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6 steps to pay less for car insurance

Since you're paying more for gas, maybe it's time to save on another expensive part of the driving experience.

By Stacy Johnson Mar 7, 2012 12:26PM

This post comes from Brandon Ballenger at partner site Money Talks News.


Money Talks News on MSN MoneyAccording to the Bureau of Labor Statistics, the average American spent $5.75 each and every day for gas in 2010. Since the average price per gallon is now approaching a record price of $4.11, you can bet that's a bigger number now.


What's a driver to do? You can try to use less by doing things like checking tire pressure, cleaning air filters and rolling up (or down) your windows. You might even try to hedge prices by following the advice in "The single best tip to beat high gas prices." But here's an additional idea you may not have considered: Adjust your car insurance.


The same BLS report says the average American spends more than $1,000 annually on car insurance. Squeezing savings from your policy will ease your pain at the pump.

 

In the video below, Stacy Johnson offers three practical ways to lower your premiums. Check it out, then read on for a few more ideas.

Let's add some detail to Stacy's suggestions and examine a few more ways to drive down the cost of car insurance.


1. Break down your policy.

Understanding exactly what you're paying for can help you save. (See "Understanding, organizing and saving on car insurance" for a look at the spreadsheet Stacy mentioned in the video.) For example, if you have an older vehicle you own outright, it might make sense to drop comprehensive and collision coverage. These expensive components of a car insurance policy cover theft, vandalism and accident damage to your car when you're at fault.


One rule of thumb: If the annual cost of comp and collision coverage exceeds 10% of the car's value, it might be worth dropping. So if your car is worth only $1,000 and comp and collision costs more than $100 a year, you might consider self-insuring against at-fault wrecks, theft and other perils. But remember, if you don't have full coverage on your car, you won't have it when you rent one either -- unless it's provided by your credit card -- which can mean paying outrageous rates at the rental car counter.


Another thing to remember: Don't be penny-wise and pound-foolish when it comes to liability coverage. That covers other people and their property if you cause an accident. It's critical.


The point is that from roadside assistance to towing to comp and collision, insurance is made up of components, each with its own price tag. Go over your policy and understand what each part costs and what it covers. If you don't understand it, there's a simple solution: Call your company and make a representative break it down for you.


2. Raise your deductible.

A deductible is simply what you're willing to pay before your insurance kicks in. For obvious reasons, the more you're willing to pay yourself, the lower your premium. The Insurance Information Institute says going from a $250 deductible to $500 can save 30%, and up to $1,000 can save more than 40%.


3. Ask about discounts.

Many companies offer discounts for having anti-theft and safety devices, multiple policies with the same company, pay-as-you-drive, low mileage, no accidents, being over 50 -- the list goes on and on. Even setting up online auto-pay can help. But often the discounts won't be made available to you unless you call and ask.


4. Comparison-shop.

As Stacy mentioned, he does this only every couple of years. But it can pay off, especially if you haven't compared rates for a while. Use an insurance tool to compare rates. Also, look to see if any other insurers are licensed in your state. (Not sure about a company's financial strength? Check its ratings at Standard & Poor's.)


5. Maintain good credit.

Insurance companies use lots of seemingly irrelevant information to set their rates, including your credit score. They've found that people with bad credit are more likely to file claims. So work on your credit score if it's not where you want it. Estimate your credit score for free.


6. Drive cars that carry lower rates.

Some vehicles cost more to insure, and not just Porsches either. While a low insurance rate may be way down the list of factors you consider when buying a car -- certainly behind mileage -- you can find out the least and most expensive cars to insure


More on Money Talks News and MSN Money:

20Comments
Mar 16, 2012 3:58AM
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basing rates on credit scores is a scam.
Mar 16, 2012 12:29PM
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"So if your car is worth only $1,000 and comp and collision costs more than $100 a year"

Reality flew over this guy's head...

And Geico??? Please..."15 minutes will save you..." squat. They were about 30% higher than my current carrier. And boy...try to get these idiots to leave you alone once you request that "free quote". Worse than a damned mosquito.
Mar 16, 2012 12:54PM
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But remember, if you don't have full coverage on your car, you won't have it when you rent one either -- unless it's provided by your credit card -- which can mean paying outrageous rates at the rental car counter.
This is a completely not true.  This is what really bothers me about people who do these reports.  Mr. Johnson, are you a licensed insurance agent in all 50 states?  Probably not.  This type of coverage varies by company, and by state and is not true for all states and all companies.  Get your facts straight before doing an article and misinforming the public. 
Mar 16, 2012 9:04AM
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I have changed my car insurance company 3 times in the last 3 years. The insurance

companies expect most people to just "renew" without even "shopping around" a

little to see if there is a better deal available with another carier so they [usually] add

a little more cost to your policy as a matter of course through your association with

them.

I was with 21st Century and switched to Geico to save $300 yearly with better coverage

and I just switched from Geico to Farmers and got an even better policy than that which

I got from Geico for $450 less.

The only "trick" is to shop around at renewal time because "other companies" will almost

always give you a great deal to "switch".

