Frugal Family: Avoid Paying Too Much for Car Insurance

Insurance can be a tough one… Many of us, especially in tight economic times, struggle with the idea of paying for something we hope we’ll never need. While it’s true that in order to drive you must have liability insurance, there are things you can do to make sure you’re not paying more than necessary. Aside from the obvious “shop around,” here are some other tips for keeping your insurance premiums at a minimum while still maintaining the coverage you want and need.

1. Bundle your insurance. Just like you can bundle cable, phone, and internet services, insurance policies can be bundled as well.  If you have a lot of assets, an “umbrella policy” may be your best bet, but if not, consider purchasing homeowner’s or renter’s insurance through the same company that you insure your vehicles. There’s often a discount available, especially if you ask for one.
2. Review your policy regularly and buy only the coverage you need. As your vehicle ages, you may want to reduce some of the coverage on it (say, damage or theft) while maintaining full liability coverage.
3. Drive safely, and ask if safe driver discounts are available. When you are “at fault” for an accident, or if you get speeding tickets often, your premiums can increase substantially for three to five years. But, if you don’t, many insurance companies will reward you with “safe driver” discounts, if you ask.
4. Maintain good credit, especially if you’re shopping around for insurance. Also, don’t let your policy lapse. When insurance companies are writing policies, especially for new customers, they’ll look at past credit history. Those with poorer credit and drivers who have let their policies lapse in the past are considered more “at risk,” and premiums will be higher because of it.
5. If your work or housing situation changes, make sure to let your insurance carrier know. If you stop working, move closer to the office, or begin working from home or carpooling, even if it’s just a few days a week, call your insurance company. If your mileage to and from work decreases, so will your premium.
6. Consider increasing your deductible. By agreeing to pay more out of pocket in the event of an accident (say, $500 instead of the standard $250), your premium will come down. Of course, only do this if you’re a relatively safe driver, and make sure your financial situation is able to support that higher deductible in the event that you do need to pay it.
7. Buy a longer policy, and pay all at once if you can. You can typically save money by purchasing a 12-month policy instead of 3- or 6-month coverage, and if you pay for it all upfront instead of in monthly installments, you’ll save even more. If this isn’t possible, sometimes having your monthly installment paid automatically via direct draft can save you a few dollars.