We are bombarded with advertisements about auto insurance. Many times, a very important but basic concept about auto insurance gets lost in those advertisements. The primary purpose of auto insurance is to protect you or a member of your family against financial loss in the event of an accident. Protecting you should be the focus of auto insurance. Advertising lines like “we keep you legal for less” (Safe Auto) or “only pay for what you need” (Liberty Mutual) redirect your focus mostly to price rather than what’s most important – protecting you and your family. We like saving money as much as the next person but not at the expense of our families. That’s especially true as auto accidents and costs of claims have steadily risen over the last decade. Added to the increased risk are accidents due to cell phones and legalization of marijuana. The question is not if but when you’ll be involved in an accident and need the protection of good insurance.
Let us put help you put your money where our advice is. Here are some tips for trimming your auto insurance bill so that you can afford better coverage for your family.
Improve your credit
What does your credit score have to do with car insurance? Your credit is a big factor when car insurance companies calculate how much to charge. It can count even more than your driving record in some cases. Having a poor credit score could mean paying more for auto insurance. It’s a good idea to check your credit score when shopping for car insurance and, if necessary, take steps to improve it. Paying your bills on time is the biggest factor in your credit score, but there are several other steps you can take to raise your credit score—and potentially reduce your auto insurance premiums.
LegalShield members can work with their provider law firms to request a copy of their credit report and dispute errors or challenge negative comments from creditors. If successful, these efforts can increase your credit score.
Drop car insurance you don’t need
If you’ve got an older car in the household, it might be time to drop collision and comprehensive insurance, which pay for damage to your vehicle. Collision insurance pays to repair damage to your car if it crashes into another vehicle or object, or flips over. Comprehensive insurance pays if your car is stolen or damaged by storms, vandalism or by hitting an animal such as a deer. Collision and comprehensive never pay out more than the car is worth. If your car is worth less than your deductible plus the amount you pay for annual coverage, then it’s time to drop them. Evaluate whether it’s worth paying for coverage that may reimburse you only a small amount, if anything.
If you drop collision and comprehensive, set aside the money you would have spent in a fund for car repairs or a down payment on a newer car once your clunker conks out.
We’d be happy to review your auto insurance and make suggestions for savings and better coverage. Request an auto insurance review here.
Review changes in your circumstances with your agent.
Did you know that where you live affects your car insurance premiums? Factors such as the density of local traffic, frequency of accidents in your area, length of your commute and rates of crime involving cars all have an impact on the risk you present to your insurance company. This fact emphasizes the importance of updating your information if you happen to move or change jobs. You might be in for a rate reduction that you did not expect.
Seek Savings on Other Coverages
Set the deductible right. Raising your comprehensive and collision deductibles to $1,000 from $500 can shave, on average, 11 percent off your premium, says research by the search engine The Zebra. Just make sure you can afford to pay the deductible if your luck runs out.
Forgo rental-reimbursement coverage. If you have another car you can use while your vehicle is being repaired, you don’t need to buy this. And skip roadside assistance if you have an auto-club membership that’s a better deal—or if it comes as part of your car’s warranty.
Review personal injury protection and medical payments coverage. Forget it if you have good health coverage; keep it if you don’t or if your usual passengers might not be well-insured.
Don’t drive a lot? Consider usage-based insurance
If you don’t drive much, consider an insurer that offers a usage-based or pay-per-mile driving program. These policies base rates in part on how much you drive and, in some cases, how well you drive. To participate, you install a small device in your car that transmits data to the insurance company. You score a discount for low mileage and, with many programs, safe driving habits. Several insurers offer usage-based insurance programs. With these programs, the insurers track your driving habits such as speeding and hard braking and offer discounts or reduced rates for safe driving. In some cases you can get a discount just for signing up.
Try some or all of these tips and see if your insurance bill goes down. If it does, we encourage you to invest some of the savings in better coverage to protect your family.