Apr 8, 2013 3:12PM
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6 steps to pay less for car insurance- MSN Money : Try this site where you can comapre quotes from different companies:  usainsurancequotes.net
Mar 16, 2012 10:10AM
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I am almost 60 years old and have not have a wreck or ticket in 25 years yet companies still insist on do a credit report to get a rate.  I have pristine credit as well but one has nothing to do with the other and I hate it when they say that !  It just iritates me when they say that,  I just wish I could find a company that didn't do that.
Mar 16, 2012 11:54AM
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Credit or "insurance scoring" on auto insurance is an underwriting tool virtually all major companies use. For those naysayers, I am a veteran insurance agent, have seen the statistics and it does work.  If you start with a consumer with a credit score of around 750-800, you will generally find very few claims, tickets and accidents on their record.  As the credit score diminishes, statistically the number of claims, etc. increases and the consumer pays more for coverage.  Of course there are always some exceptions, but by and large the scoring works well for most.  Those who have worked hard to develop a decent credit score should be rewarded for personal responsibility and accountability.   
Mar 17, 2012 9:09AM
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I have priced policies from a company and gotten very different quotes from different

agents that work for the same company; agents have a lot of "sway" in how they

price policies as the more they charge the more they get.

Mar 16, 2012 12:48PM
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To Libbuster

My credit score hasn't changed much in the past 10 years, so rating on a credit score is bull. My driving has changed quite a bit in those same !0 years, so again bull to the credit score.

I could see age, tickets, and other factors playing into risks, but the fact that I pay my bills doesn't compute. Running a credit score for auto insurance should be illegal in my opinion, but it isn't. There is no correlation to a person ability to pay their bills and their ability to drive. Explain how a person who lost their job through a layoff and had to file bankruptcy is more of a risk then a person who didn't? Or perhaps a person who had large medical expense they couldn't pay is a risky driver?  Or the person who got behind on their student loans through no fault of their own? I'm not buying into the credit score risk for auto policies bull.

Mar 16, 2012 1:19PM
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@Ken45

 

There are insurance companies that make exceptions with regards to your insurance score due to the life changing events you mentioned.  Hopefully, consumers will stick with a company that still have licensed, personal agents instead of some ya-hoo at a 1-800 #, that know their company's guidelines and can intelligently inform you of all the options and processes.   

Mar 16, 2012 12:22PM
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as one who used to sell car insurance, If you refuse credit scoring usally your rate will be higher.shop your insurance at renewal each year will usually save you money. Fyi companies pull scores from your address not your social security number so the odds of them not running a score on you are pretty slim. i would estimate 98% of car insurance providers run credit scores.
Mar 16, 2012 11:47AM
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The nerve of these sites spreading spam on important issues irritates me to no end,but enough of that...I am currently with geico and have a decent rate,less than 90 a month but  I tried going to 21 st century and was given what a bad rate i was like are you kidding me???was over double than what I'm paying now. If in fact rates are based on credit reports whose dumb idea was that??? How i pay my bills and how I drive are 2 seperate things. havent had a accident in over 10 years and ask why am I paying rates that should be given to new drivers 16-25 yo?? But I like his idea about raising your deeductible for savings but dread if an accident finds me that amount is going to hurt.
May 16, 2012 6:21PM
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Anyone got any recommendation, I am looking for a new carrier now.  My son had an accident in one of my vehicles and my rates have more than doubled.
Mar 16, 2012 7:19AM
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The insurance company's also heavily weight your premimum

based on your education and job level.  So next time they ask...just tell them that you have a PH'D and you are an executive.  You yearly premium will drop hundred's of dollars.  Also if you have bad credit...DO NOT give them permission to run your credit and do not give thenm your SS #.  If they insist...find another company.  I am not pushing GEICO...but they will not run your credit if you do not want it run...so someone with bad credit will get a much better rate.  Do these 3 things and I guaranteed you will get a lower rate.  I know all of this because I have worked in Insurance.

Mar 16, 2012 10:04AM
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Or you could all stop driving your stupid oversized nuisance to everyone else on the road SUV's and get a sedan that gets twice the gas mileage as your pig does.  SUV's are the sole reason we all pay more for gas.  They raise the demand and decrease the supply 2 fold collectively.  You know how many idiots I see with 1 person in a Suburban, or a Rogue, or Armada?  They actually open the hatch to put 1 grocery bag in the back.  99% of the time there is one person in the oversized tank.  
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It's where wealthy singles looking for  someone to enjoy their fabulous lifestyle with:)

As Stacy mentioned, he does this usually any integrate of years. But it can compensate off, generally if we haven’t compared rates for a while. Use an word tool to review rates. Also, demeanour to see if any other insurers are licensed in your state. (Not certain about a company’s financial strength? Check a ratings during Standard Poor’s.)



Mar 16, 2012 10:27AM
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Think about it my friends. This is just the start of the rich getting all the bailouts.

When do we get ours? RIGHT NOW!

G00GLE the term ' THE CASH TEACHER ' and click the first site. Go right to the 'PENNY STOCK' page to see what the rich don't want you to know.

 

 

 

 

 

 

 

 

 

old and have not have a wreck or ticket in 25 years yet companies still insist on do a credit report to get a rate. I have pristine credit as well but one has nothing to do with the other and I hate it when they say that ! It just iritates me when they say that, I just

 

Mar 16, 2012 7:24AM
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oh,nice topic.i have heard that a saying goes in China like this "Only one himself knows if the shoes match his feet or not “。If u really love her /him ,nothing matters, let alone the age . look at my name .~~  it is a nice place for younger women and older men, or older women and younger men, to interact with each other.we met there ,and he is almost 12 older than me ,but we think we did find the true love.BTW,Ever feel that you would best enjoy someone who is not in your age group? If u are really interested in it, maybe  u  wanna check  it out or tell your friends.













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