How to save on car policies
Insurance is sure one of driving's necessary evils. You can put more money into your pocket (and gas tank), though, with a few simple steps to lower your auto insurance premium without sacrificing coverage.
Car insurance protects you the driver and your passengers from financial hardship after an accident or other vehicle-related incident, and generally comes in two forms. Liability coverage pays the medical bills of individuals you are found liable for injuring with your car; property damage liability pays to repair or replace cars or other property that you hit with your vehicle.
Collision covers you if you're at fault in an accident or have a single-car accident or a hit-and-run or uninsured driver damages your car.
Though rates vary widely according to your driving record, age and type of car you insure, the premiums can make you veer off the road. The national premium for a full-coverage policy averages $1,311 a year, with rates varying widely in states, from $805 in Maine to $2,476 in Michigan.
So lowering your expense is key. Consider:
Raising your deductible. If you've never been in an accident or it's been a long time since your last one, you're probably paying too much if your deductibles are low – anywhere from $0 to $250. As with many kinds of insurance, raising deductibles can lower your premiums.
Dropping full coverage. If you've got an older vehicle – roughly 10 years old or older –dropping comprehensive and collision coverage might save you money. Generally, as the age of your vehicle increases its value decreases.
This may also be a good option if you cover teenage drivers. Get your teens a reliable, inexpensive vehicle and only carry high-liability limits.
Bundling coverage. Many individual insurance companies grant pretty significant discounts if you use one insurer to cover your auto and home (which you either own or rent) as well as take out a life policy.
Not only can you save with a multi-policy discount, tracking your coverage and policies may become easier when you deal with one carrier.
Shopping around. I don't recommend you switch carriers every six months or even every year – that strategy might actually increase your premiums – but you do want to continuously look for the best coverage at the best price.
Online calculators can help you balance cost and coverage, such as those on insurers' own sites and on the likes of Bankrate,Esurance or NerdWallet. Before using one of these tools, best to see if it's affiliated with a specific insurance company.
Although price often looms large, consider what you get for the cost. Some carriers beat the competition on price – and if you ever submit a claim or need to speak to the insurer's customer service department, you wind up wishing you paid a few more bucks for quality in those services.
First, ask your current carrier (and other carriers) how you can save on premiums. Beware coverage deals that come in with a very low initial price then drastically increase your premiums after the first six months or at annual renewal.
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Sterling Raskie, CFP, is an independent, fee-only financial planner at Blankenship Financial Planning in New Berlin, Ill.
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