9 ways to trim car insurance bills

When was the last time you gave your car insurance a tune-up? If you're overdue, you might be overpaying.

By Stacy Johnson Apr 3, 2013 12:31PM

This post comes from Angela Colley at partner site Money Talks News.

 

In 2010, the last year data was available, American households spent an average of $1,010 for car insurance, according to the Bureau of Labor Statistics (.pdf file).


That's a lot, but there are plenty of ways to drive down the cost ...

 

 

1. Know your policy

Step one with any kind of insurance is understanding what you're paying for. 


Know as much as possible about your policy. Take it out (or read it online) and look under the hood. Learn exactly what you're paying for, what it costs and how you might reduce the expense.


If you’re not sure what something means or costs, call your company or agent and ask. Part of your premium is going to pay for customer service; use it. 


2. Ask for discounts

There are dozens of discounts that can take a chunk out of your premium. A few examples:

  • Being a member of an organization like a fraternity, credit union or educational association.
  • Having safety features like air bags, anti-theft systems or anti-lock brakes.
  • Having good grades.
  • Being over 50.
  • Being a non-smoker.

Image: Car Accident © Stockdisc, CorbisIf you assume your insurance company will automatically apply discounts you're eligible for, you're probably wrong. Few insurance companies actively attempt to reduce their profits by calling you and offering discounts. Pick up the phone and ask for a full list of available discounts. 


3. Raise your deductible

The deductible is simply what you're willing to pay in the event of an at-fault accident. Shoulder more of the burden and you’ll lower your premiums.


The Insurance Information Institute says going from $200 to $500 can knock 15% to 30% off the cost of the comprehensive part of your policy. Set your deductible to $1,000 and you could save 40%.


Think of the max you'd be willing to pay, then raise your deductible to that level.  Most people wouldn't report a $500 accident for (justifiable) fear of a premium increase.  If that's true, why would you pay extra for a $500 deductible? 


4. Check your credit

Your credit can affect your insurance rates, because insurance companies have apparently decided that people with wrecked credit are more likely to wreck cars.


Have a great credit history and you’ll see more affordable quotes. Have a blemished credit history and you’ll deal with higher premiums. If you haven't checked it lately, do it for free at annualcreditreport.com.  


5. Before car-shopping, insurance shop

When it's time to buy a car, don't just compare gas mileage, style and features; compare insurance costs as well.


Some cars are more expensive to insure than others. Insure.com recently released a study of the least-expensive cars to insure for 2013. Top three: The Ford Edge SE (average annual premium $1,128), the Jeep Grand Cherokee Laredo (average annual premium $1,148), and the Subaru Outback 2.5i Premium (average annual premium $1,150).


Whether you're buying new or used, before you buy any car, call your existing company or use online insurance quote comparisons to see what you'll be paying.


6. Shop regularly

When you buy a car isn’t the only time you should shop insurance. Carriers have no incentive to offer you the lowest rate, especially once they already have you as a customer. They know what a pain it is for most consumers to shop rates and switch companies, so they'll raise rates, confident you won't leave.


Don't be a patsy. Whenever you get your annual or semi-annual bill, spend a few minutes comparing quotes from competing companies. If you find a better deal, ask your insurer to match it, or switch companies.


7. Group your policies

You can sometimes get a discount by grouping your policies. For example, carrying renters insurance and car insurance with the same company can lower your premiums. And if you have multiple cars in your household, keep them on the same insurance plan for another potential discount.


8. Keep a clean driving record

Your driving record obviously affects your premium: Accidents and tickets add points to your driver’s license and raise your rates.


Insurance.com analyzed the effect of traffic violations on more than 490,000 quotes. Here are some scary statistics:

  • Not wearing a seat belt – average 2.8% increase.
  • Speeding up to 14 mph over – average 10.62% increase.
  • Tailgating – average 13.37% increase.
  • Reckless driving – average 21.9% increase.

Nobody tries to get tickets, of course, but if you get one, try everything in your power to avoid points, from hiring a lawyer to opting for traffic school.


9. Drive less

I save a ton on insurance simply because I don’t drive much. I work from home and live near everything, so I drive only about 1,000 miles a year. While you probably can’t stop driving altogether, you can do a few things to lower your total yearly miles and your insurance cost:

  • Carpool – Carpool with co-workers and cut out up to four driving days a week.
  • Walk – Walk whenever you can. You might end up saving on health insurance while you save on car insurance.
  • Use public transportation – Sign up for a frequent traveler card at your local transit office and you’ll save on trips too.

