Saving Money On Auto Insurance

Dirt Cheap Auto Insurance

As it relates to family money management, you'll find these methods will definitely reduce car insurance costs.

We've successfully used these techniques for many years to get affordable auto insurance; and have been very pleased with our results. We're excited to pass this knowledge on to you because you shouldn't have to overpay to insure your car.

Saving Money On Auto Insurance

Auto Insurance Basics

Each state in the US has different laws regarding what type of auto insurance you're required to have. For example, Michigan auto insurance policies require personal injury protection (PIP) coverage. Some other states do not. So you’ll want to make sure you ask at least three different insurance agents in your state what the "required" auto coverages are for your state.

Here are the most common automobile coverages:

• Uninsured motorists' coverage. Uninsured motorists coverage insures you for damage someone else does to you.
• Property protection coverage. This covers you if your car damages someone else's property. Usually it is their car, but it could be a fence, a house or any other property damaged in an accident.

  It also provides you with legal defense if another party files a lawsuit against you. It is a good idea to purchase enough of this insurance to cover the amount of damage your car might do to another vehicle or object.

• Comprehensive coverage. Covers your vehicle, and other vehicles you may be driving for losses resulting from incidents other than collision. For instance, it will cover you for your windshield, or if your car is stolen, or if your vehicle is damaged by flood, fire, or animals.
• Collision coverage. This covers damage to your car when you get into an accident. This coverage will kick in when your car hits or gets hit by another vehicle or other object.
• Road service & towing. Provides emergency roadside service and towing.
• No fault PIP coverage. These coverages and limits will vary by state; but it generally covers medical, work loss, and funeral expenses of the insured; others in his vehicles and pedestrians struck by him.
• Bodily injury liability coverage. Covers other peoples injuries or death caused by you. It will also cover your legal defense should the injured party file a lawsuit against you.

Discount Auto Insurance Rate

Also, insurance companies will charge higher premiums on certain types of cars such as sports cars and convertibles because they consider these to be higher risk.

Automotive Liability Insurance

You don't want to end up being sued and not having enough auto insurance liability coverage in place to pay for damages should the jury find against you. You could lose everything.

So, you'll want to buy enough auto liability insurance to protect yourself against a potential lawsuit. Property protection liability insurance premiums are low even at $1,000,000 coverage. Unfortunately, that's not the case with bodily injury liability coverage; but at the end of the rainbow is umbrella liability coverage.

Umbrella Liability Insurance

Umbrella policies will kick in after you've used up the liability insurance in your automotive and homeowners policies. Actually, an umbrella policy is not a part of your automotive policy; you have to purchase it separately, but it's affordable.

That's why you won't see insurance agents trying to sell you umbrella coverage. It's doesn't cost much and they make very little on commissions.

An umbrella liability policy will prevent you from overpaying for expensive liability insurance on both your auto and basic homeowners insurance policies.

Instead of raising the coverage limits on your auto and homeowners policies and paying hefty premiums, you can buy an inexpensive supplemental umbrella policy that covers "all" your personal liabilities. We have an umbrella policy covering us for $1 million for less than $150 a year.

Saving Money On Auto Insurance

How To Get Affordable Auto Insurance

• Raise Your Collision Deductible

  Collision coverage accounts for a good amount of your auto insurance costs. So, the simplest and best way to save money on your auto insurance expenses is to raise your deductible.

  We raised the deductibles on our cars to $500 and it substantially knocked down our costs. A few years later, we increased it to $1,000 and shaved even more money off of our premiums.

  You'll want to have broad, not basic collision. With basic collision, you'll still pay the deductible regardless of who's at fault in the auto accident. However, with broad collision you will only have to pay the deductible if you’re at fault.

  So, if you get into an accident and the other party is responsible, you will not have to pay a dime towards your deductible.

  Begin with raising your deductible for what works best for you. Some people will go with a $1,000 deductible for even greater savings. You can consider jumping to $1,000 as your assets and income increase.

• Avoid Filing Small Insurance Claims

  You'll find that if you file a couple of small claims (under $1,000), your insurance company will increase your premiums or possibly cancel your policy. If you save your claims for the costly damages, you'll keep more money in your wallet.

• Knowing When To Drop Your Collision Coverage

  You'll certainly be saving money on auto insurance by dropping collision coverage. In fact, you'll save bigggg bucks. The question of the day is when should you drop it?

  You can start investigating dropping the collision after your car gets to be about 4 to 5 years old. At that point, find out what your car is worth by looking at its value in the Kelly Blue Book (KBB).
  
  The more conservative value will be the trade-in value number. The rule of thumb is you'll want to drop your collision coverage if the "annual" cost for your collision coverage is 10% or more of the car's value.

  So let's say your car is valued at $2,000 and you pay $350 a year for collision coverage. That being the case, you would want to drop your collision ($2,000*10% = $200) because your collision premium is above $200; so you're paying more than 10% of your car's value.

  You see, if you smash up your car and have $4,000 worth of damage, the insurance company is only going to pay $2,000 because that's what the car's valued at.

  Now, if you still owe money to a lender on the car, they're not going to let you get away with dropping the collision. But at the 4 to 5 year mark, you shouldn't have a car payment anyway. Please see used car shopping.
  
  To take it a step further, you can take the extra money you’re saving after you dropped the collision and do some frugal investing with it.

• Ask for discounts

  You'll be saving money on auto insurance by asking the insurance agent for available discounts. Potential discounts can include having more than 1 vehicle insured with the same insurance company (Multi-car discount), having a good driving record, no claims against your policy, antilock brakes, antitheft car system and senior citizen discounts.

  Also, most insurance companies will give you a discount if you have both your homeowners and auto policies with them.

  Many times you can get a premium discount if you have group coverage. For example, we save 25% on premiums by being a member of the MDA (Michigan Dental Association).

  You can also get group discounts through business or alumni associations or belonging to a certain credit union.

• Shop for rates

  Especially on-line, you'll be saving money on auto insurance by shopping around with many different carriers for a quote. You can also ask your family and friends who they're insured with and their experiences with their carriers.

  Also, by having some quotes in your pocket, you'll have additional leverage to negotiate your premiums when speaking with other insurance carriers. Let them know you got a better quote elsewhere for the same coverages. They'll fight for your business.

• Check your credit rating

  Many insurance carriers will check your credit because they use that in helping to determine how much of a risk you are to them. A poor credit score, in most cases, will lead to the insurance company charging you higher premiums.

  Even if you know you have good credit, you should check it at least annually to make sure no mistakes were made on your credit report.

Summary - Saving Money On Auto Insurance