How to Stop Wasting Money on Car Insurance
Check out this list of common mistakes to see if you've been overspending on car insurance.Tweet
Do you think you're spending too much money on auto insurance?
First things first: Take stock of your current policy.
Susan Voss, president of the National Association of Insurance Commissioners (NAIC), says the best thing you can do for your wallet is to re-examine the details of your auto coverage once every few years.
"Because factors like the age and condition of your car, as well as your driving record, can change, you may find that you're overpaying now for a policy that was reasonable two years ago," says Voss.
Keep reading for more tips on how to stop wasting money on your auto insurance policy.
Tip #1 - Comparison Shop
Whether you're a first-time buyer or you just need to renew your auto insurance, if you're looking to save, you should really shop around.
According to the Insurance Information Institute's (III) article "How Can I Save Money on Auto Insurance?," shopping around allows you to compare different prices as well as the quality of a company's customer service.
By focusing on both price and service, you can get a clearer picture of what each company has to offer, notes the III.
Ways to Save: Voss recommends getting price quotes from multiple companies and re-evaluating your policy every few years to make sure you're still getting the best deal. "E-tools, like comparison websites, are an excellent resource for when you're shopping around because all the information is at your fingertips," says Voss.
Tip #2 - Consider Bundling Your Insurance Policies
By keeping different policies - like life, homeowners, and car insurance - with different agencies, you could be missing out on an easier, less expensive opportunity.
The III article points out that many insurance companies encourage customers to bundle their policies - getting homeowners, life, and auto insurance from the same provider - by offering discounts.
Ways to Save: While researching companies and rates, ask about their bundled policies and prices. Once you receive the rates on these bundled policies, you can make a more informed decision about whether bundling is the most cost-effective approach for you.
Want to Save on Car Insurance? Compare Rates on Yahoo!
Tip #3 - Increase Your Deductible
Choosing a lower deductible, the amount you pay out-of-pocket before your insurance policy kicks in, may seem like a good way to cut corners and save money. But the truth is, it could end up costing you more in terms of your overall rates.
For example, increasing your deductible to $500 could ultimately reduce your collision coverage by 15 to 30 percent, according to the III article. When you are willing to shoulder more of the expense for accident damage to your vehicle, you could lower your costs substantially.
Ways to Save: When choosing a deductible, Voss says to first ask yourself this question: "How much can I afford?" If you think you have enough money to cover, say, $500 worth of repair costs, then setting a higher deductible could be a good way to drive down your overall insurance rates.
Tip #4 - Ask About Discounts
Forgetting to ask about possible discounts? You could be missing out on substantial savings.
The III article suggests asking your auto insurer about some of the following discounts:*
- Antitheft Devices
- College Students away from Home
- Defensive Driving Courses
- Drivers Ed Courses
- Good Credit Record
- Low Annual Mileage
- Long-Time Customer
Ways to Save: "It always pays to ask questions," says Voss, who suggests asking your auto insurer about any and all discounts you think you might qualify for.
Tip #5 - Don't Over-Insure Older Cars
Is your car basically held together by duct tape and prayers? Then don't insure it like it just rolled off the assembly line.
For example, if you're driving a car that's one accident away from being totaled, paying collision coverage, which covers repair costs for your car after an accident, may not be worth the investment, says Voss.
Figuring out your car's market value can help you determine whether collision coverage is a solid investment.
Ways to Save: The III article recommends going to the Kelley Blue Book website (www.kbb.com) to find the most accurate estimate of your car's worth. Once you have a figure, you can compare it to your collision coverage cost, and then decide whether that type of coverage is right for you.
Tip #6 - Drive Less
What's another way you can stop wasting money on auto insurance? Consider going green and driving less.
According to "What Determines the Price of My Auto Insurance Policy?," an article on the III's website, the more you drive, the more at risk you are of getting into an accident. Conversely, the less you drive, the less likely you'll get into an accident and cost your insurer money.
And many Americans seem to already be catching onto this tip, according to a June 2011 NAIC report, "Five Economic Trends That Might Impact Your Car Insurance Costs."
The report found that 40 percent of Americans are driving less overall and as a result, could already be taking action to lower their auto insurance rate.
Ways to Save: Carpool, bike, walk, or take public transportation when and wherever possible. Voss also recommends asking your insurer if they offer a low mileage discount as many people aren't aware of this possible price cut.
*The discounts listed may not be available in all states or from all insurance companies.
Want to Save on Car Insurance? Compare Rates on Yahoo!
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