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 meanpaying 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.
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%.
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.
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.)
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.
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.
Source: Brandon Ballenger at partner site Money Talks News.
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