Is your car insurance driving up your monthly expenses?
Whenever you get behind the wheel and start driving your car, you’re taking thousands of pounds of metal and accelerating it all to a high speed. There are a lot of things that could go wrong. What would happen if you lost control of your car and crashed into someone’s house? What if you accidentally hit someone crossing the street? What if someone else drove their car into yours?
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In any of these unfortunate scenarios, you could ultimately be responsible for repair or medical bills ranging from several hundred dollars, if you’re lucky, to several hundred thousand dollars, if you’re not so lucky. Most people don’t have that kind of money just lying around – and that’s where car insurance comes in. Your car insurance company will pay for these monster expenses, so that you don’t have to declare bankruptcy every time you get in an accident. So how do you keep your car insurance costs down and still make sure you have enough coverage?
Tip 1: Shop Around
My first rule of thumb is to shop around. There are dozens, perhaps even hundreds of companies out there who sell car insurance, and all of them are selling essentially the same product. Does this mean you should always go with the least expensive option? Probably not – you could be sacrificing in terms of responsiveness, ease of access, or professionalism.
I’ve typically had good luck with major insurance carriers like Geico or Progressive in terms of the cost being on the lower end, but still with decent enough service. It’s quick to compare rates from many of the big insurance companies, and in most cases you can do so right on their website without even talking to another human.
Make Sure You Speak to an Independent Agent
In addition to that, I also recommend that you speak with at least one independent insurance agent in your state. This is someone who does NOT work for a company like State Farm or Allstate – those guys are called captive insurance agents and can only sell you insurance from a single company.
An independent insurance agent will be able to provide you with valuable guidance on the amount of insurance you should purchase and get you quotes from a pool of insurance companies that they have experience working with. Some insurance companies don’t like dealing with the general public and therefore the only way to purchase their product is through a licensed independent agent. You could be missing out on the best deal by not talking to one of these independent agents – not to mention they usually provide top notch personalized service. Let me know in the comments how you like to shop for and buy your car insurance!
Tip 2: Pay In Full Up Front
My next tip is to pay for your insurance in a single, lump sum up front. With many insurance companies, this single payment option will get you a huge discount, sometimes even hundreds of dollars. Insurance companies typically sell insurance in six or twelve month periods, so you’ll need to pay for all six or twelve months at once to take advantage of the largest discount available. My wife and I usually have enough wiggle room in our monthly budget to make this work once every six months by putting a little bit less toward our debt when it’s time to renew our car insurance. If your budget is a little tighter than ours, you can simply move some money into a savings account every month so that when it comes time to renew your insurance, you already have the cash set aside to pay in one lump sum.
You might be concerned about paying up front for six or twelve months because of the possibility of your insurance needs changing, or finding a better deal with another company. This is not something you need to be concerned about! I’ve cancelled or changed my car insurance policy part of the way through on several occasions, and I’ve simply received a partial refund for the unused months each time. There was no penalty for cancelling and I got all of my money back minus the months I had the insurance for. You can and should verify that this is the case with your state and your insurance company before proceeding with your purchase!
Tip 3: Maintain a Clean Record
You’ve made it this far. You’re officially an insured driver! Now how do you keep your premiums down going forward? The simple answer to that question is to maintain a safe driving record free of accidents, violations, and insurance claims! If your insurance company views you as a safe driver, unlikely to cost them anything, then they’ll continue to give you the lowest possible rate for car insurance.
If you get into an accident or get a ticket, you can expect the cost of your car insurance to go up significantly when it’s time to renew your policy. This is one of the hidden costs of something like a ticket for speeding or running a red light. At first glance, a couple hundred dollars for a ticket might not seem so bad. But consider the possibility of your monthly car insurance bill going up by ten, thirty, or even fifty dollars per month for the next three to five years. That speeding violation just went from costing you three hundred dollars to three thousand dollars.
Well there you have it – three tips for keeping your monthly car insurance expense to a minimum. Do you have any other tips for keeping your car insurance premiums down? Let me know in the comments!