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How to drop your car insurance rates in 3 easy steps
Mike Phillips once said "Money will come when you are doing the right thing." Getting your fixed long term expenses down is definitely the right thing to do.
Step #1 Call your insurer and tell them to lower your limits.
It might not be the smartest, but it's one of the easiest. The problem is you don't save much dropping from mid level coverage to the state minimum. Drop collision if you have an older, lower value vehicle. If it's totaled, the car insurance company will most likely give you some paltry amount based on their own software. so don't think you will get Kelley Blue Book fair market value. Most people are holding onto their older cars now, and fewer are buying new.
If your car is new and financed, you agreed to have comprehensive coverage when you bought the car, at least until it's paid off. You can still drop your limits up to a point.Did you pay your car off? Then you are free to lower your amounts.
"However"
You should never drop uninsured motorist since between 8- 25% of the drivers are unregistered, depending on your state. Border states tend to have more "undocumented" drivers, if you know what I mean.
Step #2 Pay your premiums annually.
You will only save on the finance fee, but that can be as high as 10% with some carrier. Assuming you have the cash a no cash economy. Savings depend on your state and if they allow credit scoring.
If your credit is not so good, your insurer will charge you a high interest rate, so paying annually will save you more.Step #3 Increase your deductibles.
This makes a lot of cents. Most people don't report small claims. So figure out your max pain before you pick up the phone to the claims department. Why would you pay for coverage you probably won't use? That's what drivers are doing when they get a low or no deductible policy.
Bonus Tip: Shop around.
It's too simple to omit. Yet very few peeps do it. Make sure you use the same limits you have know to compare carrier, unless you want to change. Comparing rates is the only real way to make sure your carrier is not overcharging you.
If you are getting quotes through us or another site, make sure the actual insurance companies are different. Many independent brokers tend to use the same carriers and you don't want to waste your time getting a lot of duplicate quotes.
Extra Bonus Tip: Avoid Captive Insurers.
Large Insurers like State Farm, Farmers, Allstate, etc. employe Captive agents who tend to work separate areas, so you will probably only get 1 rate from them. Problem is I have never gotten competitive rates from the larger insurance carriers. I think it has something to do with their pricing and overhead.
Larger insurance carriers have squeezing profits down to a science and some of them have been at it for over 100 years. A smaller regional carrier can be much cheaper, since they don't have the overhead, aren't paying for ratings like AM Best, and don't have an army of executives to carry.
In review:
- Drop your limits
- Pay annually
- Increase deductibles
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Written by Craig J. Casey
Financial Writer helping people with their insurance problems on the net since 1998.
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