I hate paying auto insurance. I get the idea that it is there for if and when the unfortunate should happen, but I’ve been driving for close to 20 years now and I’ve had to use my insurance twice. Both times for a cracked windshield that would have cost me a total of $800 out of pocket. If I go back and total up how much I’ve paid in car insurance premiums over the past 20 years, the total comes to roughly $16,000. That’s some serious money.
Of course, I’m not going to go out and cancel my auto insurance because of this since first, it’s state law that I have it and second, I would rather pay out that $16,000 than have to fork over hundreds of thousands of dollars should I get into a serious accident and need costly medical procedures.
Even with this said, there are things that every one of us can do to ensure that we are getting the most discounts on our auto insurance. This post is going to walk you through 5 ways to lower your auto insurance rates, allowing you to invest more of your hard earned money.
Ways To Lower Your Auto Insurance Rates
This is an easy change to make to your auto insurance. The higher your deductible, the lower your premium. The reason is simple: you are shifting more of the burden to pay on you. As a result, your insurance provider will charge you a lower premium.
But, what should your deductible be? Ideally it should be $1,000. I realize though that not everyone has an extra $1,000 laying around to pay the deductible should they get into an accident. Therefore, you should start with $500. Then, make it a point to save $1,000 more in your emergency fund so that you can increase your deductible to the recommended $1,000.
When you make this simple change, you could cut your premium 15-30%! If you are paying $1,200 a year in auto insurance coverage, you are looking at a potential savings of over $350 a year.
Cancel Collision Coverage
When you get into an accident with another vehicle, your collision coverage is what takes care of repairing your car. As your car ages, it loses value. Eventually, your car’s value is worth less than the amount you are paying in collision coverage. At this point, it makes sense to cancel your collision coverage.
Think about it this way: Let’s say you are driving around in an old beater that is worth $500 and you are paying $1,000 for collision coverage. You get into an accident and the car is totaled, meaning it would cost more to fix it than it is worth. The insurance company will see what the value is of your car, $500 and pay you that money. This sounds great, but you already paid the insurance company $1,000! You lost $500 by having collision coverage.
The solution is to pay attention to the value of your car. There are many free resources out there that will give you rough estimates of your car’s value. When you see that your car is worth less than what you are paying in collision coverage, it’s time to cancel the coverage.
Know Your Premium Before Buying A Car
I see my friends do this all of the time. They want a new car, so they buy a new car. No problem right? Then they call their insurance agent and find out that their insurance is going to double. Some freak out. Others are so in love with their new car, they don’t care about the cost of insurance.
Before you buy a car, regardless if it is new or used, you need to talk to your insurance agent first. Find out how much it will cost to insure the car and then see if you can afford that.
Back in the day, I wanted a brand new Acura RSX. I was about to buy it, but called my insurance agent first. I found out it would cost me close to $2,000 a year to insure it since it was a sports car and I was a young male. I almost had a heart attack. I couldn’t afford that much and I refuse to pay it even if I could afford it. The bottom line is this: know your costs before signing on the dotted line.