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Everyday Cheapskate: 5 ways to shrink cost of your car insurance

Automobile insurance. We spend thousands of dollars on it and then hope we’ll never need it. By law and common sense, we know that we must have it. But that doesn’t mean we should pay one dollar more for auto insurance than necessary.

Shop around. Rates between insurance companies can vary greatly. Call three different companies today and you’re bound to get three different quotes. There is nothing righteous about staying with the same company forever. An hour of your time once a year could net a handsome premium reduction. You can get quotes online from companies that sell directly, such as Geico, State Farm and 21st Century. Compare with what you have and don’t be afraid to make a switch.

Increase deductibles. Remember this: The lower the deductible, the higher the premium. You’re not likely to file a claim for a minor incident because that could make your premiums skyrocket. So if you’re not going to file small claims, think about increasing your deductibles to say $500 or even $1,000. Then put the premium savings in a special account to pay for the fender-benders. One Florida couple that raised the deductible for their 2005 Volvo and 2003 Acura Legend from $500 to $1,000 cut their annual premium from $3,200 to $2,800 — a decrease of 12 percent. That is significant. But they need to squirrel away those savings. If the worst happens, they don’t want to feel compelled to use a credit card to cover the deductible.

Drive a safer car. Larger and heavier cars tend to be safer and therefore less expensive to insure. And don’t drive a thief’s favorite model. (The Ford F-250 pickup is the new favorite vehicle target of thieves, by the way). You can discover which cars are more likely to be totaled or stolen by calling the Highway Loss Data Institute, 703 247-1600, or searching online at iihs.org.

Drop unnecessary coverage. Examine your policy carefully for coverage you can reasonably reduce or eliminate. The most promising area may be your collision and comprehensive coverage. The general rule is to drop collision coverage when its annual premium exceeds 10 percent of the car’s market value. Most public libraries have the National Automobile Dealers Association price book of market values. Or visit Edmund’s Automotive Buyer’s Guide, edmunds.com, or Kelley Blue Books, kbb.com, to discover values online.

Rack up discounts. Mark Green, author of The Consumer Bible, estimates Americans are paying $300 million more in auto insurance premiums than necessary per year, simply because they are not getting credits for which they qualify. For example, if you insure all your cars and your home with the same company, you will likely qualify for a significant discount. Safety equipment like anti-lock brakes, advanced air bags, daytime running lights, rearview cameras and security systems will reduce your exposure and your premium. Non-smokers, good students and safe drivers also qualify for discounts. Cindy M. walked away from a phone call to her company with a nice reduction of $204 all because she asked them to run down the list of discounts to see if she qualified.

Mary invites questions at mary@everyday

cheapskate.com, or c/o Everyday Cheapskate, P.O. Box 2099, Cypress, CA 90630.

This column will answer questions of general interest, but letters cannot be answered individually

Mary Hunt is founder of www.DebtProofLiving

.com, a personal finance member website.

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