When was the last time you reviewed your car insurance? If you are like most people, it was probably when you first purchased the policy and you have had it automatically renewed ever since.
If that is the case, or if you haven't reviewed your insurance in the past year, you are likely spending more than you need to on your auto insurance.
You should review your car insurance on a yearly basis. Many people like their current insurance company and don't want to switch. But even if you are perfectly satisfied with the insurance company, bringing in competitive offers from other insurers can help you negotiate a better rate. If you are willing to switch companies, you can likely save even more money.
Here are a few steps you can take to save money on your auto insurance:
1. Use the Internet
The Internet has greatly evened the playing field when it comes to insurance. It has increased competition between car insurance companies and given consumers a much easier way to compare rates and analyze coverage that insurance companies offer.
There are a wide variety of insurance comparison sites that you can use to compare rates. Simply use any search engine and plenty will show up. It pays to use several since they may contain different car insurance companies in their engines. All you need to do is input your information and if a better deal appears, you're on your way to saving money.
If you don't want to switch car insurance companies, take in your lower quote and explain that you don't want to switch, but have received a better offer. Your insurance agent will do everything in his or her power to get you a competitive price. From there you can choose whether to stay or go to the other company. Either way, you will be paying less on your insurance premiums.
2. Raise Your Deductible
Another way to lower your car insurance premiums is to raise your deductible -- the amount you have to pay before your insurance kicks in to cover a claim.
If you have $1,500 worth of damage to your car and a $500 deductible, you must pay the first $500 and the insurance company would pay the rest. While a lower deductible may sound preferable, it means you'll pay much more for the insurance -- even if you don't use it.
You should raise your deductible as high as possible, as long as you will have the money to cover it should you ever have an accident. Moving your deductible from $500 to $1,000 can knock up to 30% off your yearly car insurance payments.
3. Drop Collision and/or Comprehensive Coverage
You also need to take into consideration what your car is worth. If your car is older, you may be carrying too much collision insurance, which covers damage to the vehicle sustained in an accident, or comprehensive coverage, which covers the cost of the car if it is stolen or damaged in some other way.
If the car has a
Kelley Blue Book
value of $2,000 or less, you may want to drop these coverages altogether. It's important to run the numbers and compare what you will pay for the insurance vs. how much you could get back if you ever have to make a claim. Between the insurance payments and the deductible, you'll likely come out ahead without any collision or comprehensive coverage for an older, less valuable car, even if something happens to it.
4. Get a List of Discounts
You may be surprised at the number of things that can get you a discount on your auto insurance, many of which you probably never knew about. That is because many insurance agents won't always tell you all the discounts available unless you specifically ask for them.
Since each insurance company is independent of the others, some may offer specific discounts that others don't. Here is a list of some of the possible discounts:
- Safe drivers: If you have had a safe driving record, it can qualify you for a discount.
- Courses: Some companies have approved defensive-driving courses you can take to brush up on your driving skills that will entitle you to a discount. These courses can sometimes cost you a few dollars, but the savings outweigh the expense and can be applied to several years of insurance bills. Much like defensive-driving courses, a driver's education class may also qualify you for a discount.
- Anti-theft and recovery devices: Some anti-theft devices, like steering wheel locks, will get you a discount on your insurance. Likewise, devices like LoJack or OnStar that help locate a stolen vehicle also can lessen your premium.
- Seat belts: By signing a paper that indicates that you always wear your seat belt when driving, you can get a discount.
- Passive restraint systems: If your car comes with passive restraint systems, you may be eligible for a discount.
- Multiple vehicles: If you insure more than one vehicle with the company, the vehicles after the first car usually will be eligible for a hefty discount.
- Multiple products: Most insurance companies offer more than just car insurance. If you also buy homeowner's, renter's or life insurance from the same company, you will usually get a discount.
- Policy renewal: If you have been with the same company for a number of years, you may qualify for a discount when renewing your policy.
- Senior citizens: Many car insurance companies offer discounts for senior citizens.
- Low mileage: If you don't drive a lot, you can qualify for a discount.
- Good students: Students that meet a certain grade-point average may get a discount.
- Military service members: Those who serve in the armed forces can often get a discount.
- Low-risk occupations: If you work in a job that is deemed a "low-risk" occupation by the insurance company, you may get a discount.
- Professional organizations and clubs: If you belong to certain organizations such as AAA or AARP, you may qualify for a discount.
- Credit score: Insurance companies have found a correlation between credit scores and claims. If you improve your credit score, you'll likely get a discount on your insurance.
- Dependable cars: While this won't necessarily save you money at the moment, the type of car you own can have a dramatic effect on the cost of your insurance and is something to consider the next time you purchase a car. Choosing a safe, dependable car that doesn't have a lot of costly repairs can save you a lot in insurance payments over the years. Your insurance company can provide you with a list of cars that are the least expensive to insure.
By taking the time to review your car insurance rates yearly, you'll make sure that you save money and aren't paying more than you need to be.
Jeffrey Strain has been a freelance personal finance writer for the past 10 years helping people save money and get their finances in order. He currently owns and runs SavingAdvice.com.