- Boost your deductible. Generally, when someone decides on a deductible amount for his car insurance, he sticks with it. But increasing the amount you pay for fender benders is the best place to look when trying to lower your annual out-of-pocket expenses, according to the Insurance Information Institute. Admittedly, it's a gamble. A car wreck will cost you more this way, but if you and everyone else on your car insurance policy have a history of safe driving, it's a way to save money. And if the threat of a big deductible payment worries you, put the money aside. Use your annual savings as an auto emergency fund so you'll never be caught by surprise.
- Car pool. Joining a car pool has benefits beyond helping the environment. If you carpool with three other people, with each driving one-week shifts, you can cut the miles you drive by up to 75 per cent. And the less you drive, the more you save on car insurance. "Most companies track mileage," says Fred. "Anything under 7,500 miles is considered the pleasure rate--and that's the lowest. Up to about 13,000 miles is a medium rate, and anything over that is a higher rate." The amount you save will vary depending on several factors, the difference could be as much as 25 percent.
- Take a second look. The car insurance you need when your car is brand new is often considerably different than what you need later on. Initial rates are generally higher, since you're required to get both comprehensive and collision coverage if you took out a car loan to pay for the vehicle. Comprehensive pays for the repair or replacement of your car from damage that doesn't result from an accident, and collision covers damages if you're in a wreck. Once it's paid off, most people forget to save money by exploring their car insurance options. Check the value of your car through the Kelley Blue Book or NADAguides.com. You might have more collision insurance than you need. And in some cases, it might be worth dropping it entirely, especially if your car is an older model. "It's often smart to drop collision on older vehicles," says Fred. "Comprehensive is so inexpensive, and you're giving up a coverage you might need--that's worth hanging on to, though." Among the reasons you might need comprehensive coverage: damage from storms, vandalism and theft.
- Bundle auto/home.If you've got your car insurance through a different company than you did your homeowners insurance or renters insurance, you may be paying more than you should. It's called "multilining" in the industry. It means that by combining policies with a single company, you can stack discounts and save money. Car insurance is the biggest risk for policy writers. You're more likely to get in an accident or have your car stolen than to have something catastrophic happen to your house. By combining policies, you lower some of the insurance company's risk. "Multiline is where they make their money, rather than just picking up a loser like auto insurance," says Fred. "The more lines (of insurance that insurance companies) can get, the more they're willing to give discounts for it."
- Driving patterns changed? Have you changed jobs recently? Maybe you've moved to an area where your favorite stores are a lot closer? Keep an eye on that odometer to save money. Just like with carpooling, reduced driving mileage means reduced car insurance rates, says Elia, the car expert. But people often don't reach out to their insurance agents when their residence or driving habits change, and they end up sticking with unnecessarily high rates.
- Safe driving and school smarts. Older drivers who complete adult driver safety programs can get premium reductions, while many insurers offer discounts for teens who maintain a 3.0 grade point average in school.
Dave Balog teaches financial basics to families. firstname.lastname@example.org 355-0967.