I don’t know about you guys, but my car insurance payment is one of the biggest expenses I have each year – New Jersey isn’t exactly the cheapest place to get insurance either. I’m pretty lucky though, since I actually understand my policy pretty well and all the mumbo jumbo that it’s made out of, since I spent a brief stint as a Customer Service Rep for Nationwide in grad school.
Did you know that every one of those folks on the other side of the phone is a licensed insurance agent? We had to be to be able to make any changes to a policy. And I learned a lot real quick (like no, you can’t insurance a parade float or a motorized wheelchair on an auto insurance policy – true stories).
Paying your monthly car insurance bill can be a painful process, and costs continue to skyrocket. While according to the DMV women pay significantly less in insurance than men over a lifetime, it can still be a substantial burden. Many states require some insurance, but you may be throwing away your cash on unneeded benefits. While it might seem a little hopeless, there are a number of ways that you can cut back on your costs.
Understand How Insurance Is Priced
Car insurance is typically broken down into six different types of coverage, which are priced individually. Therefore, your insurance bill can be broken down into six different costs: collision coverage (repairs to your vehicle), comprehensive (vehicle repairs and damages outside of collision), property damage (repair to other vehicles), bodily injury liability (injury costs incurred by others in a crash), personal injury protection (injuries to you and other passengers), and uninsured or underinsured coverage (protects you in an accident with someone who does not have the required insurance). Each of these pieces contributes to your overall bill separately.
Determine Your Specific Needs
Assessing your individual situation can help you identify where you can cut back. You will want to ensure that you have minimum liability because some major accidents may leave you open to substantial lawsuits.
You want to make sure that you are financially protected. However, you can save cash on collision and comprehensive plans. If you drive an older car that has been paid off, you will not need and these plans and ultimately may pay more in fees than you would possibly get reimbursed for. If your annual payments are 10% or less of the blue book value of your car then there is no need for these policies. However, if you do not have the cash to replace a newer car then you will want to make sure you can get reimbursed for repairs or replacement.
Highlight Your Clean Driving Record
Insurance companies base rates on your risk levels. If you are more likely to get into an accident, they will charge you more. If you are less likely, they will charge you less. Therefore, the more quickly you can clean up your record the better. If you already have an optimal driving history then highlight this and keep it up. Some policies will even continually reward you for safe driving. These reimbursements and savings can certainly add up.
Many agents will not directly advertise many of their discounts to new customers. However, if you ask, you may be able to discover hidden savings. Many companies will provide discounts if you bundle your policies. Therefore, you could not only save money on your car insurance but also home or renter’s policies. Additionally, certain features in your car could help reduce rates including anti-lock breaks. You may also be able to save money if you are in a particular profession including education or engineering, and military members and family can receive significant savings. It doesn’t hurt to ask, and you could be looking at some important adjustments. To begin asking these questions, click here.
Insurance doesn’t have to be a debilitating expense, and there are a variety of ways that you can begin to cut back growing premiums. A little bit of time and assessment can make an important difference.
**This post is linked up over at Frugal Friday on Aspired Living. Come party with us and share your best frugal posts of the week!*