Ways to Save Money on Car Insurance

The average American family spends about $3,500 annually on all types of insurance.  Studies show that if you just spend a little time comparing rates you can save about $1000 per year on auto and homeowner's insurance. Visit the major insurance companies -- Progressive, State Farm, Farmers, Geico, The Hartford, Allstate -- and compare rates.  The price you will pay for auto insurance changes as you move through life; therefore, you should comparison shop at least twice a year.  Ask your insurance agent to provide you with a list of all the discounts they have available.  For example, the following factors can influence what you pay for car insurance:
·         If you get married, your rate should go down;
·         If you buy a house, your rate will go down
·         If you move into a new age bracket, e.g., turn 50, you might get a discount

 Also, if you pay down debt and improve your credit score, your insurance rates should go down.  If this isn't happening as your credit score improves, consider shopping around for a better insurance rate.

Compare rates.  You can get insurance quotes at numerous websites, but two of the best and most well-known are insurance.com and insweb.com.  You can find an independent agent at iiaba.net or contact major insurance companies directly at geico.com, progressive.com, statefarm.com or allstate.com.  Research has shown that only about 15 percent of people who compare rates will get a lower rate from another insurer, but you should try anyway because your savings could be big. Before you sign up with a particular insurance company, check out their record for how they handle complaints at NAIC.org.

Lower your auto insurance premiums.   There are other steps you can take to lower your car insurance premiums even more:
(1) raise your deductible so that your premiums will be lower, often as much as 20 percent lower --  but before you do this, make sure you have enough in an emergency fund to pay the higher deductible should you need to file an insurance claim if you are in an accident.  You should only do this if you are a very safe driver;
(2) cancel your collision insurance if your car is very old (worth less than $1,000).  A good rule of thumb is to cancel your collision insurance when your car is ten years old and worth little more than your deductible or when the premium is equal to or exceeds 10 percent of the car’s book value;
(3) Get rid of unnecessary add-ons, such as towing insurance and car rental insurance.  These typically cost $50 or more per year.  Why pay $50 a year for three years for towing insurance when you will probably only have your car towed once every four or five years?
(4) Take a driver's safety course approved by your insurance company to qualify for a discount anywhere from 5% to 10%;
(5) Combine your homeowner's insurance with your auto insurance and your insurer will likely give you a 10% discount.  One major insurance company claims that it gives a forty percent discount if a person insurances both their house and cars with them.
(6) Take advantage of special discounts given to certain classes of consumers.  For example, those over 50 years old can get discounted insurance by joining AARP (visit www.aarp.com for more information) -- if you're a teacher, you can get a discounted rate (visit www.horacemann.com for more information) --  those who are currently in or retired from the military can get a discounted rate through Geico -- as much as 15% (visit www.geico.com for more info). 
(7) Take advantage of discounts that many car insurers offer for things such as insuring more than one automobile; good driving discount, renewal discount, academic achievement discount, and having certain safety equipment (side airbags, antilock brakes), and anti-theft devices.  Many insurers also give big discounts to long-time customers and to people who don’t drive their cars that often.

Cut Your Auto Insurance Premiums in Half by Raising Your Credit Score.   Who do you think pays more for auto insurance -- someone with a good credit score, but several traffic tickets and accidents, or someone with a perfect driving record but a low credit score?  Surprisingly, it is often the person with the low credit score and the perfect driving record.  Why?  Because most insurance companies have conducted research that tells them those with low credit scores are three times more likely to file an insurance claim than those with good credit scores.  As a result, they often charge those with low credit scores a premium that is two to three times higher than the average.  Many consumer groups find this practice unfair and some states have banned it or limit the use of credit scores in determining insurance rates.  Raise your credit score and you will save significantly on your auto insurance.

Be a Safe Driver.  If drivers knew how much just one speeding ticket increased their insurance premiums, they wouldn't speed at all because just one speeding ticket can increase your car insurance premiums by about 25 percent.  Two speeding tickets or a speeding ticket and any other traffic infraction can increase your premiums 40 percent.  Three speeding tickets will increase your premium 65 percent and four speeding tickets will make it very unlikely you can get car insurance without paying 100 percent more than a safe driver. A teenager with just one traffic conviction can pay two or three times more in insurance premiums. This is why when you receive a traffic ticket you should always contest it no matter what.  Perhaps you'll get lucky and the judge will dismiss the ticket or reduce the charges or perhaps the officer who wrote the ticket won't show up at the hearing and you can surely get it dismissed.  Insurers regularly check for speeding tickets and other traffic violations once every 12 to 18 months.  Tickets and accidents can remain on your record for three to five years, so ask for a lower rate if you’ve been a good driver the last three years.

Find Lower Rates for Bad Drivers.  Typically, the more tickets you have and the more accidents you have been involved in, the higher your car insurance rates.  But you can save money by getting insurance quotes from small independent insurers who are trying to compete with the major insurance companies.

Don’t Buy a High-Loss Vehicle.  Insurance companies keep track of how much it costs to repair every type of vehicle there is and which vehicles are most likely to result in injury or death to the occupants, and which cars are most likely to be stolen.  These are just three factors that go into determining your insurance premiums, and if you own a high-loss vehicle, you will pay more for car insurance.  Ask your insurer for premium quotes for different car models and research the Highway Loss Data Institute website online to find information about costs associated with every car model there is or you can conduct this research at InsWeb.com

Have $100,000 in bodily injury coverage.  Most car insurance policies only come with $10,000 in bodily injury coverage, yet the average medical costs associated with an automobile accident injury are over $20,000 per person.  If you are responsible for injuring someone in an auto accident, you could be held liable for all medical bills over $10,000 that your auto insurance policy don't cover. 
Get the $100,000 bodily injury coverage with your car insurance policy, even if you have to pay more in insurance premiums, because it would be penny wise and pound foolish to leave yourself vulnerable to an expensive lawsuit just to save a little money on car insurance.

Let your insurance company track you.  Some insurance companies, such as Progressive, will give you a 10 to 15 percent discount if you let them track your driving habits for six months by plugging a tracking device in to the car’s diagnostic port.  The device will record how many hours you drive per day and how many times you brake suddenly as if to avoid an accident and send the data to the insurance company.  If the data indicates you drive less than the average person and don’t use the brake too often, you could save as much as 30 percent. 

Lower your teenager’s car insurance.  Teen drivers can raise a family’s annual car insurance premiums significantly, usually at least 50 percent higher.  There are discounts available for teens who are good drivers and who have parents who are good drivers.  There are also discounts of up to 15 percent for students who make good grades.  Be sure to change your coverage when your teen goes off to college if they aren’t driving your car anymore or you are no longer financially responsible for them.