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Auto Insurance Savings Tips
How much money do you think you will spend over the course of your lifetime on car insurance? Using the average amount of $1,587 that each American spends on auto insurance annually, we can calculate as follows:
- If we say on average that we begin paying for car insurance at age 20 and stop at age 80, it comes out to about $95,820 (60 times $1,587).
What if even as little as 10% of that could be saved? That would mean an extra $9,582 in your pocket!
Car insurance is mandatory. Fortunately, you can make car insurance savings a must, also
Following are some areas to consider when you are seeking ways to achieve insurance expense savings while retaining the best protection for your family and vehicles.
You might be surprised to learn how many discounts are available on car insurance. Checking with your agent to make sure to take advantage of all that you are qualified for can save big dollars on your policy.
Multi-Policy: If you have an auto, home, boat, or umbrella policy with the same insurance company, you could receive a multi-policy discount. It can add up to 20% off your total policy premium.
Multi-Car: Depending on how many and the types of vehicles, you might be able to take advantage of a multi-car discount.
Safe Driver: If you are a safe driver (meaning no tickets or accidents for the past three years or more), you might be eligible for a safe driver’s discount of up to 5% of your premium.
Anti-Theft Devices: Using a car alarm system may save you a percentage on the comprehensive premium of your policy.
Good Student: Good grades for your high school or college student may save you 15% or more on your car insurance. You will need it to offset the higher rates for younger drivers, especially males under the age of 25.
Senior Citizen: Some companies offer a discount if you are over 65 and have established a good driving record.
Insurance Friendly Occupations: Insurance companies tend to watch statistics very closely. If they see that workers in certain occupations tend to incur fewer losses, they may be inclined to offer a special rate for those professions. For example, if a member of your household who is on the policy is also a teacher, engineer or scientist, you may qualify for a discount.
These are not all of the discounts that are available. So, ask your agent to apply the savings that you are qualified for on your policy right away!
Deductibles are applied to collision and comprehensive coverages. Before the insurance will begin paying out the claim, you will have to pay the deductible. So, if you have a $250 deductible and the repair bill is $1,000, you will pay $250 and the insurance company will pay $750. A deductible can be anywhere from zero to over $2,000. It’s your choice.
The more of the risk you are willing to take on with an increased deductible, the less annual premium you will pay. The difference could be substantial. For example, going from a $500 to a $1,000 deductible could save you up to 30% on the collision (which usually comprises the highest premium component) and comprehensive portions of your policy.
When it comes to coverages, there are two that are mandatory—bodily injury and property damage liability. In addition, if you have a brand new car with a loan on it, your finance company may require collision insurance. Other than that, everything else is optional.
For example, towing may cost you $10 per month. Do you really need it? Especially on a new car? Even for an older car, if you are in a wreck, the property damage coverage from the other driver will pay for your vehicle to be towed to a repair shop.
Also, how often do you feel you will have to rent a car because of a collision? If you are hit, the other insurance company will pay for a rental. Plus, many credit cards offer car rental discounts. Consider skipping the car rental coverage.
If your car is an older model and paid off, you might want to consider doing without collision and comprehensive. Look at how much the car might be worth and see if it is even fiscally sound to add those coverages on the policy.
Certain vehicles cost less to insure. This is because statistically, they have less frequency of submitted claims and a smaller dollar amount of claims paid out.
For example, following are ten cars that are among the cheapest to insure:
- Buick Lucerne
- Buick LaCross
- Toyota Camry
- Volvo V70
- Toyota Avalon
- Mercury Grand Marquis
- Volvo S80
- Mini Cooper
- Volkswagen New Beetle
- Chevrolet Impala
These cars will cost less to insure than most other models. So, consider the cost of car insurance that you will bear on the car you might buy.
Other Car Insurance Tips
- Limits: Although the dollar difference might not be great, think about the limits that you want to have on your policy. Instead of 100/300/100 limits for liability and collision, 50/100/50 limits might be less expensive. However, make sure you have enough limits to cover all of your assets.
- Shopping: If you are going to shop around for anything, shop for auto insurance. The competition for the insurance dollar is so fierce, you will find it time well spent to compare different quotes from different insurance carriers. For the same coverages and deductibles, you might find six-month quotes that vary 10% to 20% among companies.
- Credit Score: Many car insurance companies in states that allow it, are reviewing credit scores. They have found that individuals who are credit worthy tend to be better drivers. As a result, they may adjust the auto insurance rates accordingly.
- Professional Organizations: Being a member in an organization such as or AARP or a credit union may also qualify you for discounts on your auto policy.
- Employers: Sometimes employers will cut a deal with an insurance company to offer special group rates to their employees. Check with your Human Resources department to see if such a deal is available at your workplace.
Scrutinizing and applying all of these auto insurance savings tips can add up to substantial extra dollars for the family coffers!