Finding ways to save on auto insurance can be challenging, but I dug in to do some research to help us slash our insurance costs without giving up coverage.
We started with a policy that we were paying $750/6 months for 2 vehicles. That included loads of discounts (multi driver, low mileage, etc.). We are insured through USAA which has consistently been the cheapest insurance option. Most insurers can’t come close to their numbers, and I’ve always had excellent coverage with USAA. Not everyone is eligible, you can find out if you are here.
Here are the steps I took to reduce our auto insurance costs.
1) Learn how to negotiate insurance coverage. Read Ramit’s advice on how to negotiate insurance coverage. This inspired me to look at the insurance costs and play with the numbers. Fortunately, USAA offers a service online where I can change coverages so I was able to do it at my convenience.
Learn more from Ramit’s book: I Will Teach You To Be Rich
2) Look at what the different coverages mean. I found this great page on Geico, where I got an understanding of what all those numbers mean. $100K/$300K for uninsured motorist meant nothing until I read more.
3) Raise your deductible. Chances are unlikely that you’ll put in a small claim, so consider raising your deductible to $500 or even $1,000. Make sure you have enough set aside in an emergency fund to coverage the deductible.
Learn more about all types of insurance in this book: Insurance for Dummies
4) Find out what your car(s) are worth. I ran the numbers for what the hubby’s (paid off!) vehicle is worth. We dropped comprehensive and collision coverage because after we pay the deductible we’re close to what his car is worth. Note: the monthly savings SHOULD be going into a savings account, but because our goal is to pay off the rest of our consumer debt first, we won’t save to replace the car until those debts are paid. My reasoning is that if his car did become completely unusable we could get by with one car if necessary.
Learn more: Which Cars Earn The Best Resale Value
5) Reduce medical coverage. If you have disability insurance, life insurance, and health insurance you are over-insuring if you have high medical coverage. Reduce it to the minimum for your state.
6) Drop the rental coverage. I realized the monthly expense was not worth it for us. (again, we have 2 cars so the likelihood of both being in the shop is low) Usually auto insurance only covers a small portion of rental fees. Make sure to check with your insurer to find out how much your insurance covers.
7) Consider dropping towing coverage. If you have AAA or towing coverage elsewhere this is redundant. Some credit cards, associations and organizations offer towing to their members. We kept our towing/labor coverage. I ran the numbers and it was cheaper than AAA. We have had a flat fixed, windshield repaired, and the car towed up to 20 miles without having to pay a cent.
Learn more: Car Maintenance: Know When To Replace Your Tires
8 ) Look for discounts. We get discounts through our local credit union, and could get a multi-policy discount from our homeowners insurance company, etc. None of the discounts saved us more than staying with our current insurer. Be sure to check for discounts from companies you are already using. If you are a student ask for a student discount.
9) Drive less. Most insurance companies offer a low mileage discount.
10) Shop around. Make sure to get more than one quote. A lot of insurance companies will try to beat your current quote, so don’t be shy about telling them what you’d be paying elsewhere. Do it every 6 months or so to make sure you are getting the best deal. No need to wait until your policy is up, most insurers can switch you mid-policy.
Learn more: Top 10 Family Cars Under $25,000
11) Keep an eye on payment options. It may be cheaper to pay every 6 months, or it may not. Our insurance offers the same payment if you pay for a total of 6 months or monthly.
By reducing our coverages in some areas, dropping rental coverage, reducing medical coverage, and raising our deductible we are now paying just $400/6 months or $800/year. That’s a savings of $700/ year!