Home Blog How to save big money on car insurance

How to save big money on car insurance

How to save big money on car insurance

Car insurance is an expense that is necessary but is generally not appreciated until it is needed to pay for repairs required as a result of a collision. Auto insurance premiums can be expensive, but by following three simple strategies, auto insurance rates can be significantly reduced.

Shop Around

Because of the competitive nature of the auto insurance industry, consumers often reap the benefits of the cutthroat environment of the car insurance marketplace. Shopping around for a quality, low- cost auto insurance policy may not sound like a very exciting task, but doing some price comparison research could save a person big bucks on insurance premiums.

Comparing car insurance prices online is perhaps the easiest and most efficient way to find the best auto insurance coverage at the most reasonable price. There are many websites dedicated to providing instant car insurance quotes online to help the consumer chose the best policy for his or her circumstances. Most major auto insurance companies offer free rate quotes on their websites and some even provide comparisons to competitors’ premiums. Many people find that by investing a little bit of time researching car insurance quotes online results in big savings; sometimes hundreds or thousands of dollars per year.

Increase the Deductible

An insurance policy should be in place to provide financial protection in case of an accident and not be treated as a maintenance plan. A low deductible increases the financial liability of the insurance company, thus the potential expense is passed on to the policyholder in the form of higher premiums. In her book Save Big, Elisabeth Leamy discusses the benefits of raising the car insurance deductible as high as can be afforded. She provides an example of an auto insurance policy premium for a two-car family before and after increasing the deductible:

  • Average annual premium for a two car family = $3744
  • Premium after raising deductible to $1000 = $2246
  • Annual savings = $1498

The idea of raising a car insurance deductible to $1000 may be a bit intimidating for some. However, by adopting the perspective of using a car insurance policy only when large repairs need to be made, the frequency of claims will be reduced and will result in a net reduction of out-of-pocket expenses on the part of the policyholder. This has the added benefit of keeping personal car insurance premiums low because rates are often raised by insurance companies when frequent claims are made.

Cancel Unnecessary Policy Features

One of the best ways to save money is to keep a car as long as possible. Eventually, all cars depreciate to the point where they are worth less than the amount they cost to repair. In this case it does not make much sense to retain the collision or comprehensive coverage on the insurance policy. When the annual cost of comprehensive and collision coverage equals more than 10 percent of the total value of the car, it may be worth canceling those two features. This simple modification may save hundreds or thousands of dollars per year on car insurance premiums.

By implementing the three strategies of shopping around for car insurance, increasing the car insurance deductible and canceling unnecessary auto insurance policy features, a significant amount of money can be saved without reducing the protection that the insurance policy provides.

Auto Insurance and Anti-Theft Devices for Cars

Comprehensive auto insurance rates vary from person to person, and car to car. Depending on a number of factors, this coverage can range from relatively inexpensive to overall quite pricey. As comprehensive coverage protects vehicles damaged or lost by theft or vandalism, car anti-theft devices, in addition to other factors, can lower the rates of this type of car insurance coverage.

Comprehensive Car Insurance: What Does It Cover

This type of coverage pays for damages to a vehicle that result from entities beyond a driver’s control. Damage from floods, hail, winds, so called “Acts of God,” such as falling trees or telephone poles, and vandalism or theft are paid for by the provider when a client has this optional insurance.

Basic Factors that Influence Costs of Comprehensive Coverage

There are a number of factors that auto insurance agencies take into account when setting rates for this coverage. In areas where damage due to weather is likely, rates are probably going to be higher than they would in places where severe weather or flooding is uncommon. In some areas, even specific locations within a city, where crime is high, comprehensive auto insurance costs more than it does in places with low crime rates, as the chances of theft or vandalism, both of which a driver’s agency would have to pay for, are more likely in places with higher crime. However, regardless of one’s place of residence, anti-theft devices for cars directly lower comprehensive coverage rates.

Car Anti-Theft Devices and Auto Insurance Rates

Anti-theft devices, particularly in areas where crime is somewhat prevalent, reduce the rates of comprehensive coverage, because they can deter theft and vandalism. Depending on the exact situation, these devices may or may not be worth their costs.In areas where crime is quite low, anti-theft devices may not reduce rates enough to even cover their costs over time.

In certain places, however, they can lower monthly premiums significantly, as damages that might otherwise be considered likely can virtually be eliminated by a driver who decides to protect his or her car by installing devices that prevent theft. Car alarms, steering wheel locks, tire locks, kill switches, and tracking devices are all items that can lower monthly premium rates, as theft, or theft with little chance of recovery is less likely when a driver has any of these.

Some anti-theft devices for cars are inexpensive and can save a lot on auto insurance rates. It is best to talk to an agent at an auto insurance provider before investing in any particular device to find out how much can be saved by securing a vehicle, and if doing so is even worth the cost.