Getting the Right Auto Insurance Coverage at the Right Price

You can’t undo all of that increase, but you may be able to roll back some of it — if you’re willing to ask for discounts, tweak your coverage, modify your driving habits, and adopt new technology. Of course, you can also try to find a better deal from a different carrier. The savings could amount to several hundred dollars a year.

• __Ask for every possible discount.__Most insurance companies offer price cuts if you meet certain criteria. You may already receive some of these discounts but double-check to be sure.For example, you may qualify for a “good driver” discount if you have no recent accidents or traffic violations. If you have a short commute or work from home, a “low mileage” discount may be available. Young drivers with good grades can get a “good student” discount.If you insure multiple vehicles, you may be eligible for a “multi-car” discount. If you have car insurance and a homeowner’s insurance with the same company, there is probably a “multi-policy” discount.  Some carriers offer “loyalty” discounts for long-time customers.In addition, most insurance companies offer discounts if a car is equipped with anti-theft technology and newer safety features (such as blind spot detection and automatic emergency braking).Almost all carriers offer a discount for customers who pay up front rather than in monthly installments. You may also get a discount if premiums are auto-drafted from your bank account.
• Increase your deductibles. A deductible is the amount you pay out of pocket on an insurance claim. For example, if you’re insured for a loss of $10,000 and have a $500 deductible, the insurance company will “deduct” $500 from the settlement and pay $9,500. Increasing your deductible(s) will lower your premiums because the insurance company assumes less financial risk, and you assume more.Auto insurance policies typically have separate deductibles for collision coverage (for accident damage) and comprehensive coverage (loss caused by theft, vandalism, storms, etc.). According to the Insurance Information Institute, an industry-backed organization, increasing a deductible from $500 to $1,000 can reduce an annual premium by about 20 to 25% on average.(Deductibles don’t come into play with “liability” coverage, which covers medical expenses and property damage if you are at fault in an accident. States typically mandate a certain amount of liability coverage.)
• Don’t pay for what you don’t need. If you drive an older car, you may want to drop collision coverage entirely since the car’s value may not justify the premium. The general rule is that if the premium is more than 10% of the car’s value, maintaining collision coverage isn’t worth it. (You could also drop comprehensive coverage for an older car, although it can come in handy if a tree falls on your car or a rock cracks your windshield!)
• Take driver’s ed. Even if you’ve been driving for decades, completing a defensive driving course could result in a multi-year discount on your car insurance, depending on the insurance carrier and, in some cases, your age. (Some companies offer special discounts for 55+ drivers who take a course.) Before signing up, be sure your carrier approves the course. Also, weigh the course cost and the time involved against what you could save. Typically, such courses range from $25 to $100 and require an investment of 4-12 hours (either online or in person).
• Park in a garage. You may dread cleaning out your garage, but taking on that chore could cut your insurance bill. Here’s why: Parking your car in your garage — rather than in the driveway or street— makes it less likely to be vandalized or stolen. Also, a car parked on the street could be hit by a passing vehicle. So, if you have a garage, park in it — and let your carrier know.
• Sign up for monitoring. (You can ignore this one if you don’t want an insurance company tracking your movements.) Some companies now offer a discount if you allow your driving habits to be monitored via a smartphone app or a “black box” device installed in your car. The tracking device can verify if you’re a safe driver (avoiding excessive speeds and hard braking, for example). The result could be a reduction in your premium. (Conversely, if the device data suggests you are an unsafe driver, you could see your premium increase.)
• Pay by the mile. Monitoring devices can track your mileage too, so some insurance companies now offer premiums based on the actual amount of driving you do, rather than a fixed amount. If the “pay as you drive” approach interests you, ask if your carrier offers that option.
• Comparison shop. If you’ve explored savings opportunities with your current insurance company but are still unsatisfied, you may find that it pays to shop around. Each auto insurance company has its own method for calculating rates, so the cost of virtually identical coverage can vary significantly from one carrier to another.

To shop effectively, get quotes from at least three carriers, using identical coverage amounts, liability limits, and deductibles. Also, pay attention to the coverage period. Some companies may offer a six-month quote, while others provide a quote for an entire year of coverage. (Keep in mind that if you choose a company offering a six-month quote, your rates could go up at the end of that period.)