Stop Getting Ripped Off on Auto Insurance
Now is the perfect time to give your auto insurance a tune-up. Here are ten tips on how you can do it.Tweet
Do you feel like you're spending more on auto insurance than you need to? Want 2012 to be the year you put money back into your wallet?
Good news: You're likely already doing things that can help you save.
In fact, a 2011 trends survey by the National Association of Insurance Commissioners (NAIC) found that 53 percent of Americans have made an economic-driven change that could impact the cost of their car insurance in the past year.
Read on for some additional tips on potential car insurance savings that can help you stay on budget this year...
Tip #1 - Shop Around
The Internet has redefined shopping. And that holds true with auto insurance. In fact, it's never been easier to shop for a lower rate.
But don't shop by price alone, advises Insurance Information Institute's (III) Vice President Loretta Worters. "Buying insurance is not just to protect you financially, it's also to provide peace of mind. So, it's important to pick a company that is financially stable," she says.
She suggests asking friends and relatives about their insurers, or contacting your state insurance department to find out whether they provide information on consumer complaints by company.
Here are other shopping suggestions from Worters:
- Get at least three quotes.
- Give the same information to all three companies; this ensures your comparison will be more accurate.
- Check the financial health of insurance companies with rating companies such as A.M. Best and Standard & Poor's.
Tip #2 - Don't Over-Insure
There's a word for paying for something you'll never use: frustrating. Unfortunately, many people over-insure with auto insurance, according to Worters.
For example, collision and/or comprehensive coverage, which protect your car in the event it's damaged, may not be necessary on an older car. Worters' general rule: if your car is worth less than 10 times the premium, buying the coverage may not be cost-effective.
Information from NAIC's website also suggests that if a car is worth less than $1,000, you should consider only carrying liability coverage, which protects from damage you do to others or to property. This is because you'll likely pay more in premiums than the insurance will payoff, if and when you file a claim.
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Tip #3 - Pay a Higher Deductible
Ironically, raising your deductible, the amount you'll pay out-of-pocket in the case of a claim, could be a great savings opportunity.
How? According to an III article titled "How Can I Save Money on Auto Insurance?," increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage cost by 15 to 30 percent. If you raise your deductible to $1,000, your savings could climb to 40 percent or more.
If you decide to pursue this potential money-saving route, make sure you have the funds to cover the deductible in the case of an accident.
Tip #4 - Cash in on That Wedding
If you got married since you last renewed your policy, be sure to let your insurer know.
"Generally speaking, you can save money when you get married since married people file fewer claims than singles," says Worters. Therefore, married people are considered less of a risk than single people and can often qualify for lower premiums.
On the other end of the spectrum, if 2012 is a year of divorce instead of marriage, you still might be able to save if your ex had a bad driving record.
Tip #5 - Remove Children from Your Policy
Is your son or daughter going off to college this year? If so, you could save by labeling him or her as only an occasional driver on your policy. This means your child will only drive your car while home for vacation or holidays. And the savings could be significant.
Parents typically see a 50 percent increase in their insurance premiums if a child under 25 years old is listed on their policy, says Worters.
However, to qualify for a potentially lower premium, most insurers will require that the college your son or daughter attends is at least 100 miles from home, according to "Auto Insurance FAQ's" from NAIC's website.
Tip #6 - Drive Less
Driving less is trending. At least that's what the 2011 NAIC survey on economy-driven trends found. It states that almost 40 percent of consumers are diving less, instead choosing to carpool, walk, or take public transportation more often. If you're a part of that 40 percent, you could qualify for a low-mileage discount.
"You could save 10 to 20 percent, depending on factors like which state you live in," says Worters. So check your mileage. If it's 10,000 miles per year or less, you could be in for some good news about your premium, according to an III article, "What Determines the Price of my Policy."
Tip # 7 - Buy a Different Car
Are you thinking about buying a new car this year? Don't forget to check the insurance prices for the various makes and models you're considering. It could make a big difference.
Car insurance premiums are based in part on the car's price, the cost to repair it, its overall safety record, and the likelihood of theft, according to Worters. And if you thought only pimped-out luxury rides got targeted by thieves, think again.
The three most stolen cars in the U.S. for 2010 were the Honda Accord, Honda Civic, and Toyota Camry, according to the National Insurance Crime Bureau's "Hot Wheels" report.
So, before you pick out your new ride for 2012, make sure to research the car's stats and determine whether or not the insurance premium is in your budget.
Tip # 8 - Move Out of the City
Like marriage, you likely won't be moving out of the city based on auto insurance rates. But if you have moved out of the city, or if changes in your work allow you to drive and park in less urban areas, make sure your insurer gets the good news. Because to them, that's exactly what it is.
In fact, insurers consider cities so much more of a risk because of traffic (increased accidents), theft, and vandalism, that the 10 highest places to insure a car in 2011 were all populous cities, according to III.
And because we know you're curious, here are the three costliest places in the U.S. to insure a car:*
Detroit, Mich.- Average annual premium: $5,941
Philadelphia, Pa.- Average annual premium: $4,076
New Orleans, La. - Average annual premium: $3,599
Tip #9 - Use an Anti-Theft Device
Since stolen cars mean insurance payouts, there are some anti-theft devices that will garner you substantial savings.
For instance, says Worters, signing up for LoJack - which uses a hidden transmitter to let police track your car if and when it gets stolen - could net you a 15 to 20 percent discount.
Just make sure that whatever savings you get pays for the anti-theft device, if that's your primary purpose for using it. Of course, getting your stolen car back is kind of a nice thing, too.
Tip #10 - Take Advantage of Any and All Discounts
From being a good student to simply aging, there are a number of auto insurance discounts that you could potentially qualify for. But, don't expect your insurance carrier to automatically sign you up for discounts for which you qualify.
To get you started, here are a few common discounts:**
- Mature Driver - Many insurers lower rates by 10 to 20 percent for drivers over 50 or 55, according to Worters.
- Good Credit Score - Better credit usually equals a better rate, but not all states allow for credit-based insurance scores.
- Good Student Discount - Usually requires a B average for a full-time student.
- Passive Restraints - This is for seat belts that automatically buckle when you start the car.
- Driver Education Course - Completing a defensive driving course could qualify you for savings.
- Bundled Insurance - Get your auto and home or renters insurance with the same company.
- Pay in Full - Applies when you pay your entire premium in one payment rather than installments.
*Average insurance rates come from the Insurance Information Institute, as of August 2011, and are based on business driving for a 2012 Chevrolet Malibu LS. Assumes $100,000/$300,000/$50,000 liability limits, collision, and comprehensive with $500 deductibles, 100/300 uninsured motorist coverage, and any mandatory insurance coverage.
**All discounts not available from all insurers and amount varies with coverage and carrier.
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