Easy Ways to Make Sure You’re Not Overpaying For Your Auto Insurance
Just like you need to have a valid driver’s license to legally drive a car, the law also requires you to have auto insurance to legally operate a vehicle. This situation is different from almost all other kinds of insurance, which are for the most part optional and not mandatory.
Auto insurance is also burdensome because it can often be expensive for many drivers. Therefore it is important and beneficial to understand how auto insurance works and ways to keep the cost down. Also, although it is required, auto insurance can financially protect you and your family if you get the best kind of policy for your circumstances.
Most states only require minimum coverage against you causing harm to other people or damage to other’s property. This is known as liability insurance. In most cases, the legal required minimum will not adequately protect you from a lawsuit. The other type of coverage is to protect your car against damage or theft, sometimes referred to as comprehensive coverage. Most states do not require you to buy this type of coverage (but auto loan lenders usually do), but not having it can result in a huge financial loss for you. Then there is the issue of deductibles for different types of coverage, which will affect your coverage and your insurance premium costs. These issues and others will be discussed below, regarding ways to save money on your auto insurance, followed by some typical premium cost examples of different companies.
Most states only require minimum coverage against you causing harm to other people or damage to other’s property. This is known as liability insurance. In most cases, the legal required minimum will not adequately protect you from a lawsuit. The other type of coverage is to protect your car against damage or theft, sometimes referred to as comprehensive coverage. Most states do not require you to buy this type of coverage (but auto loan lenders usually do), but not having it can result in a huge financial loss for you. Then there is the issue of deductibles for different types of coverage, which will affect your coverage and your insurance premium costs. These issues and others will be discussed below, regarding ways to save money on your auto insurance, followed by some typical premium cost examples of different companies.
Shop For The Best Deal
Although auto insurance is expensive, thankfully there are many companies offering many different kinds of auto insurance policies. This makes it a fairly competitive business, which behooves you to shop around. This is not only true when you select a policy for a new car, but on a regular basis as well for renewals. As a consumer, you are free to choose which insurance company that is best for you. Many drivers save significant money by being active and informed consumers and not just automatically staying with the same company. It may take time and bother, but it can pay off with some nice savings.
Excess Coverage Amounts
One of the major variables in auto insurance coverage is the amount of the coverage. This is the maximum limit the auto insurance company will pay in the event of a loss. The higher these coverage limits, the higher will be your insurance premium payment. Therefore, a way to save money is not to have excessive limits. How much you need depends on your particular situation. For instance, having an expensive car will require higher limits for theft and collision coverage versus a less expensive car.
Deductibles That Are Too Low
The other major variable in auto insurance coverage is the deductible amount. This is the amount you will have to pay for before the insurance company will pay for anything. The higher your deductible amount the lower will be your insurance premium payment and vice-versa. Thus, an easy way to save money is to have higher deductibles. If you have adequate savings, it is prudent to have a higher collision coverage deductible. Even if you don’t have a lot of savings – you can “bank” the savings you will get from a higher deductible and use these funds to self-insure if necessary.
Unneeded Coverage Types
Many auto insurance policies offer many different kinds of coverage in addition to liability, theft and collision. These extra coverages cost extra money and you should only have them on your policy if you really need them. For instance, if you are a AAA member, you don’t need to have towing and road service coverage. You don’t need auto contents theft coverage if you have a homeowners or renters insurance policy that already provides such coverage.
Various Discounts
There are different ways to get discounts on your auto insurance, but you usually need to proactively ask for them. Some examples are:
– Senior Citizen / Retired Driver: These drivers typically have less accidents and tickets.
– Good Driver: Many companies will give you this discount if you have a clean driving record for the last three or so years.
– Safety and Security Devices: Alarm system, automatic braking, collision avoidance system, etc.
– Bundle Insurance Discount: By having your life and/or homeowner insurance with the same company as your auto policy, you can get a “bundle” discount.
Payment of Premium
Many insurance companies will give you a discount for paying your policy for a whole year or even a half year upfront. Even if you can only afford monthly payments, many companies will give you a discount for an automatic pay option – where the monthly payment is automatically taken from your bank account or credit card every month.
Update the Insurance Company
Certain changes in your situation can result in a lower insurance premium, but only if you update the insurance company. Some examples:
– Getting married or turning 25 years old
– Becoming retired and not using your car for commuting anymore
– Getting a garage to park your car in on a regular basis
– Completion of a safe driver course
– Moving to a more suburban or rural neighborhood
