If you are not able to save money on transportation by changing up how you commute to work you should look into how to save money on car insurance. As car insurance will most likely be the largest monthly expense that you have if you do not have a car loan payment. Since the initial steps of getting car insurance at a good price can be so frustrating, most people tend to ignore it once they have it. That could be costing you considerable sums of money each year.
While it’s easy to mistake auto insurance as something that’s a relatively fixed cost, it’s not. It can be lowered — often easily — to help you save money. Your savings will vary greatly depending on your driving record, vehicle and location, but it could add up to hundreds of dollars per year. This is money that you can use towards paying off debt or investing.
The car insurance you need when your car is brand new is often considerably different than what you need later on. Initial rates are generally higher, since you’re required to get both comprehensive and collision coverage if you took out a car loan to pay for the vehicle. Comprehensive pays for the repair or replacement of your car from damage that doesn’t result from an accident, and collision covers damages if you’re in a wreck.
Once a car is paid off, most people forget to save money by exploring their car insurance options. Check the value of your car through the Kelley Blue Book or NADAguides.com. You might have more collision insurance than you need. And in some cases, it might be worth dropping it entirely, especially if your car is an older model.
Here are six different ways that you just might be able to save hundreds of dollars on your car insurance if you simply take a few minutes to put these steps into action:
Step 1: Drop Coverage You Don’t Need
The beauty of doing a car insurance coverage checkup every six months or so is that even if it turns out that your current car insurance coverage is still the best value out on the market you may just find out that you are paying for a part of your auto insurance policy that you no longer need. Not only do insurance rates change quite often but your insurance needs change more often than you may think. Ask your insurance agent how much money you can save by raising the deductible on your auto collision insurance. Often, raising the deductible from $200 to $500 can save you 10% to 30% in premiums. If you have a good driving record, you could come out ahead.
Step 2: Search for Discounts
Never assume that because you searched for all of the car insurance discounts available 6 months ago that now there are no new discounts that you may be eligible for. New opportunities for saving money with a car insurance discount program pop up all of the time as different companies announce different discount programs in order to increase their market share. Most insurance companies have comparison shopping tools on their sites, but feel free to use a third-party site such as Compare.com or Insure.com. When you compare insurance companies, make sure you get quotes on the same coverage. At this point, you usually can find companies you want to explore further and companies you want to skip. I recommend that you compare at least three price quotes.
Step 3: Call your current insurance company
You’ll spend most of your energy on this step. Set aside time to call some companies — your current insurer and the few you’re interested in. Be civil, polite, and respectful. Tell your current company that you found the same coverage elsewhere for less money. Usually, your current insurer will try to keep your business and match the price. Sometimes, it will offer another discount between 10% and 15%. If you like your current insurance company, you can stop here, as your work is almost done. If you don’t, it’s time to call another insurer. The new company might match the low cost to lure in new business, but don’t be upset if it says it can’t go any lower.
Companies might not feel as inclined to win the trust of new customers. Don’t be discouraged if you get rejected. You can be nice and persistent in your negotiations. You never know if a company will agree unless you ask, especially when it comes to discounts
Step 4: Pay your premium upfront
Many companies offer extra savings if you pay your six-month or 12-month premium upfront. If you can swing the extra cost, it’s worth saving in the long run. Keep in mind that not all insurance companies offer this perk, so when you’re in the haggling stage, inquire about this opportunity.
Step 5: Pay Your Premiums with a Credit Card
Wanna shave off 1 percent to 5 percent off of your total car insurance premiums just by changing your method of payment? With the average cash back credit card earning you anywhere from 1 percent to 5 percent cash back that’s like getting a bill from your insurance company and then having to only pay 95 percent to 99 percent of the total instead of the full 100 percent. One to 5 percent may not seem like much but that money can quickly start to add up depending upon how much money you spend each month.
Step 6: See if Your Occupation Can Save You Money
Did you know that when car insurance actuaries calculate car insurance rates that they actually assign different risk classes to different types of occupations? Some occupations have cheap car insurance rates while other occupations get assigned an added level of risk that increases their rates. The various occupation risk assessment algorithms will vary from one insurance company to the next but generally speaking professions like engineering and teaching will receive lower car insurance rates than business owners and attorneys.
Always review your car insurance
Simply just take a few hours on a weekend and go through this exercise. As it can save you hundreds of dollars per year. If you’ve always had your car insurance deducted from your bank account without giving it another thought, you might be missing out on extra money in your pocket. You could use it to pay back your student loans or stash it away in an emergency fund or investing it.
Regardless of what you do with your newfound money, make sure you review your car insurance policy every six months to get the best deal.