More from Money Talks News and MSN Money: 


VIDEO ON MSN MONEY

39Comments
Apr 6, 2013 5:45PM
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#4 Check your credit

Damned if you do damned if you don't. Every time you shop for rates from insurance companies they run a credit check on you. 

My question then is how many credit checks can be done without affecting your overall credit scores?
Apr 6, 2013 8:18PM
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Absolutely check your credit score when renewing your policy. My insurance co said my score adversely affected my premium, which went up 17 percent over last year. Only one problem, my credit score is 820 out of 850. So you figure how the deck is stacked! Their rules say you lose.
Apr 6, 2013 8:20PM
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well they pushed mandatory  coverage and said if everyone has it it will  be cheaper  I say its strong arm protection  if u don't buy this then when we get u with out it then we are going to lock u up or fine you it no diff than if I told u that if I don't get x amount ever month then ill break your leg or your house going to burn down   ask the mobsters how strong arm protection work you will find it works same as insurance
Apr 6, 2013 8:18PM
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Kinda hard to walk when you're job is 22 miles away...that would be a great work-out though if I started jogging at mid-night!
Apr 5, 2013 7:24AM
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Here's the 10th way:
10. Drop insurance for vehicles you don't use often. It's so simple to add/remove vehicles to an existing policy, stop wasting money on that RV/Boat/Grandma's Car/etc. that sits mostly.

Apr 6, 2013 10:36PM
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Did anyone watching this video observe how often the driver takes his eyes off the road to look at the camera?  I bet he even texts while driving! His rates should be increased.
Apr 6, 2013 11:57PM
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Blame the attorney's evert time someone claims there neck hurts and sue your rates get affected! They are what drive up the cost. 

Apr 6, 2013 11:51PM
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Here's the real deal. I have a great credit score my insurance rate is still crap, great driving record and my insurance is still ****... As far as the insurance companies using your credit against you is wrong. They can use your credit to judge you but you can't use them as a credit reference. I've tried just to see what would happen. I drop money into prgressives bottomless pit every year , 11 years and nothing back should have been burning my money up or wiping my **** with it and flushing it. Insurance is a scam, as Americans we sould have the right to chose weather we want insurance or not, since there's no one to regulate these pits....
Apr 6, 2013 4:22PM
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wrecked credit means you will wreck cars?  where did you get your information from?  Your article is totally biased and it made me angry just reading it. 

 

Apr 6, 2013 6:12PM
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The smartest thing you can do is shop for a CPA.  They all overcharge so call and ask what they charge.  One CPA is no better than another.  They all have a designation, so don't overpay for a CPA.
Apr 6, 2013 8:09PM
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#6: shop regularly is about the worst suggestion he could make.  All the others are great ideas, but 6 is awful.  While rates can rise even on good drivers, it is more beneficial to stick it out with companies as most of them provide a longevity or accident free discount the longer you are with them with a good driving record.  Most rate increases that companies take are spread across all policyholders, because that is how insurance works, the cost of insurance for the entire population of policyholders is spread across everyone. But the better drivers are rewarded with internal discounts as well as some other well know discounts that provide them with better rates. Insurance laws, which are mandated by each state, dictate that 65% of the premium that insurance companies bring in, must then be paid out towards claims. So out of the premium you pay in, only 35% is used to pay for overhead costs to the company and a portion of that must be invested to keep a company solvent in case of a disastrous loss. 
Apr 6, 2013 5:05PM
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1000 mile a year--so, you only have a car for status symbol? Most drive over 12000, I drive 45-60 K and only pay about 650 a year for each, with collision. You must not be the right type!!!
Apr 8, 2013 1:40PM
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9 ways to trim car insurance bills- MSN Money : Try this site where you can comapre quotes from different companies:  usainsurancequotes.net
May 28, 2013 4:32PM
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Most of the information in this article is reasonably accurate, but the bit about discounts is wrong enough to make your insurance agent cringe. Non-smoker discounts are available on homeowners policies, but not typically on auto policies. The safety equipment information is all embedded in the VIN on your car; you only need to bring it up if you've had after-market modifications. "Being a member of an organization like a fraternity, credit union or educational association" is worth squat in most cases- very few organizations of any sort have arrangements like this in place, and you should be asking that organization which insurers they've worked out deals with. Your age is also automatically factored into your quotes, and being over 50 is only good for a discount until you hit 65, and start becoming statistically more likely to be in an accident. Being a good student does get you a discount, but only if you're under 25, which is when you're paying through the nose anyway.
Apr 8, 2013 1:14PM
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9 ways to trim car insurance bills- MSN Money : Try this site where you can comapre quotes from different companies:  usainsurancequotes.net

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