up. Though my rep tried to convince me not to, I happily pay $90 more a year to keep my coverage UNcoordinated.
Should a catastrophic auto accident occur, the last thing you want to have to worry about is making sure your auto and health insurance providers are playing nice with each other AND your hospital. Keeping things uncoordinated keeps both resources available simultaneously. In fact in many cases, your auto coverage will pay medical expenses before your health insurance ever comes into play.
Disclaimer – I am an independent insurance agent – Just tossing that out there right away for full disclosure’s sake.
@Chris – Ask your local independent agent. They’ll know how the company would respond to certain types / quantities of speeding tickets, DUIs, etc.
A couple things to consider when you’re shopping around for insurance. Most people buy 100% on price. If money is tight, that is understandable. However, for a savings of $3-$5-$10 per month, don’t overlook your local independent insurance agent. We have more to offer than Geico can ever dream of. We’re there in the flesh and that makes it crucial for us to provide our best customer service every single time.
– I get a lot of 20-something drivers coming in with their Geico policy with abysmally low limits. If they were to injure someone, they would be destitute for the next 20 years trying to pay for someone else’s medical bills. Geico doesn’t really explain the coverage or weigh the benefits.
– At the time of a claim who would you prefer? Someone who knows you and has worked with you to make sure you have adequate coverage or some call center employee #54932?
– Independent agents that are worth their salt are there for the insured, not the company. We fire companies every now and then if they abuse our clients.
We have some people who are price-drive consumers. They come and go. However, if someone has a claim with us they stick with us for 20+ years because our insured’s satisfaction is our #1 priority. You are our meal ticket and as long as you’re not rude to my CSRs, I will bend over backwards to make you happy.
How do you find which companies are more aggressive in terminating your insurance or raising your rates should a mishap occur? How do you find companies that won’t dink you around when a claim needs to be made?
I can compare rates, but I am having a difficult time with the service aspects.
Good tips– shopping around really helps and even threatening to do so helps . . .
re: Local agent vs. online – we switched to online for our auto policy last year when our state started to let insurance companies go competitive on prices instead of the state setting the rates. We were able to save over $350.00/yr. BUT, this year when we went to renew our camper registration (DMV requires stamp from AUTO carrier as they provide the liability coverage when towing the camper) the out-of-state online company declined to stamp, not to mention the fact that they don’t have a local office to go to get that done. Two months of going back and forth with auto insurance carrier & DMV and it still was not resolved. Our local agent, who still holds our homeowner’s & camper policy, called recently to quote less expensive homeowner’s. Agent was able to save (by bundling with one company) $140.00 off of homeowner’s & auto will only be $30.00 more than online company, but I was able to go to the agency’s office (5 minutes away) and have them stamp my camper registration w/o problem because they know how it works in this state.
In the end, online company saved us money, reps were very polite & as helpful as they could be, but local agent knows ins & outs of insurance for our particular state & was able to save us more (overall) by putting H/O and auto with same company. Just having their knowledge available & being able to go to their office and get everything taken care of personally is worth the price of slightly increased auto policy premium, not to mention all the time lost that I spent on the phone & going to DMV to try & get this particular issue resolved.
@ Tony – There isn’t a magic age per se, it really has to do with your current financial position. The question is, ‘If I get into an accident and total my car, do I have enough money to comfortably buy a replacement?’ The definition of ‘comfortably’ varies from person to person, but I would submit that it should mean being able to pay cash without biting into an emergency fund. Until you can comfortably afford a replacement, keep the collision coverage.
Also, when reducing your car insurance costs, be careful to maintain the right level of liability coverage. If you have a high net worth, it’s important that your liability coverage is at least equal to your net worth plus a year’s worth of earnings. It’s great to save money on insurance, but be sure you’re getting the best deal for the appropriate level of coverage.
@ Nickel – the best discounts are through the bundle assuming you have a standard driving history. We can’t come close to our current insurance costs with another company when shopping an individual policy.
I’m terrible with this because my insurance is pretty cheap a it is. I pay $65 a month currently. Though I am looking to switch because my insurance is held through AIG, I have concerns over what would happen should I need to place a claim. Still, I haven’t looked for insurance in years and I don’t want my rate to jump up either. I have renter’s insurance, so maybe I’ll check and see what the combined rate would be. Even still, since it’s been awhile since I’ve been in the game, I’m glad for these tips, nickel! Very helpful reminders.
In regards to 3rd suggestion, is there an ‘age’ of the vehicle when you should drop full coverage and carry only liability? I’ve been debating this, as my car is an ’01.
AP: I think the answer varies. Your best bet is to check prices both locally and online. You might also be able to get your local agent to cut you a deal if you find a better rate for the same coverage online.
Also look for defensive driving courses.
GEICO offers an online course, its about 50 or 60 bucks, but once you take it, you can save 10% for the next 3 years. I broke even after the first year and over the next 2 years will save a good bit.
The course only took an hour or so to complete! Talk about a good use of time!
Call up GEICO, they had about 10 different online courses that worked, I’m sure the other big ones have similar stuff.
AP, I had always purchased policies online until the last time I shopped around. I wanted to combine my policies at one company and add an umbrella policy. The umbrella coverage is a bit less common online so I went to a local agency. I was expecting to see higher prices and more hassle; instead I got better prices than ever and it was a very pleasant, simple process. I’m very happy and won’t be leaving that agency unless they screw something up or stop being able to get me a competitive price. I’m guessing it all depends on your agency.
I also recommend reading every word of your policies. It’s very educational, and they shouldn’t be hard to read. Most of them are written in very plain English these days.
Here’s my question; is it cheaper to buy your car insurance policy online or through a local agent?