Auto Insurance Tips

Have Uninsured and Underinsured Motorist Coverage

This coverage covers you and family members that live with you for injuries caused by a negligent driver that fails to maintain enough (or any) auto liability coverage.  This is not a mandatory coverage in most states and is easy to overlook when price shopping. If you choose, for example, Bodily Injury Liability of $100,000 per person/$300,000 per accident, you should mirror these limits with the Uninsured/Under-insured Motorist Liability on your policy.

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Maintain Good Credit

Many insurance companies take your credit score (sometimes referred to as an insurance score) into account when they develop your auto insurance premium. Insurance companies have found that clients with poor credit scores are more likely to have and submit a claim against their policy.

Increase Your Deductible to Save Money

One way to reduce your annual premium is by increasing your collision and/or comprehensive deductible.  The more you are willing to self-insure before the insurance company pays a claim, the lower your premium.  Average deductibles start at $250 or $500, but increasing your deductible to $1,000 or $2,000 could save you hundreds in premium each year. Just be sure that you can afford the higher deductible in case you’re involved in an accident.

Consider Your Billing Plan

Insurance companies often provide multiple bill plan options: monthly, quarterly, semi-annual, and annual are the most common.  Installment fees average from $5 to $10 a month per installment. This means that if you pay monthly premiums with a $5 installment fee each month, you are charged an extra $60 a year. Instead, ask for automatic deductions, more commonly known as EFT payments. Monthly installments are automatically withdrawn from your checking account, which can eliminate fees. Many carriers also offer a pay-in-full discount for annual payment plans, so take advantage of extra savings when possible.

man with tire, stuck in tire
Stay out of trouble by following these auto insurance tips

Consider Driving Habits that Drive Up Insurance Rates

Your car insurance premium is a reflection of how you behave as a driver.  Some factors that impact your insurance premium are:

  • Moving violations. Moving violations like speeding tickets, stop sign violations, and accidents that are your fault typically create surcharges in your annual premium.
  • Higher mileage. Since the chance of incident increases the more you drive, higher mileage per year usually means higher premiums.  If you are a light driver, look into a low-mileage discount
  • Having a newer vehicle. Newer vehicles typically cost more to insure than older models. If you’re considering a new car, ask your agent or insurance representative for an insurance estimate to avoid a surprise hike in your premium.

Remember: Not All Auto Insurance Companies are the Same

  • When deciding between insurance companies, know what’s most important to you.  Will you want OEM (Original Equipment Manufactured) parts on your vehicle’s repairs or are you satisfied with aftermarket parts?
  • Most carriers provide actual cash value settlement. This means that the insurance company will look up the market value of your vehicle based on its mileage, condition, and amenities. Some carriers offer the option for agreed value settlement: you and the company “agree” to a value at policy inception, and this is the value you receive if your car is totaled.
  • Consider the financial stability of the insurance company you’re choosing.  Choose an insurance company with an “A” financial rating or better. This rating is a reflection of a carrier’s financial stability, customer service, claims satisfaction, and overall performance in the insurance marketplace.

Consider Accident Forgiveness Coverage

More insurance carriers now carry accident forgiveness coverage.  You pay more in premium to have this coverage on your auto policy, but it prevents your carrier from increasing your insurance rates following your first at-fault accident.

Don’t Let Your Policy Lapse

Your insurance coverage history can impact the quotes you receive from new insurance companies.  Maintain continuous insurance coverage and avoid a lapse so that your new company will perceive you as financially responsible and less risky than someone who lets their coverage cancel or lapse.

Remove Unnecessary Coverage

Get an analysis of your vehicle’s value and condition, as well as your own financial situation.  As your vehicle ages, you receive less reimbursement after a claim for damage to your car. It may make sense to remove comprehensive and collision coverage in order to drop your premium. Websites like Kelley Blue Book or can help you determine the current value of your car.

Special Circumstances:

Do I Need Collector’s Car Insurance?

People who own antique, vintage, classic, or exotic cars should more carefully consider insurance companies.  Some companies specialize in insuring older cars with increased value due to restorations done to the vehicle over the years.  Using specialty carriers is often necessary to insure cars with values higher than $100,000. Insurance rates for these types of vehicles can be lower than average car insurance costs because these vehicles are often only used a few months of the year and have very limited mileage.

Am I Covered When I Rent a Car?

