Car Insurance Savings

Looking for car insurance savings? Who isn’t?

First of all, forget the obvious, drastic way to save on car insurance. Don’t cancel your coverage. In virtually all states, you’ll be violating the law -- and can be ticketed -- if you cancel your insurance and drive without it. Even if liability insurance wasn’t required, it would be foolish to drive without it. Cause one accident and you’re financial toast.

1. Make sure that you are only buying the coverages you need.

For example, if you have joined a motor club such as AAA, you probably don’t need towing coverage. If you have multiple cars in your family so that you would have transportation while your damaged car is being fixed, you may not need Rental Reimbursement coverage. If you have an older car, you may want to eliminate collision coverage since your vehicle isn’t worth enough to warrant the expense of the coverage. (However, if your vehicle is being financed or is leased, you will be required to continue collision and comprehensive coverages.)

2. Increase your deductibles.

Comprehensive and collision coverages normally have “deductibles.” The higher the deductible, the lower your premium will be, and vice versa. However, remember that you will have to pay the higher deductible amount if you are involved in an accident. You'll have to decide whether the car insurance savings that result from a higher deductible are worth the risk of having to pay the higher deductible if you have an accident.

How much can you save? Raising your deductible from $250 to $500 could result in car insurance savings of 10% or more.

3. Keep your driving record as clean as you can.

Insurance companies penalize you for driving violations. If you have points on your driving record, insurance companies typically hold those points against you for 3 years. So that speeding ticket that you get now will continue to haunt you for years.

4. Protect your credit score.

What does that have to do with safe driving? Good question. I’m not persuaded that there’s a connection, but the insurance industry thinks there is. They seem to think that a person who pays bills promptly and doesn't overuse credit is a more reliable person, generally, and therefore less likely to have accidents and other driving problems. Even if I don’t buy the connection, as long as the insurance industry does, this is still another reason to keep your credit score up.

5. Avoid car insurance coverage gaps.

The insurance industry holds these against you, so stay continuously insured to reduce your premiums.

6. Keep your car in a garage.

Cars in garages are less likely to be stolen, vandalized or struck by other vehicles. Therefore, many insurance companies offer a slight car insurance saving if your car is kept in a garage.

7. Drive less.

Insurance companies consider how much you drive in establishing rates. That makes sense. The more you drive, the more you are exposed to harm and the more risk the insurance company is assuming. If you drive very little, such as 7,500 miles per year, or less, you may be able to get a car insurance saving as a low mileage driver.

8. Buy a less expensive car.

Higher priced cars cost more to repair and more to replace. Therefore, they cost more to insure.

According to a report that I saw, a 2007 S Class Mercedes SL, with a sticker price of about $135,000, costs about $22,000 per year to insure!

9. Buy a less sporty car.

Cars are rated by insurance companies on a risk scale. In general, sports cars and other high-performance, flashy vehicles are classified as higher risks because they are common targets for thieves and vandals and because, statistically, the people who own them tend to drive more recklessly (or so say the insurance companies). If you own such a vehicle, you will likely pay a higher premium than if you owned a station wagon, sedan, or other low-risk vehicle.

10. Purchase or install anti-theft and safety devices.

You may receive car insurance savings (discounts) if your car is equipped with anti-lock brakes, automatic seat belts or airbags. Similarly, anti-theft devices such as car alarms and tracking systems such as LoJack may also get you a discount because they reduce the chances of your car being stolen or vandalized.

11. Be a female.

At least in the 16 to 25 age group, males are charged higher rates than females. Short of a drastic surgical change, there’s not much you can do about this. My advice to males is . . . keep you driving record clean and wait until you “graduate” to a different rating age classification.

12. Don’t use your car for business purposes.

Generally, insurance companies charge higher premiums for cars that are used for business purposes than for those that aren’t.

13. Use multiple-car discounts.

Many insurance companies offer car insurance savings if you insure multiple cars under the same policy. However, when you group cars in this way the insurance company will consider the driving records of all of the drivers and hold bad records that any of the drivers have against all of the drivers in establishing premium rates.

14. Use multiple-policy discounts.

You may receive a car insurance saving from your insurance company if you buy more than one type of insurance through that same company, such as auto insurance and homeowner’s insurance.

15. Ask if there are any other discounts that you qualify for.

There may be car insurance savings for such things as being an AAA member, being with the same insurance company for a number of years, having taken a defensive driving course. These additional discounts differ widely among insurance companies, so ask.

16. Move.

If you live in a rural community with little crime and traffic congestion, your premium will generally be lower than if you live in an urban area where your car is more likely to be stolen, vandalized, or involved in an accident. Granted, you shouldn't move just to cut your auto insurance costs, but it could be a consideration if you are weighing such a move.

I saw a 2007 study which showed that the 10 LEAST EXPENSIVE states for car insurance were (from the more expensive to the least expensive): Utah, Oregon, Illinois, Kansas, Indiana, Idaho, Maine, Iowa, Ohio and . . . drum roll, please . . . the least expensive state for buying car insurance . . . Wisconsin.

What were the MOST EXPENSIVE states? Florida, Maryland, West Virginia, Kentucky, Rhode Island, District of Columbia, Delaware, New Jersey, New York . . . and, the most expensive state for buying car insurance . . . Louisiana.

17. Shop around.

Auto insurance premiums for the exact same coverage on the same car can vary widely (by hundreds of dollars per year) between different insurers, even in states that regulate auto insurance rates, so for maximum car insurance savings . . . shop around!

The last time I shopped my auto insurance for my wife and me, I found rates that varied by $800 per year for essentially the same coverages. I chose the lowest rate . . . even though I had never heard of Ralph’s Deli and Insurance Company (well, maybe the company wasn’t quite that obscure) . . . and felt that the time I spent shopping was definitely worth it.

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