The Right Way to Save 15% or More on Car Insurance
November 02, 2011A few months ago I received my annual notice from my auto insurance company that my auto policy was up for renewal. I pay my auto insurance premium monthly, and to make it easy, I have it automatically drafted from my checking account. When I first took out the policy, the insurance company I chose was one of the more competitive pricewise. However, over the last several years I’ve noticed that my monthly premium has slowly been going up. Now, I would expect the cost of coverage to increase with inflation, plus we purchased a newer car a few years ago, but the most recent increase was way more than I expected, so I started shopping around. I did end up finding a new company to insure my vehicles, but not without learning a few things along the way.
If you’re in the market for car insurance, here are some things you should know:
Always compare apples to apples
Any insurance company can “save you 15% or more on car insurance” just by changing the amount of coverage or the deductible, so review your current policy’s declarations page and be sure you have the right level of coverage before shopping around.
If you have an existing relationship with an insurance broker, ask them to review your policy. You may also want to ask friends or family what they are paying. I prefer to use online resources such lowermybills.com or insure.com to do my comparison shopping. Since the rates quoted online were comparable to the rates quoted by a local agent, I decided to work with the agent. That way, if I should ever have to file a claim, I will have a name and a face I can hold accountable.
See if your current policy has a fee for discontinuance
Once you find the policy with the best value for your preferred level of coverage, check with your existing policy issuer to make sure there are no fees for cancellation. When I received my renewal notice and decided I would shop around, I procrastinated. I figured I could switch my auto insurance at any time, so I waited a few months before making a move. It was only AFTER the fact that I learned my previous insurer charged a fee when canceling during the policy year. Had I made the switch three weeks earlier—at the time of renewal—I would have been spared the 17% cancellation fee.
Not all insurers have this fee, so if yours does and you are looking to make a switch, wait until the policy is up for renewal. Needless to say my new insurer does not have this fee.
Bundle to save (if you can)
The policy I ended up with will save me around $20 a month, but it could have saved me more. Most insurance companies offer a multi-policy discount on their auto insurance policies when you carry another form of insurance, such as a homeowner’s policy. It’s worth noting that some insurance companies will require you to be claim free for a certain period of time before they are willing to underwrite a policy. If you follow my blog, you may recall I had a claim on my homeowner’s insurance policy about a year ago, and as a result my new auto insurance carrier is unwilling to underwrite my homeowner’s policy for at least another two years.
On a final note, if you have roadside assistance through a travel club such as AAA, you may want to see what kind of roadside assistance is available through your insurance company. Sure, they may not have flashy bumper stickers or give you a 10% discount when you check in to a hotel, but if all you really need is a tow truck in case of a breakdown, your auto policy may be able to provide you this service at a fraction of the cost.
I’m not saying the cheapest policy is always the best, but all things being equal, saving $20 to $30 a month in car insurance adds up. And besides, it’s your money! I’m sure you can find some better uses for it.