What does it take to save money on your auto insurance? There are two main ways to go about lowering your auto insurance premiums:
- reduce the cost of your current policy, or
- get a new auto insurance policy.
Today I’m going to walk you through both of those ways, plus introduce some more drastic steps you can take to lower your auto insurance.
Review Your Current Auto Insurance Policy for Ways to Save
I pay roughly $700 every six months to ensure our minivan and our SUV. I review my policy every six months with my Farmers agent to see if there are more ways for me to save.
I would encourage you to review your policy regularly.
1. Ensure Your Policy is Accurate
The very first thing you need to do is to make sure that your current policy accurately reflects your situation. This includes all your vehicle information, like age and make.
Also, make sure your yearly estimated mileage is properly stated. If you work at home or have a very short commute, make sure that your policy reflects that for that vehicle.
Anytime something like this changes in your life, let your insurance company or agent know and see if the changes can save you some money on your auto insurance policy.
2. Be Aware of State Minimums
The state you live in will have a minimum set of auto insurance liability coverage requirements. You can find these at your state’s insurance commissioners website.
You can also visit this page from The Balance to see the full list of each state’s insurance requirements.
The minimums will be expressed in bodily injury liability limits and property damage liability insurance. Just make sure you know the minimums you have to maintain.
Obviously, lowering your insurance coverage closer to the minimums will have the positive effect of lowering the cost of your policy.
3. Be Aware of Financing Requirements
If you currently finance your vehicle, the financing company may have additional requirements of their own for you to maintain as part of your auto insurance coverage.
This usually affects your deductible, so be sure you know your required limit before you raise your deductible.
4. Consider Raising Your Deductible
Now that you know your requirements, it’s time to consider raising your deductible. If you raise your deductible, keep in mind that you will be responsible for that amount if you get into an accident and it’s your fault.
If you’ve set up a nice emergency fund, you’ve already self-insured to a degree. So, raising your deductible wouldn’t be a bad idea. To my knowledge, raising your deductible has the biggest impact on your auto insurance rates.
5. Consider Dropping Certain Coverage Items
Each insurance policy will have different levels of coverage. Some are required, some are recommended, and some just aren’t needed for your situation.
I’m not going to tackle each type of coverage here today, but I will discuss the main three and when you could consider lowering the coverage.
- Liability – This type of coverage pays for personal injury to others, including medical expenses and lost wages. It also includes property damage, which covers the damage you do to their vehicle or other property. Liability is the baseline of insurance coverage and most states, as mentioned above, have minimum requirements. If you’ve got a decent car and a few assets to protect, you should consider getting 100/300/100 level coverage here. There’s no reason to skimp in this area.
- Collision – This type of coverage pays for the damage to your vehicle. How much is your car worth? If only a couple thousand, it may be a good idea to drop this coverage, since you’ll only need a couple thousand to replace it.
- Comprehensive – This type of coverage pays for any loss or damage to your vehicle for anything other than an accident. For example, if your car is stolen or damaged in a flood. Similar to collision, factor in the value of your vehicle and how much the insurance premiums are.
Those are the three main types of coverage, but here are some more add-on types you can consider lowering or dropping all together: Medical Coverage, Personal Injury Protection (PIP), Uninsured Motorist, Under-insured Motorist, Rental Reimbursement
The bottom line: meet your requirements, get plenty of liability insurance, and factor in the value of your vehicle when deciding on collision and comprehensive.
6. Consider Dropping Extras
Many insurance policies will have little extras that you simply don’t need. Emergency roadside assistance is one that comes to mind for me. I just don’t need this and so I make sure I’m not paying for it on my policy.
Have a discussion with your agent or insurance company and know exactly what extras you are paying for. Evaluate which ones you want to drop.
7. Get Every Discount You Can
The quickest way I’ve found to do this is to call your insurance company or agent and ask them for a list of all their discounts.
Write them all down and then systematically work through the list to ensure you’re getting the full discount.
One that I have on my list right now is the defensive driving discount. I just need to find a place to take the course.
Pro Tip: If you own Berkshire Hathaway stock you can get an extra 8% discount with GEICO. Just ask.
8. Combine Policies if Newly Married
If you just got married, and have the same insurer, call your insurance company or agent to have your policies combined. This will save a great deal because of the multi-car discount.
9. Consider Paying in Full
You may be paying an extra fee for paying your policy month-to-month. Start saving now and pay your auto insurance premium in full next time.
Sure, it will cost you more cash in the short-term, but you will save overall AND you won’t have a payment!
Consider a New Auto Insurance Policy
Let’s say you’ve looked over your bill and you’ve exhausted all the tactics above. You should still check to see if there is a more affordable auto insurance policy available from another insurance company.
10. Shop Online for Quotes Through Gabi
11. Shop Direct for Auto Insurance Quotes
You can also go straight to the source, as some insurers aren’t included in the multi-quoting process above. Get direct quotes from GEICO, USAA, Esurance an Allstate Company or Farmers (that’s who I use), etc..
12. Consider a Multi-Policy Discount
If you are considering a new policy, it might be a good idea to check with your home insurer to see if they have a discount for multi-policies.
Most of the companies above insure both home and autos, so it’s worth a try to see if you can pay less by bundling insurance policies.
13. Take Advantage of Multi-Car Discounts
If you’re getting a new policy, consider going with the insurer that your spouse uses if you aren’t already. There are big savings for keeping all the cars under your roof within one policy.
14. Group or Organization Discounts
As a member of a trade organization or other group (i.e. your employer), you may be eligible for a discount. Check to see if you need to purchase through them to get the discount though.
Consider These Big Changes to Your Auto Insurance
Here are some more drastic changes you might make to lower your rates and make your auto insurance more affordable:
15. Consider Going to One Car
Do you really need that extra car? If you’re married and one of you work from home, consider going with just one car. The savings on payment, maintenance, and insurance could be in the hundreds.
16. At Least Consider Lowering Your Commute
If you can’t drop to one car, consider working closer to home, working at home more, or taking alternative transportation to work. The lower your commute to work is, the lower your auto insurance policy will be.
More Ways to Save Money: 104 Ways to Save Extra Money (New Ideas!)
17. Move to a Different City or State
Different states not only have different requirements, but they also have very different premiums.
Okay, this one is a bit of a stretch, but if you live near a state line, consider the effects of moving a mile or two over to save on insurance rate, taxes, etc.
18. Improve your FICO Score
Insurers can use your FICO score to determine how safe a driver you are. Therefore, having a better FICO score will lower your insurance premiums.
19. Get a Different Car
Lastly, the type of car you drive can have an impact on the amount of insurance you pay. Consider driving a different vehicle. At least one that’s less likely to be stolen.
Do you have something to add? Help me think of the 20th tip. Let me hear from you in the comments below.
Photo by Saketh Garuda on Unsplash