Having auto insurance isn’t just a smart idea, it’s the law. Each of the 50 states requires some type of insurance, though minimums vary. Auto insurance doesn’t have to be a costly investment, however. You can do several things to keep your auto insurance premiums affordable.
Think about the Insurance When Purchasing a Car
Auto insurance companies want to know that they are investing money in a responsible person who won’t be speeding, racing or otherwise playing games on the road. The more family-friendly your car is, the less you might pay out to your insurance carrier.
Ask for a Discount
While you can’t go to an insurance broker and haggle your premium, you can ask for discounts. If you’re a student, do you have good grades? Are you married? Do you have home or renter’s insurance through your broker? Insurance providers often offer discounts for bundled plans, good grades and other things that prove you’re reliable.
Work with a Company That Shows You Competitors’ Rates
A reputable company will be willing to show you competitors’ rates, even if the competition’s rates are better. Ask your prospective insurance company to provide a quote, and then ask them how theirs measures up to the competitors’ quotes. If they hesitate to give you the information, it’s possible they will always put their profit over your best interest.
Your Credit Report Matters
Some states allow insurance companies to look at your credit report. A bad credit report could mean higher insurance premiums. Insurance providers view those with good credit as more responsible and, therefore, a lesser risk than someone whose credit is poor.
Always Drive Responsibly
Driving responsibly might seem like a no-brainer since it means being safe and keeping within the law, but responsible driving goes even further. Drivers who do not receive tickets and who have not been involved in auto accidents are more likely to have a lower monthly bill. Again, it all goes back to being a reliable person that doesn’t pose a financial risk to the insurance provider.
Don’t Spend Too Much on Old Cars
If your state doesn’t require you to keep comprehensive coverage or full collision coverage, consider removing it from your policy on any old cars. A good rule of thumb is to avoid high premiums on any car worth fewer than $1,000. If you total the car, you’ll only receive what it’s worth no matter how much insurance you pay for.
As with any purchase, do your research. Purchasing auto insurance is about comparison shopping, responsible buying and ensuring the insurance is right for the vehicle. Don’t simply pick the first policy you see, since doing so could result in being over or under-insured and ultimately, money loss.
Try To Save The Most Money On Car Insurance
Every driver needs car insurance, but every driver also wants to save as much money as possible on that coverage. No one wants to ever have to overpay for car insurance, especially if they are aware that the same types of plans are available from other providers who are willing to give drivers the assurance of insurance at lower rates.
Lower car insurance premiums during these tough economic times mean more drivers will be able to afford the coverage they need, fewer drivers will be late on payments, and more drivers will be able to allocate more of their money towards other expenses that they need to pay off instead.
If you are in the market for a new car insurance policy because you want to save as much money as possible on your plan, below are some things to consider while shopping around.
Get Quotes from Every Provider You Can Think Of
With so many car insurance providers out there, take advantage of the competition in the marketplace and ask them all for quotes so that you can figure out who will give you the best coverage at the cheapest premium.
Be sure to inquire about coverage rates, coverage types, and discounts whenever you speak with a representative from a car insurance company. They will not always divulge the discounts to you, so be sure you ask for them yourself. Then you can really compare what you are getting for your money from a variety of different providers. You will quickly see that some are more helpful when it comes to saving you money than others.
To make your life easier and save a lot of time, utilize the many comparison websites that are out there so that you can get all of the rates from many different car insurance companies at the same time.
Auto Club Discount
Being part an auto club often entitles you to a discount with many auto insurance agencies. The benefits of joining an auto club are alone worth the price, but when you also get a discount off insurance, it really starts to seem like a worthwhile service.
A little account maintenance goes a long way with insurance. Modern e-commerce insurance agencies offer automatic billing and online payments. This is convenient, but you might find that it means you pay less attention to adjusting your policy when things change. The agency doesn’t know if your circumstances have changed. By letting them know, you will see serious savings.
If you have a vehicle that is only used seasonally or a broken vehicle you no longer use, you should not be paying a normal premium on it. Many families have cars that are only used when their children come home from college for the holidays. Others have forgotten to remove an older vehicle from their account and are still paying for coverage!
Check Before You Buy
Few of us give any thought to insurance price when purchasing a new vehicle. We might even assume a new car won’t affect our premium by very much. Nothing could be further from the truth. Insurance agencies keep records on how often different models of cars are stolen or in car accidents. These statistics can differ greatly even in similar class cars. Check before you purchase a new vehicle and see if there might be a similar alternative for lower rates.
