Three Tips to Save Big Money on Car Insurance
Use these three simple strategies to reduce your car insurance rates significantly.
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.
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 an inspiring 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 significant 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 extensive repairs need to be made, the frequency of claims will be reduced. It will result in a net reduction of out-of-pocket expenses on the part of the policyholder. It 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.