Car insurance has its complexities. Expert tips to save money without giving up the protection you need. How to avoid paying more for car insurance.
It’s easy to forget about car insurance, especially if your bills are paid automatically. However, experts advise that you review the policy and reevaluate your insurance needs each time you renew. This way you will avoid paying more for insurance.
It could be that your car has become of lower value. Maybe you are paying for coverage that you no longer need, or that you don’t need as much. Or it may be that your rates have gone up for no apparent reason, or possibly for reasons beyond your control.
Experts say loyalty doesn’t always pay off, and some insurers will charge you more if you stay, simply because they assume you’re not price-sensitive and unlikely to quit.
How to avoid paying more for car insurance
If you want to save money, a good starting point is to familiarize yourself with what your policy covers and what you need. Basic coverage includes the following.
Insurance: civil liability
This coverage is required in most states to register and drive your car, and it protects you and your passengers, as well as other drivers if you are at fault in an accident. It also covers medical expenses. If there’s any coverage that could be beefed up from state-mandated minimums, it’s this one, because it can protect you from costly medical bills resulting from an accident.
In other words, paying a little more for liability insurance can save you a lot of money if something bad happens. Don’t assume that the state-mandated minimums will cover you in the event of an accident.
Collision insurance
Generally optional (although it may be required by a lender or if you lease the car), this coverage pays for collision-related repairs to your vehicle. CR recommends periodically reviewing the cost-to-value ratio of collision coverage.
There comes a time in the life of an old car when it is no longer worth having collision coverage, usually when the annual premium exceeds 10% of the car’s value. This moment depends a lot on the model: some cars hold their value better than others.
It should also be kept in mind that luxury models from European manufacturers may be more expensive to repair than standard models from domestic and Japanese manufacturers. This may also influence your decision to keep – or drop – collision coverage.
All risk insurance
This optional coverage protects your car against damage not caused by a collision, such as a tree branch falling on your car or damage caused by a flood. It can provide valuable additional protection to owners of new cars that would be very expensive to repair or replace.
If you’re thinking about ditching collision and/or comprehensive coverage on an older vehicle, Insurance Information spokesperson Loretta Worters says comprehensive coverage is the one you’ll want to keep because it offers the best value. price.
Below we explain what other coverage they can offer you, with expert advice to help you decide which one is worth it.
Glass replacement
Coverage for windshields or windows damaged in an accident is often included in collision policies. Comprehensive policies typically pay to repair or replace windows damaged in non-collision incidents, such as storms, attempted theft, or a rock from the road hitting the windshield. Without that coverage, those types of repairs, which can be expensive, are not covered.
In most states, there is also an affordable add-on to full window coverage that addresses rock fragments that cause cracks, which is quite common among highway drivers.
If your car is equipped with Advanced Driver Assistance Systems (ADAS), make sure your window policy pays for the necessary calibration of the sensors, which makes the cost much higher than a conventional windshield replacement…
Supplementary insurance
This is coverage you may want to avoid. It is designed to protect those who owe more than the car is worth in the event of a total loss and when collision insurance does not cover the full value of the loan. But Douglas Heller, insurance director at the Consumer Federation of America (CFA), says most people never use this coverage and that it’s more of a way for insurance companies to make money.
“The people most at risk of having their outstanding loan exceed the value of their car are those who can’t get auto loans at reasonable rates,” he says. “This is another way for the financial services sector to punish people for their poverty.”
Rental car reimbursement
This covers the cost of a rental car while your vehicle is being repaired. Rental car reimbursement is limited by dollar amount and not time, so make sure you have enough insurance to cover at least a week or two in case the car needs a major repair.
“The good news is that you can increase coverage for very little money,” says Divya Sangam, insurance spokesperson for consumer financial information website ValuePenguin. According to her, the additional cost depends on the coverage you want and usually adds between $2 and $15 per month to your premium.
She recommends calling a few rental agencies in your area to get an idea of what the daily and weekly rates are so you can determine the coverage limit that’s best for you.
Uninsured Motorist Coverage
It protects you from damage caused to your car or your passengers by an uninsured person. Without this coverage, you may have to take the uninsured driver to court to recover everything you spent on repairs to your car and medical treatment related to the accident.
According to Heller, 1 in 10 accidents involve an uninsured driver. How much coverage do you need? Heller says it’s a good idea to make the dollar amount of your uninsured motorist coverage the same as your liability coverage.
There are other ways to save on car insurance
- Increase the franchise. Increasing comprehensive and collision deductibles from $500 to $1,000 can mean an average 11% reduction in premium, according to the CFA’s Heller. Just make sure you can afford to pay the extra cost if you are unlucky enough to have an accident.
- Look for discounts. Some insurers offer discounts on premiums if you bundle home, auto, and comprehensive policies. You can also get a discount if you take a safe driving course (as long as it’s not required by a traffic court) if you allow your insurer to track your safe driving habits.
- Also, if you reduce your annual mileage or if you have a teenage child on your policy and you report their good academic average (usually a B or higher).
- Have a clean driving record and a good credit score. Both influence the price of your insurance premium. To get the best rates, you must have been free of driving offenses for at least three years. In most states, the higher your credit score, the lower your rates will be.
- Choose your car well. Premiums vary by model. When comparing models, ask your insurer for premium quotes for the ones you’re considering. Luxury and high-performance cars are usually more expensive to insure than more common models.
- Assign the right driver to the right car. Ask your insurance agent who should be the primary driver of each car in your household. Based on each person’s driving history and the value of the car, it could save you money.
Pairing a lower-value car with the driver who travels the longest distances, for example, could cost you less than giving that driver the higher-value car. (Of course, this strategy may require some negotiation between family members, and you may want to assign a teen driver the safest car in your fleet.)
