Getting the lowest possible premium payments on your auto insurance is absolutely possible when you do the following things:
- Shop around for the best coverage
- Find out from insurance companies or agents what discounts you can get (more on this later)
- Figure out if you really need that comprehensive and/or collision coverage for your vehicle
- Not pay for “occasional” insurance which you could get elsewhere.
1. Comparing cheap car insurance by shopping around is not as hard and laborious as it sounds. Really. I’m talking about saving thousands of dollars on your auto insurance premiums each year here for a few hours of work and research on your part. The simplest way to compare auto insurance is to call an independent insurance agent and have him supply you with all of the information and quotes from different car insurance companies. This is also a good step if you’re new to driving and this is your first time car insurance. There are actually three ways to do research on auto insurance quotes.
- Call the direct writer
- Talk to an exclusive agent
- Talk to an independent agent
Direct writer is simply the car insurance company. The advantage here is that you’re bypassing the fee a company agent is paid for providing his services.
Talking to an exclusive agent of a car insurance company means you’ll be able to get a more versatile insurance coverage with that company and the agent will be usually knowledgeable in this particular company’s policies. The downside here is that you’re only getting the information from one company and don’t know what other companies are offering, unless you already shopped around.
Now, when you shop through an independent insurance agent you can simply tell him to find you the cheapest car insurance you can get, without the hassle of comparing cheap car insurance by yourself. You’ll get many options this way as well.
2. When assigning a car insurance policy the auto insurance company takes the base rate of the particular insurance and then multiplies it by many factors. It can look something like this, for example:
Let’s use a 2007 Lexus Sedan for this example.
Territory 18(New York)
Collision base rate $180
Model year/ Symbol factor X 3.78
Increased deductible factor X 1.00
Classification factor X 1.00
Companion Policy Discount X 1.00
Defensive Driver Discount X 1.00
Tier Factor (Standard) X 1.00
Expense Fee + $76
Collision annual premium= $680.4
So this is how much you would pay for a collision insurance coverage for a 2007 Lexus sedan in this example. If you had taken a defensive driving class in the past three years, you would get a 5% discount. If you also had a health insurance with this insurance company you would get a “Companion Policy Discount” which ranges from 5% to 20%, depending on how many insurance policies you have with a company.
You need to ask your agent for these discounts to see if you qualify. In some states giving a 5% discount for a defensive driving class to a driver is mandatory by law and auto insurance companies have to abide by it, but there are also some states where insurance companies do not have to honor this. Depending on the state you might get different bonuses and discounts.
In this example we covered a collision coverage for a 2007 Lexus sedan, however if you were getting a comprehensive coverage for it the list of ratings would be different and would include an Anti-Theft device discount, which can give you up to 25% discount for the cost of your entire comprehensive coverage, but not for the cost of your collision coverage. Note that the expense fee is a flat fee that does not depend on the car you drive or your personal driving record, it’s just a fee that insurance companies charge for insuring a policy to you.
3. A lot of the times the comprehensive/collision coverage is what makes the insurance policy expensive. If you’re driving an older car or a car that you’ve finished making payments on, consider dropping the collision/comprehensive coverage to make your premiums a lot cheaper. Another option would be to raise your deductible from $250 to $500 or from $500 to $1000 to lower your premiums. A raise in deductible on your liability insurance from $250 to $500 is usually enough to buy you $200,000 more liability coverage. The $100,000 liability coverage most people carry on their insurance policies is very little. Getting higher liability limits can mean the difference between financial wellbeing and financial ruin for you and your family, so pay extra careful attention to this factor.
4. Almost all states require you to have at least the minimal Personal Injury Protection (PIP) to drive your car. This covers medical benefits, income continuation, essential services, death benefit and funeral expense benefit. Rather than to pay for increased limits on your PIP you’re better off with higher limits on personal Health Insurance. It covers the same things, but the cost of raising your limits on your Health Insurance is a lot lower than raising limits on your Personal Injury Protection coverage.
There are also add-on coverages like “Towing and Labor” which basically provides you with towing and labor on your vehicle if it’s disabled. You’re better off going with an automobile club such as AAA in this case, simply because of the fact that making too many claims even for this coverage will make relationships with your insurance companies worse and therefore can potentially hike up your annual premiums.
There is also a special discount for women drivers that cheap car insurance for women article covers in detail.