10 Ways to Cut Your Auto Insurance Costs
By Ric Edelman
Chances are, you’ve had the same automobile insurance coverage for a long time. If so, this may be a good time to review it for savings. Here are some tips to help you reduce that bill.
Raise your deductible.
Instead of forcing the insurer to pay claims in excess of $500, change your policy so that you pay the first $1,000. This will reduce your collision and comprehensive premiums significantly. By not filing small claims, you also avoid the risk of being charged higher premiums or even having your policy canceled.
Drop collision and comprehensive coverage on older cars.
If your car is worth less than $1,000, the cost for collision coverage could be more than what you’d recover if the car were in a crash. Use a site like Kelley Blue Book to determine your car’s value. But make sure that you keep your auto liability coverage.
Ask about discounts.
Many carriers reduce their prices if you buy coverage for two or more cars or if you buy homeowners coverage from them as well. You can also get discounts if your car has antilock brakes, air bags, automatic seat belts, alarms or antitheft devices, or if you complete a driver education course. Some discounts are also available if you are a member of certain professional, business or alumni associations, so ask your association and also check with your insurer.
Manage the cost of insuring teen drivers.
It costs more to insure young drivers, but some insurers reduce their rates for good students, students who go to school more than 100 miles away from home and don’t take a car with them, or teenagers who have completed defensive driver classes. You may also save money by “re-garaging” a car if your child takes his or her car to school in a town where car insurance rates are lower.
Pay your bill once per year.
Insurance companies let you pay in monthly or quarterly installments, but you’ll pay more than if you pay the entire bill once each year.
Don’t duplicate coverage.
If your credit card or association membership offers towing and roadside assistance, don’t pay your insurance company to provide these benefits.
The fewer miles you drive each year, the lower your premium. And if you don’t drive to work, your costs will be even less. Make sure that your insurer knows how many miles you drive and prices your policy accordingly.
Park in a garage.
Cars stored in protected environments are less likely to be stolen or hit by other cars. Tell your insurer if you park in a garage and see if you can get a price break as a result.
Maintain good credit.
Insurance companies believe that people who are responsible with their money are more likely to be responsible drivers. A good credit record can translate into lower premiums.
Other people’s driving records affect your rate.
Believe it or not, other drivers’ past behavior influences your insurance rate. That’s because insurers track the average insurance claim for every car make and model, and they use the data to help determine their rates. If drivers of a specific vehicle tend to have more accidents, incur more frequent or higher claims, or have their cars stolen more often, insurance companies will charge higher rates for everyone who drives the same type of car.
Consider the Subaru Impreza WRX, which ranks the highest for insurance losses for 2005 to 2007 models and has losses that are 89% worse than the average car, according to the Highway Loss Data Institute. Chances are that people who own that car pay more for auto insurance than owners of the discontinued Buick Rendezvous, which ranked lowest on the list, with losses 39% lower than average. It makes sense: A car with lots of horsepower like the WRX is going to attract a much different driver than a midsize SUV designed for taking children to soccer games.
So if you’re in the market for a new car and serious about keeping car insurance costs low, check out the Highway Loss Data Institute’s data.
Or simply ask your insurer for a price quote before you decide which model to buy.
Vehicles With the Lowest Insurance Claims
1. Buick Rendezvous
2. Pontiac Solstice
3. Buick Terraza
4. Honda Odyssey
5. Mazda MX-5 Miata
6. Subaru Outback
7. Ford Five Hundred
8. Volvo V70
9. Chrysler Town & Country
10. Chevrolet Corvette Convertible
Vehicles With the Highest Insurance Claims
1. Subaru Impreza WRX
2. Scion tC
3. Hyundai Tiburon
4. Mercedes CLS-Class (4-door)
5. Suzuki Forenza
6. Honda Civic Si
7. Dodge Charger
8. Nissan 350Z
9. Chevrolet Cobalt
10. Suzuki Reno
Source: Highway Loss Data Institute