Renting a car when you go on vacation is common.  If you have a personal auto policy, your own insurance coverage extends to the temporary vehicle as though it were your own. Your liability protects you against injuries or damages that you’re responsible for while using the rental car, however; rental agencies will ask if you want to purchase what is commonly known as a collision damage waiver. There is typically a daily charge for this waiver ($10-$20 depending on the rental agency). If you chose to purchase the waiver, any damage you cause to the rental vehicle will be covered by the rental agency themselves at no additional charge to you. One type of coverage your policy likely won’t provide is loss of use. If you’re responsible for the damage to the rental vehicle and it requires repairs, the rental agency could charge you for the loss of use, or their inability to rent that vehicle, while the car is fixed.

Have Rental Reimbursement Coverage

Also known as substitute transportation, this coverage is essential if you want to avoid large out-of-pocket costs for a rental car should your car be involved in an accident. Cost of this coverage will vary since carriers allow you to choose a dollar limit ($15, $20, $30 or more per day).  Because it is fairly inexpensive, this coverage can pay off the first time you have to use it.

How Do I Insure a Leased Vehicle or a Vehicle with a Loan?

If you’re in a lease or considering a leased vehicle, remember that the lease contract will require you to carry a specific minimum coverage on your auto insurance. Most require that you maintain Bodily Injury Liability and Uninsured/Under-insured Liability of $100,000/$300,000. Lease vehicles also limit the maximum deductible on your policy: often $1,000 is the maximum allowed deductible.  If you take out a loan on a newly purchased car, you won’t have any specific requirements for liability coverage.  Though you can choose your own liability limits, you will need to have comprehensive and collision insurance as a requirement of the loan. GAP coverage, also known as Loan/Lease coverage, provides reimbursement when a total loss occurs to a vehicle and the amount you get from the insurance company is less than the amount you own on the loan. GAP coverage pays the difference between the totaled value and loan amount.  If you put a large amount of cash down on a new purchase or if you use your trade in value to gain equity on your new car, you might be able to go without GAP coverage. Since interest rates are low, many auto dealers offer sign-and-drive,  $0 down, or deferred payment deals on new car purchases. It’s very important to have GAP coverage in these situations, as the depreciation of a new vehicle in the first year often drops the vehicle’s value faster than you can pay down your loan.

Take a Safety Driving Course

If you’re looking to lower your auto insurance premium, you might consider enrolling in a safety driving course. There’s a range of options to choose from, including driver’s education and defensive driving. Car insurers love to see that their customers care about driving safe and the completion of one of these courses typically results in a premium discount. These courses vary in price, starting around $50 with rates discounted 10-15%.

Shop Regularly

The most important piece of information to know when it comes to car insurance is that you must shop around. Browse, research, compare quotes, and shop regularly. Check out other car insurance carriers even if your policy isn’t up yet. You never know what one provider will offer you in comparison. Shopping around is also the best tactic to beat price optimization. Some car insurers are using data to determine which customers are least likely to switch carriers, and are then raising their rates because of that. Because pricing intelligence is relatively new, few legalities exist. For now, shopping for quotes regularly is the best way to insure you are getting quality car insurance at the price you deserve.

Consider Before You Buy

When purchasing or leasing a new or used vehicle, you might want to first consider your car insurance premium. Many factors determine car insurance rates; primarily driving history and location, but car make and model can also influence the price. Depending on whether a car is old or new, has few or many safety features, and has high or cheap replacement costs can all determine your premium rate. Typically, more expensive cars cost more to insure. Consider your options by comparing quotes before purchasing a car.

Safeguard Your Vehicle

One way to save money on your auto insurance is to upgrade your safety features. Your vehicle likely has several safeguards already including airbags and quality seatbelts. Upgrading to an automatic braking system or other collision avoidance system can keep you safe and save you money. Anti-theft devices work the same way and even obtaining VIN etchings can come with a discount. When speaking with an agent, be sure to mention all of your vehicle’s extra features.

Ask and Ask Again

Ask a lot of questions. To get the best deal on auto insurance, you need to. If you’re confused about your policy details or what type of coverage is available to you, speak up. It also never hurts to ask about potential discounts and to let your agent know whenever anything concerning your driving situation changes.

Bundle Up On Insurance

Bundling up on insurance policies can sometimes save you money. If you need home or life insurance, consider buying them from the same company as your auto insurance. Providers will typically offer a discount known as a “bundle discount” or “multi-policy discount” to customers who are purchasing more than one form of insurance. Savings can be up to 25%.