Lower Your Miles
The amount of miles you drive your car obviously affects how soon you’ll need routine maintenance performed. It also affects how much your insurance agency charges. Don’t forget to change your weekly mileage on your account if you get a new job that is closer. Carpooling or even biking can also lower your weekly commute miles. Some agencies even have sizeable discounts for staying under a certain mileage level. Many big companies give you a break. Unitrin Auto Insurance discounts are some of the best in the country for low miles.
Like all kinds of insurance, auto insurance companies often have group rates. If you work for a large company, you may be able to take advantage of this. Small business owners with a few employees might even find it is in everyone’s best interest to start a small group policy as well.
Don’t Let Insurance Lapse
If you let your insurance expire without renewing or stop one policy and start another, this is noted by insurance providers. You may find that your costs go way up if this happens. Play it safe by overlapping start and end dates when changing providers. This will keep your coverage from lapsing.
Make Your Payment in Full Upfront
If you can manage to do so, pay for your entire year’s worth of car insurance coverage up front. If you pay in installments, such as monthly, it may seem at first like you are saving money, especially in the short term. But in the long run, you will realize that you are actually paying more because the car insurance company is charging you interest as you go.
Therefore, when asking about rates, ask for what your rate would be if you paid in installments versus if you paid everything at once. You will see right away that being able to pay it off at once will save you quite a bit of money.
Be Ready to Switch Providers
Every time your coverage is up for renewal, see what your renewal rate will be while also taking some time to see what the competition will offer you. While some car insurance providers may offer discounts to those who have been long-time customers, many will just increase your premium while offering discounts to new customers.
Therefore, if you shop around and find that another provider can give you the same, or better, coverage for less than what you are currently paying, go for the switch.
3 Important Car Insurance Facts
Don’t let numbers and complicated jargon confuse or overwhelm you. It’s easy to become the master of car insurance companies and choose the policy that best suits you. By remembering a few simple facts, you can save yourself lots of money and prepare for your future. Keep these three things in mind when you’re looking around for auto insurance.
1.) Know What Factors into Whether or Not You Receive Insurance (and How Much)
Car insurance companies need to determine whether or not it’s risky to insure you. Thus, they will look at your history to see how you are with your driving and your money. For instance, if you have a bad credit history, they might be less likely to insure you. These companies will also go back as far as half a decade to look at any accidents or violations you’ve had. They’re not going to want to insure someone who is an irresponsible driver or can’t follow the law.
A lot of people simply nix car insurance altogether in an attempt to save money. Not only is this a HUGE no-no, but it’s yet another factor making you an undesirable candidate when the time comes to apply for insurance again.
2.) Understand Deductibles and Premiums
It’s normal to want to save money on your monthly bills, but make sure you’re fully aware of what this means if you choose a lower monthly premium on your car insurance. Lower premiums mean higher deductibles. In other words, if you have to make a claim, you’ll be responsible for paying more than if you were to go with a higher premium.
As you can probably see, there are pros and cons to both higher and lower premiums. If you want to lower your monthly payments, check your finances to ensure that you have the money saved up in case you ever have to make a claim and end up needing cash for your deductible.
3.) Plan Ahead: Save Money on Car Insurance Based on the Car You Drive!
Buying a fancy, expensive car doesn’t end with the purchase of the car itself. That hefty price tag will come back to haunt you when you go insurance shopping. If you want to potentially save yourself major dough, stick with a more economical car. Insurance companies know that should you get into an accident and need their help, they’ll have to pay less than if you were driving a fancier car! For the same reason, it’s better to stick with a car that can endure more in terms of damage. (But why wouldn’t you want to do that anyway?!)
It’s easy not to feel taken advantage of by your car insurance. It just takes a little time. Be certain that you understand what the numbers mean; don’t jump at the lower price, since it might cost you more money later on; and always, always, always makes decisions with your future in mind!
How To Make Your Wallet Happy
Thanks to increasing competition from discount providers, auto insurance rates have not risen nearly as much as many other products and services. In some cases, auto insurance is less expensive today that it was even a decade ago no matter where you get it. In fact, the driving public has never been more control when it comes to insurance pricing and options.
Read on to learn about some auto insurance tips that’ll make your wallet happy and keep you and your family safe and financially secure no matter what.
1. Drive Less, Save More
It’s probably no surprise that drivers who get behind the wheel more often and for longer intervals are more likely to get into an accident or find themselves victims of theft or vandalism.
One of the easiest ways to reduce your annual car insurance premiums is to cut down on your driving by excising non-essential trips and walking or biking short distances for everyday errands. Many frugal insurance consumers refuse to get behind the wheel for trips of less than two miles, preferring cheaper pedal power.
2. Exercise Caution Behind the Wheel
Although the payoff won’t be immediate, one of the best ways to reduce your auto insurance premium over the long haul is to drive more cautiously. Most national insurance providers offer safe driving discounts for drivers who stay accident-free for years at a time.
