13 Ways to Save Money on Car Insurance

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Welcome to Money Saving Monday where we remind ourselves that community is the greatest money saving resource we have.

Each month, you’ll have a chance to win one of two $15 Amazon gift cards.  Simply leave your tips and suggestions, and if it is a top pick of the month, you’ll get a $15.00 gift card.

By the way, with just a handful of comments each day, you’ve got a great opportunity to win this prize.

13 Ways to Save Money on Car Insurance

  1. Shop around for a better rate – Many times it can be easy to just stick with the same company year after year. However, if you shop around, you may find that you can get comparable coverage for a much lower price.
  2. Increase your deductible – This is the simplest way to reduce your insurance premiums. Just make sure that you have enough in your emergency fund to cover your out-of-pocket responsibility in the event of an accident.
  3. Drop any unnecessary coverage – If you are financing your car, then the bank requires that you maintain “full coverage” on the car. However, once you pay the loan in full, that requirement is gone. It may make sense (especially on an older car) to drop collision coverage and just increase the amount in your emergency fund. Also, make sure that you are not paying for medical coverage that is already included in your health insurance.
  4. Combine policies – Make sure all of your policies are with the same insurer. This includes homeowner/renter, personal property, all cars, and even life insurance. Most companies will offer a very nice discount for doing so.
  5. Keep a clean driving record – Having points on your driver’s license can cause your rates to skyrocket! In some cases, even if you avoid points on your license (by making a special agreement with the prosecutor), your insurance rates may still go up. Also, some companies will offer a discount if you avoid an accident or ticket over a certain period of time (usually 3 years).
  6. Look for professional discounts – By being a member of certain professional organizations, working for certain employers, and even being a member of AAA or AARP, you can qualify for a discount in coverage!
  7. Earn good grades – Students who earn good grades can usually qualify for a discount on auto insurance. Call your provider to see if they offer this discount. If not, see tip #1.
  8. Drive fewer miles – If the total miles that you drive in a year is below a certain amount, then most companies will offer you an additional discount!
  9. Drive a safe car – Many insurers will give discounts for having certain safety features on your vehicle. These include anti-lock brakes, driver and passenger side airbags, and even automatic seat-belts. Also, using a club and installing an alarm can reduce your rates as well.
  10. Take a defensive driving course – Taking a defensive driving course reduced my insurance premiums by 5%. Check with your insurer to see if you can receive similar savings!
  11. Maintain a good credit score - Most insurers will pull your credit report when calculating your rates. A lower score will signal that you are more likely to file an insurance claim – which will increase your premiums!
  12. Buy a “safe” vehicle – Insurance companies rate vehicles by their safety and how often they are stolen. If you own a risky vehicle, then prepare to pay big! This includes make, model, and color – so call your insurance company before you purchase a vehicle and make sure you take the safe bet.
  13. Pay your premium in full – Many insurance companies will allow you to pay your annual premium in installments. You can break your payments down from annual to monthly and everything in between. However, with every additional payment, the company will charge a fee for the service. If you can, pay it all up front and avoid these convenience fees.

Take a minute and see if you could get cheaper car insurance at Geico.

What are your tips for saving money on car insurance?

Remember, if you leave a comment you have a chance to win one of two $15 Amazon gift cards.

Comments

    • says

      @Matt,
      I should say that I added the line about Geico into Khaleef’s post. I figured that taken a minute to check for lower prices wouldn’t hurt anyone. I’ve never used Geico, but I do hear they do offer some customers lower rates.

    • says

      I actually haven’t used Geico either (they weren’t available in my state for a long time), but they seem to have a good reputation. I do think that shopping around is important, because we tend to get comfortable and fail to realize that we are overpaying.

  1. Thomas says

    Here are my two cents:

    1. Go direct and avoid the middle man. Insurance brokers can sometimes mean added costs.

    2. If possible, obtain a quote in person. This allows you to give more detailed information on your unique situation and obtain a custom-tailored quote; whereas many of the insurance websites can only quote you based on the “cookie cutter” scenarios they’ve setup. All in all, this can save you a good sum of money and it can allow you the opportunity to ask questions as needed and make a more informed decision.

    • says

      Two very good tips! Since premiums are based on a large amount of details, it makes sense to avoid using the generic comparisons to make a final decision.

  2. says

    I could not recommend AAA for any insurance enough! Check out their quotes; they have beaten Geico every time for our family. I do check into other companies every year or so, but I can’t beat their prices. You do have to pay to become a member but I add that expense in to my total and I still can’t beat their prices. Plus, I have used their membership for car trouble many times! :)

  3. Dave says

    I find the commercials amusing. I figure if I switched to Allstate (and saved $400) then to GEICO (and saved another $400) and then to Progressive (and saved yet another $400), they would be paying me to carry a policy.

    I’m not an agent, I didn’t play one on TV and I did not stay at Holiday Inn Express last night, but I do work in the insurance industry and pay attention a lot. I’m also a dad of two—one teen who is on our policy and a 20-something daughter who has her own car and insurance.

    The problem with the national call center insurance mills is they don’t know and understand your overall financial picture like a local agent would and don’t necessarily recommend the coverage you really need to protect your assets. So by getting the cheapest price from someone hundreds of miles away may cost you a lot more in the end. Mom used to call it pennywise and pound-foolish.

    Many local agents represent multiple companies and do the shopping for you. They can counsel you on coverages and how to save money. Insurance companies pay them a commission (I think it’s in the 10 percent range). The side benefit of buying from a local agent is they often are the ones that support your little league, women’s shelter and community theater and volunteer on your PTA, Boys & Girls Club, Junior Achievement and Chamber of Commerce boards.

    What’s interesting is the companies that write direct—that don’t have local agents but have huge call centers—have their own overhead. They have to pay inside sales people, plus they’re the ones spending millions and millions of dollars (overhead) pitching you to call their 800 number or click their website.

    The GEICOs of the world may be a good choice for a college student on his or her own or another buyer who has no assets to protect. A local agent could also sell a barebones policy to save you a few bucks, if you don’t care that much about being sued. The downside is, if you ARE sued and you don’t have adequate insurance, what other assets are you willing to give up to pay a judgment?

    I guess all of this rambling is meant to say, whether you’re taken in by TV ad claims or whether you choose to shop local, make sure you’re carrying enough insurance. Touching base with a local agent after exploring the buy-direct options would at least let you compare apples to apples.

    Just my two cents.

    P.S. I’m a little confused about the suggestion above that says to avoid the middle man and then says to deal in person. Who do you deal with in person if not the middle man?

    • says

      Dave,
      Thanks for the comment. I think it has added a lot of value to this post. Sounds like if you know the right amount of insurance you need and you’re confident with your numbers the national brands work. Otherwise, consider a local agent. Also, using a local agent helps the community more. Right?

      • Dave says

        While I think I understand what you mean by national brands, it’s important to realize that national brands (Progressive; Hartford; which does the AARP program; Travelers; Liberty Mutual, etc.) are available through local agents that represent a number of companies. Of national brands such as State Farm, Allstate, Nationwide, etc., also use local agents; with some exceptions, these agents represent just one company, which means they can’t shop on behalf of the buyer.

        I sure wouldn’t deal with a call center rep without a firm grasp on what I needed based on my assets and exposures and a sense of my local legal/lawsuit climate.

        And yes, working with a hometown agent is a good way to keep money in the community and ensure that options continue to exist.

  4. Dave says

    Oops… A little quick on the “submit” button. “Of national brands such as State Farm, Allstate, Nationwide, etc….” should actually read “Other national brands, such as State Farm, Allstate, Nationwide, etc….”

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