9 Ways To Save Money On Car Insurance

Ask someone how much it costs them each month to drive their car and they will likely quote their monthly loan payment. Most of us forget other expenses incurred such as maintenance, fuel and one of the biggest expenses, car insurance. Saving money on car insurance is a relatively quick way to lower the cost of your commute, and can be accomplished with a quick phone call to your insurer, or search of the web.

king and queen of the junk yard by jboy_daniel on Flickr

Ways to Save Money on Car Insurance

1. Shop around, and don’t be afraid to take your search online. Do a little comparison shopping by getting two or three quotes from multiple sources. Esurance.com is a great place to start your online search for a free quote.

2. Drop unnecessary coverage. Comprehensive or collision coverage for older vehicles may not make sense financially. Consider the annual cost to insure older vehicles compared to their potential sale value. It may be that it costs more to insure an older vehicle than it costs to replace one. On the other hand, if you have little savings, insurance may be a relatively inexpensive way to replace an asset worth a few thousand dollars.

3. Buy car insurance and homeowners insurance from the same provider. If you already have a homeowners policy in place, contact the insurer and ask if they offer auto insurance. Chances are you’ll receive a multi-policy discount for purchasing both from a single provider, helping you to save on car insurance and your homeowners policy.

4. Increase your deductible. I only recommend this step if you have an adequate emergency fund in place to cover the cost of the deductible. While raising your deductible can significantly reduce your premiums, the last thing you want to happen is to go into debt after an accident to cover repairs.

5. Inquire about other discounts. When discussing your policy quote with an insurer, specifically ask about any other discounts you may qualify for, such as low-mileage driving, the installation of car alarms or the successful completion of defensive-driving courses.

6. Look for group discounts. I received a small discount on my car insurance by signing up through a link provided by my credit union. The insurer partners with them to offer credit union members an opportunity to save through a group discount. Ask your employer, professional organization or financial institutions if they have any similar partnerships.

Keeping Auto Insurance Costs Low: Maintenance Mode

7. Maintain a clean driving record. One of the quickest ways to increase your car insurance costs is to have an accident or get a ticket for a moving violation. Tickets add points to your license and increase your insurance costs. Accidents increase your risk profile to current and potential insurers and increase premiums.

8. Clean up your credit report. Those not fond of the FICO score may find it objectionable that insurance companies use your score, in part, to determine your premium. However, statistics show a correlation between bad credit and a propensity to receive more tickets and be involved in a crash. Manage your money well and you are more likely to save on car insurance premiums.

9. Drive “low-profile” cars. That is, drive cars that are not typically a target for thieves or radar guns. Annual reports are available that list the most popular stolen cars each year. Studies have also show certain models and colors are more likely to be stopped for speeding (red sports cars, for instance). In their prime, the two cars shown above would have definitely been high-profile cars.

Saving money every month on car insurance is a quick way to make a significant reduction in your monthly expenses. Shopping around for quotes and making a few phone calls could be well worth the effort, so I’d encourage you to make this a priority.

Comments

  1. On #3, I’d like to recommend doing that task every couple of years. It seems like insurance companies offer lower than the competitions rates, but then after a few years, they bump it back up.

    It really pays to look things over again every couple of years…

  2. In the bang for the buck mentality, I would add to make sure to check your limits on your car insurance. This can save you a ton of money but hopefully not today. Most people have never adjusted their limits even though they make a lot more money and have a lot more assets. What ends up happening is a lot of their assets become exposed if they were to get in an accident or even if they where hit by an uninsured driver. It is definitely important to make sure your insurance protection keeps up with your money.

  3. As well as asking for further discounts, some companies or brokers off price matching facilities. If you have a really good quote from one provider, take it elsewhere and ask the next one if they can beat it. They may ask for evidence of the quote sure, so give it to them and more often than not, they’ll price match and then knock 50 off just to get the business.

  4. Thanks for pointing out about the FICO score. Many people’s mouth drop wide open when they hear that could have an impact on the cost of their insurance. That’s why it’s important to monitor your score and credit report annually or more frequency if there are concerns.

  5. You may want to check insurance rates before you buy. A few years ago we we buying a car. The Plymouth was the same car as the Dodge except for the grill and tail lights. The Dodge insurance was 25% more.

  6. Gotta call BS on this article. This is a good way to get people into bankruptcy by trying to save $5-10 a month on their car insurance to get the lowest minimum required.

    I actually adjusted my car insurance yesterday after a close friend only got the minimum ($25k property/50k bodily injury). He got into a pretty bad wreck, where he dropped coffee on his pants and his SUV ended up side-swiping an 18-wheeler carrying cargo. Property damage is probably $50-75k on the 18-wheeler plus the cargo he damaged. He’s probably going to have to file for bankruptcy since his insurance will only cover $25k.

    I know you all are probably thinking not to “drink” and drive, but any kind of wreck can happen, and the average soccer-mom SUV is well north of $30k to replace nowadays, even depreciated. Add 2-3 kids in the backseat disturbing the soccer-mom and that can easily be a $100k accident waiting to happen. And it’s not about who’s fault the wreck is, it’s about what you can prove in court. Considering that most states only require $10k of property damage, if Soccer-Mom and her Attorney-Husband can pin this wreck on you, you’re looking at garnished wages for decades along with bankruptcy and foreclosure.

    For $5.25 more per month, I was able to up my coverage from $25k/50k to 100k/300k and lower my deductible from $1000 to $500, and also add on towing and rental car reimbursement (Thanks Allstate!). To me, this was money well spent.

  7. By the way, filing bankruptcy won’t get you out of paying for a vehicle wreck, tthat’s one thing that can never be taken off through filing bankruptcy. They will just garnish your wages for life.

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