These discounts grow over time, meaning that you can see significant savings–up to 25 percent off your total annual premium–by avoiding unpleasant run-ins with other drivers for five, seven, even 10 years at a time.
3. Less Flash, More Class
Rightly or wrongly, insurance companies tend to penalize drivers who buy flashy cars, especially low-clearance sports coupes with powerful engines and poor safety ratings. If it’s not absolutely essential for your job or overall personal image, refrain from purchasing a sports car or executive vehicle and opt for a sensible mass-market sedan or economy car instead. You’ll save a boatload on insurance, not to mention your monthly auto loan payments and maintenance costs as well.
4. Location, Location, Location
If you live in a major metropolitan area, chances are it’s for a good reason: work, school, or the thrill of being at the center of all the action. The trouble is, big cities tend to be riskier for car owners than the suburban or rural areas that surround them due to an elevated risk of accident and theft.
Moving into an apartment complex or house even 30 minutes from a busy downtown core may save you hundreds of dollars on car insurance each year, not to mention a pretty penny on rent as well. Most national insurance providers‘ websites allow you to search for quotes by zip code, making it easy to find cheap locales.
5. Study Hard
Nearly every major insurance provider now offers “good student” discounts for high school and college students who maintain a certain GPA throughout the course of their education. As long as you maintain that level of performance, you’ll save anywhere from five to 20 percent on your annual insurance premium.
Get GAP Insurance if You Have an Auto Insurance Loan
A relatively new innovation in the world of auto insurance, GAP coverage allows car buyers to make certain that the entire balance owed to a finance company will be taken care of in the event of a totaled vehicle or theft. This could otherwise be difficult if the car is badly damaged or stolen soon after it is purchased.
If a vehicle is bought with a special financing package that involves little or no down payment, the car’s actual value may decrease faster than the loan balance. Guaranteed Auto Protection, usually abbreviated as GAP, offers vehicle owners the opportunity to have the loan paid off in its entirety without any out-of-pocket expense. These policies can be written at the time of purchase and are prepared by the financing representative at the dealership.
Why You Might Need GAP Coverage
If a buyer makes a purchase of a new or used car and pays little or no money down, the problem of an upside-down loan is an immediate concern. This is especially true if the loan agreement includes the cost of the vehicle tax, title, and licensing. For example, if a new car is purchased for $20,000 with no money down, the car may be worth only $17,000 when it is driven off the lot.
This $3,000 difference ($20,000 – $17,000 = $3,000) due to depreciation is the amount GAP covers. During the first year the car is owned by the consumer, interest accrual on the loan may equal or exceed the payments made.
In other words, after 12 months the principal balance on the loan will not decrease significantly and can even increase slightly. During the first year of ownership of the vehicle, there is no equity being built.
If the car is totaled during this period, the insurance adjuster will take into consideration the depreciation on the vehicle. This could be as much as 15-20 percent. When the insurance deductible is figured in, the total amount paid by the insurance company to the lender may be only about $17,000, as illustrated in the example above.
This leaves a gap of $3,000 that the vehicle owner will have to pay directly to the lender, in addition to the payments they have already made. However, if GAP insurance has been purchased to cover this amount, the vehicle owner is off the hook and it fills in this gap, literally.
How Much Does GAP Coverage Cost?
This is the one drawback to purchasing this type of protection. The average cost of GAP coverage is approximately four percent of the car’s initial value. Consumers will have to decide whether paying upwards of $600 is worth it. However, this amount can be paid out month-to-month.
Drivers must take into consideration the likelihood of causing an accident that results in a total loss of the vehicle. This type of coverage does not apply to damage caused by another motorist. The required liability insurance carried by the other driver would be used to cover vehicle damage.
Rates for GAP coverage is not influenced much by the driving record of the vehicle owner, age, gender, or the residence location of the policyholder. The rates are rather standard and vary only slightly from one provider to another. Vehicle owners can ask if the dealer works in partnership with more than one provider of this coverage.
A Debt Cancellation Agreement
In a sense, GAP coverage is not really insurance at all, but rather a guarantee that the debt owed to the finance company will be taken care of completely. It is a supplemental form of protection that is either never used or used only once. The agreement is often written for a period of only six months or one year, after which the payments are canceled along with the coverage.
Before taking out this form of protection, car buyers should make a checklist that includes such information as the price of the vehicle, the amount made as a down payment, the insurance rate on the auto loan, and the likely cash value of the vehicle over the next 12 months.
Some cars depreciate more rapidly than others, and buyers should be aware of the probable market value of the car during the first year of ownership.
In conclusion, it should be noted that GAP coverage is no longer needed and should be discontinued once a car’s value exceeds the amount remaining on the loan.