June 18, 2011

Auto insurance is one of those necessary expenses that can eat you alive if you aren’t careful. This is especially true for those of you that stick with an auto insurance company, get complacent, and forget to check the market from time to time.

Though there is a lot of competition in the auto insurance industry, many of the upstarts, such as GEICO, esurance, and Progressive have been able to penetrate the market by offering great customer service and lower rates, banking on the fact that they’ll make up for low margins by pushing a lot of volume.

And this has paid off, because according to the annual JD Power & Associates insurance ratings, many of the highest rated companies are some of the newest.

It’s because of this competition, and the way these upstarts have scared traditional insurance companies, that it’s highly possible to save money on auto insurance every 6-12 months by doing nothing more than getting a few free quotes and comparing them to your current policy. Better yet, it’s also possible to save money in the middle of a current policy, since there are usually zero penalties for switching providers mid-term.

Besides switching providers, a few other ways to save money on auto insurance are:

  1. Raising deductibles – if you have an older car or plenty of money in the bank, consider moving to a $500 or $1,000 deductible to save money.
  2. Removing full coverage – though this is not recommended for cars that you still owe money on, you can remove comprehensive and collision coverage and save a substantial amount of money.
  3. Driving less – many car insurance companies will lower your rates if you tell them that you are driving less than 5,000 miles per year. Of course, you don’t want to lie, but if that’s you, see if you can get a discount.
  4. Remove add-ons – if you don’t need towing or rental car reimbursement, you can usually save a few dollars per month by dropping these coverages.
  5. Buy older cars – older cars cost less to fix, and are usually much cheaper to insure than new cars. If you’re having a hard time with insurance, consider selling your newer model and buying something with a bit more mileage under its belt.

To save money on auto insurance, get new quotes regularly and take advantage of coverages and discounts to maximize your value. If you have any questions, you can easily get help by calling your local insurance agent.

Leave a Reply