3 Tips to Save on Auto Insurance

3 Tips to Save on Auto Insurance

Besides your house, what is one of the most expensive things you own? For many people it’s their car. Unfortunately, unlike your home, cars will depreciate in value over the years (unless you have a classic car or a rare car of some sort, then those may appreciate in value over the years). The more you use the car, or the more mileage you put on it, the less its worth.

According to Statistia, there was approximately 218 million drivers on the road in 2015 with approximately 263 million vehicles registered. Aside from purchasing the car, the other big expense associated with car ownership is insurance. Yes, there is maintenance and other costs too, but insurance normally equates to more than the maintenance costs you put into your car if you added up all the insurance payments you make from day 1 to the end of the car’s use. Again, there are always exceptions, but the bottom line is that auto insurance is expensive! I’ve got good news for you, though! There are things you can do to reduce that costs and these 3 tips can save you anywhere from 10% to 40% on your annual insurance premiums.

Tip 1: Consolidate Your Policies

This is an easy one and, depending on the company, it can take as little as 5 minutes. How many of you have your auto insurance with one company and your home or renter’s insurance with a different company? I don’t have an exact number on this one, but it’s more than most people think.

My husband is the perfect example; he had his auto insurance with Geico and our home insurance with State Farm. He never thought to ask the other company if they could beat the competitor’s price if we bundled home and auto with them. It wasn’t until one company called and left a message saying they would reduce our home insurance by 40% if we bundled with our auto insurance. He thought the offer was too good to be true, so he went and visited with the agent who left him the voicemail. She explained to him that combining our home and auto policy enabled us to receive more discounts that weren’t available to us before. She explained that auto insurance is riskier than home insurance because drivers are more likely to have a major loss event with their car than they are their home, so combining insurance policies helps reduce the risk to the insurance company, as well. Plus, some of our own research confirmed that the insurance companies also make more money on the multiline policies than they do on insuring cars or home individually.

If you have policies with different insurers ask if they can reduce your costs if you combine. Don’t forget to ask each company and be honest with them, if insurance company A is giving you a better quote to consolidate than company B, tell company B. Sometimes they will match or even beat the competitor’s quote to get your business.

Related Post: Why I Bought a Luxury Vehicle

Tip 2: Consider a Tracking/Monitoring Device

I know it sounds crazy. Why the heck would you ever do that!? Well, for one, insurance companies offer significant discounts if you agree to install a driver monitoring device. If you are a safe driver with normal driving habits this device can save you some serious cash. Also, if you truly are a safer driver, what do you have to hide?

If you do agree to have one of these devices installed the process is simple. You normally receive a small computer chip that can be plugged into your car’s computer system, which typically sits somewhere under the steering wheel on the driver side. This small wireless device is attached to your car, letting the insurance company monitor your driving habits, including distance, frequent travel times and driving habits, such as sudden stops or speeding.

The amounts you can save vary depending on your driving data which is recorded and analyzed by the insurance companies, but most insurance agencies offer significant discounts. For example, Liberty Mutual offers the following, “receive at least a 5% discount immediately and up to 30% on your auto insurance after only 90 days.” 35% might be worth it if you’re a good driver and some of the other insurers offer even more. If you haven’t considered it, and you are truly a good driver, it’s worth at least asking your current insurance provider how much you could potentially save if you sign up for the monitoring device.

Tip 3: Take a Defensive Driving Course

Most insurance agencies offer some type of defensive driving course to help you save money on your auto insurance. My husband and I have Geico insurance and we are currently taking a 6-hour accident prevention course that is online and can be completed on our own time, as long as we finish it within a month. Once we complete the course, we will save 10% per year for 3 years per driver (so 10% off for each of us). The cost of the course was $24.95 for each of us, but our savings over 3 years will be significantly more than that. Although a 6-hour course may sound like a nightmare to some, it’s not a bad tradeoff to get 10% per driver for 3 whole years!

Each state has different laws regarding auto insurance and different courses that may help reduce your auto insurance AND reduce points on your license. Check your local DMV website and/or check with your auto insurance company to determine what discounts may be available to you. It’s totally worth a few hours of your life spread out to obtain a discount over the course of 3 years (or whatever time-frame is applicable for you)!

What kind of tricks have you used to help reduce the cost of your auto insurance?

5 thoughts on “3 Tips to Save on Auto Insurance

  1. Additional tips I’ve used and that I would suggest include eliminating medical insurance (for you) If you have health insurance from say your employer. I personally don’t pay extra for a rental or having a repair service on call and the last one is increasing my deductible from $500 to $1000. These three things have saved me a significant amount of money and they work for me. I could see where some folks might feel uncomfortable with my suggestions and I guess we all need to make decisions that give us peace of mind so no harm done on disagreeing.

  2. Great ideas! I’ll have to call Geico to see if taking a course will help me get more discount. They already told me a while back that I’m getting all available discounts which I checked online. But there are always ways companies offer more incentives to entice new customers and convince existing ones to stay. 🙂

  3. Yes – bundling is crucial. I’m always shocked how much people can save from bundling. I don’t blame you husband for doubting it, because it caught my eye seeing how low the policy prices can go.

    One thing I’m considering doing is shopping around my insurance once per year. By shopping, I’m hoping to achieve lower prices through price matching. I won’t sacrifice too much quality, but keeping your cost low by continuously shopping around is never a bad route to take.

    It is a necessary evil, but it doesn’t have to be as bad of a cost as it is!

    Take care.

    Bert

  4. I would add that you should shop around if you’ve been with the same insurance company for years. They may have been the best option when you first signed up with them but there may be better deals available elsewhere.

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