When it comes to saving on your auto insurance policy you don’t have to compromise on coverage to save money.
In fact, if you’ve been with the same auto insurance company for more than three years chances are you can save money simply by switching to a new company.
There’s a lot to be said about loyalty… when it comes to friends and family.
But to an insurance company?
I was with Liberty Mutual for 14 years happily paying premiums until I bought a new car and promptly had my insurance rates increase by 11%, for no apparent reason. And after calling and expressing my surprise all they could offer me was “let us know what your new auto insurance rates will be and we’ll try to match them.”
So, with this in mind here are…
7 Tips to help you save on auto insurance
1. Figure out how much coverage you really need
If you have financed your vehicle the bank will want the car covered for replacement cost. If you own the vehicle, there is more leeway in terms of how much coverage you may want.
If you need to insure a second car and your intention would be to replace it with something you can buy with cash on hand, then it might make some sense to only insure the car for the amount required to replace it should it get “totaled.”
What about liability coverage?
Each state determines what you will be required to have. And some states stipulate coverage for uninsured motorists. For example, if someone with no insurance hits you your policy will pay for the damages.
Adjust your deductible when appropriate.
Switching your deductible from $1,500.to $500. can save you as much as 30% annually.
2. Compare the specifics of your policy
There’s a good chance you can save money simply by reviewing the specifics of your policy.
For example, during an annual review it turned out that my “rate” was determined by the town I used to live in, not the one I recently moved to and where I was currently living.
Also, there are other discounts for a range of options you may not even know about, like:
- better rates for good grades (for teens covered by your policy)
- driver safety classes
- using auto pay or going with a paperless account
- credit score
You get the idea.
When shopping for insurance compare yearly and monthly rates, as these may vary significantly.
3. Pay your bill on time
Don’t cancel the policy by not paying the bill.
Even if you’re going to switch to a new company, keep paying your bill on-time until the transfer is complete. You will need to make a request to cancel and possibly fill out paperwork, and sometimes your local insurance agent can take care of this for you.
By paying your bill on time you protect your credit score and protect yourself from future rates increases.
4. Research associations AND companies
Before you look at insurance companies, check out organizations you belong to that may offer incentives and discounts through those companies. For example AAA, unions you might belong to, and AARP often are a good place to start.
Often times these groups or associations have already negotiated lower rates for their members, so it pays to find out if it applies to you.
5. Ask about regional differences
Realize where you live and what your occupation is, might make a difference in your insurance costs.
Remember my example above?
Well, auto insurance rates often vary by zip code. Which means that some towns pay more than others.
Also, do you have “off street parking” or own a garage?
These can also create a discount for you since your car is protected from any possible “sideswipes” caused by parking your car in the street.
Finally, many retirees living on a fixed income, consider this when choosing a retirement location. And people who live in the city often pay a premium for insurance in certain urban zip codes. The Wall Street Journal reports that even as insurance rates edge up in much of the country, some states have lowered their rates overall.
New York went from the 23rd most expensive state to 33rd. These rates were based on 2013-model-year vehicles.
6. Get an annual review
Always be prepared to review your policy annually.
Your credit report, driving record, occupation and where you live make a difference. And so will any safety features that are currently installed in your car, or when you buy a new car.
So, when you are buying take this into consideration.
Finally, you’ll want an agent and a company that will be responsive when and if you need them. So when you are comparing prices, compare service and accessibility as well.
7. Start now
You will need the exact model of the vehicle you are insuring.
If you can’t remember, it would be listed on your insurance card (hopefully in the car). There should also be current liability and coverage info on this as well. Now that you know what questions to ask, you should be ready to search quotes.
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Either way the choice is yours…