Auto insurance is something nobody likes but every driver needs. The thought of spending hundreds of dollars on something that, if we’re lucky, we don’t use is enough to cause at least a mild case of nausea. Even if car insurance doesn’t make your stomach turn, you might view car insurance as a legal requirement, not a purchased service. But a purchased service it is, and it’s one that can save you money, despite how ironic that seems in light of your monthly expenditure on it.
The idea is to protect you from loss. If you didn’t have car insurance and you caused an accident that resulted in grievous injury to yourself or others, it could result in a catastrophic financial hit. Should you be involved in an accident that heavily damaged or destroyed your vehicle, the financial consequences, while not quite as heinous, could also be devastating.
With this in mind, you should view your car insurance as a financial life preserver, and you don’t want to skimp on the quality of your life preserver. Instead, you want to do the proper amount of research to enable you to purchase insurance that will be there for you when you need it. Naturally, you don’t want to pay more for it than you have to or buy more of it than you need. Here are five steps to take:
Shop Around before You Buy
Sources of auto insurance abound, and competition among insurance companies is keen. Before you sign up for your policy, make the effort to look at the offerings of several car insurers. This is easy to do online in a matter of minutes. Sites like Insurance.com and NerdWallet enable you to compare insurance rates from several companies at once. It is also valuable to look at individual companies like Esurance, Geico, Progressive, USAA (for current and former military members and federal employees), and AAA. And don’t forget to contact a local insurance broker. Be prepared to give information that includes the vehicle you plan to insure, what you use it for, where you live, the number of drivers in your household, and how much you drive.
Don’t Just Shop Prices
Yes, you are looking for low-cost coverage, but should an accident require the use of your auto insurance, you also want good customer service. You deserve convenience in the manner you submit your claim, and you don’t want your claim to sit in limbo for weeks. Some insurers are much better than others in their procedures and responses to claims, so include customer satisfaction in your research in addition to just looking at rates. A couple places to start that could be this study by J.D. Power, or these reviews at NerdWallet.
Don’t Set It and Forget It
Once drivers sign with an insurer, most utter a giant sigh of relief and never shop for insurance again. They simply renew their coverage year after year after year. But this complacency could be costing them money. At the very least, it’s valuable to do a quick spot check every year or so, just to see if you are missing an opportunity to save money on your coverage. You can do this by going onto one of the above-mentioned online insurance portals and by visiting a few insurance company websites. Local insurance agents can also advise you.
Be Judicious about Coverage
In setting up your auto-insurance coverage, you should be thoughtful about what coverage you need and how much. For instance, choosing “standard” liability packages might seem a logical way to get the coverage that’s right for you. But if you are a high-net-worth individual, or even if you simply own an expensive home or a business, you could well find that the standard liability coverage is far too low to protect your assets. Should a judgment resulting from an auto accident exceed your liability coverage, you will have to pay the difference out of pocket, and that could literally cost you your home or business. On the other side of the coin, if you are insuring an older car that has little value, it makes little sense to carry collision coverage.
Be Strategic about Your Deductible
The typical car insurance policy features a deductible, an amount you pay out of pocket for things like physical damage to your car before the insurance company steps in. At first glance you might be drawn to a low deductible amount, because you anticipate that it will limit your immediate out-of-pocket expenses, should you file a claim. But a low deductible is virtually always teamed with higher rates overall, so you could well pay many times your potential savings over time in elevated monthly rates. A more sensible course is to choose a higher deductible, like $1000 or even $1500. The caveat, of course, is that you must be prepared to pay the first $1000 to $1500 yourself, should you be involved in an accident. Choosing a relatively high deductible should result in significant savings on your monthly premium.
If you follow these five tips, you will have traveled a long way on the road to less expensive but still comprehensive auto insurance coverage. And there are additional steps you can take, too. For example, seek out discounts you or a family member might qualify for—such as safe-driver and good-student discounts, for example. When you change vehicles, take insurance costs into account as you make your decision on what car you’ll buy. Your insurance rates are determined, in part, by what you drive. Finally, this might seem like a no-brainer, but be a safe driver. Obey traffic laws, put the phone down, and don’t text and drive. Accidents will almost certainly lead to higher insurance costs in the future, and so will moving violations, because those traffic tickets indicate to insurance companies that you engage in risky driving behavior. Drive safely, choose your insurance company well, and you can motor serenely into the sunset with more money in your pocket.
Nerad, Jack R. “Take These Steps to Save on Car Insurance.” Go to News., 14 Mar. 2018, blog.caranddriver.com/take-these-steps-to-save-on-car-insurance/.