Five Tips to Save Big on Car Insurance
When I switched from a cruddy old Dodge Neon to my fabulous new Toyota Corolla I was intent on keeping my insurance provider, Progressive. Their customer service was excellent and dealing with them as a company was always pleasant. I paid around $500 a year and thought that was reasonable. However when they found out about the new car my rate skyrocketed to 700 bucks for six months!!!
Progressive’s mistake was that they got greedy. Here are five tips to consider when thinking about Insurance:
You could probably be paying less.
Insurance coverage goes down over time with a clean driving record, but very few companies adjust for that. The advent of the Internet has increased competition between insurance brokers as well so if you’re going by prices you got before 2000 you could really be saving a lot of money.
Even companies like Allstate which lower your rates may not be lowering them to be competitive with what else is available.
Check Websites that Let You Compare’¦.
There are a number of sites where you can compare quotes from several different companies. A google search is all that’s needed to see a variety. You’ll have to fill out a lot of information but the sites should come back with some lower amounts. Make note of the lower offers but don’t sign up for anything right away because there’s even more ways to save.
But Continue Shopping
Sites that offer comparisons are like brokerages’”they earn a commission for selling you a policy and so they tend to offer ones with good bounties. Going to the lowest offered insurance companies after that can usually net you a lower rate. I warn you that there is a lot of form filling and this is not for the faint of heart.
GEICO ended up giving me a quote of $300, literally saving me hundreds. If you are strapped for time it might be worth checking them out. So far they’ve been the lowest for everyone I know.
There’s Also Your Broker
I like to give businesses a shot if there’s been good service up till the present. The person who sold you your policy usually writes premiums for a number of companies as well. Armed with some internet research you can at least see if they can’t make a better offer. Unfortunately my brokerage could not.
Month to Month or Pay in Advance?
Even (and especially) if you can afford to pay up front for six months, consider the paying in monthly installments. Instead put the money in high interest savings where it can generate the most value. The deciding factor of course is if your company charges a service fee for monthly payments which negate the interest gains. GEICO charges a 4$ monthly service fee, unfortunately, but my home owners does not.
Conclusion
Shopping for insurance is no picnic, but it’s an effort that more than pays for itself over the course of a year. If you’re over thirty and have a clean driving record, you could probably save money by researching quotes and driving a hard bargain with your broker.
Insurance companies, like a lot of credit/investment companies, are businesses you should call every twelve months or so just to “touch” and see what you can do about your relationship. When I had some small changes made to my auto policy with State Farm due to legislative changes in Florida, they re-ran my credit, and my rate went down almost $30 monthly. Fortunately/Unfortunately, a good portion of insurance premiums is credit-driven, so it pays to be on top of your finances, once again.
I’m toying around with the idea of paying by the six-month statement instead of monthly, also. SF does charge a $3 monthly fee (I guess to cover the “cost” of sending me a bill every month). It wouldn’t be a huge savings, but I don’t like to be nickel-and-dimed.
A couple more ways to save:
Many college and university alumni programs offer discounts with one or more insurance companies. You don’t have to be an “involved” alum – just mention the discount when you call up the participating companies to get your quote and see how much it goes down. Usually all they need is a fax of your degree or transcript. Still in school? Ask about any student discounts, even if you’re only going part time.
Also, sometimes you can get small discounts for features on your car that aren’t always taken into account when you get your quote. Have anti-lock brakes? Have side/curtain airbags? You might get a few dollars shaved off the premium.
Finally, decide what level of deductible you really need. If you are in a good financial situation with plenty in savings, and you are a good driver, it can lower your rates to choose a higher deductible even with the same amount of coverage. Plus, when you pay for smaller dings and repairs out of pocket, your rates stay lower in the long run because you haven’t been submitting every little scratch to your insurance.
Using these techniques last year I cut my car insurance in half (and no, I don’t work for an insurance company).
Mike: I’ve had auto insurance with Met Life for over 15 years and never thought to shop it around until recently. My State Farm agent (we have our homeowners and life insurance with him) proactively called us and suggested taking a look at our car policies.
From this exercise, I learned that I’m incredibly underinsured… I only have $25,000 in liability/bodily injury which is really low in this day and age. But to be honest, I haven’t looked at my policy that close since I was 25 and I’ve never been in a car accident.
Anyway, he’s not really saving me much money but my liability coverage improves dramatically — increasing my protection for just about the same price. We still haven’t made the switch… but we probably will. I’m sure I’ll write about it eventually.