Saving Money on Auto Insurance Premiums: Ten Ways to Save

Insurance is one of those necessary evils for which we all need to bite the bullet and pay.  There are ways, however, to save some money on those expensive premiums.  Some may seem like common sense, but many people fail to take advantage of them.  Here are basic money-saving tips:

1.    Avoid paying your premium monthly
Most insurance companies will charge you interest if you pay out the premium over the year rather than all at once or at least semi-annually.  You can save some money if you can afford to pay it all at one time. 

2.    Decrease your coverage limits
Although I would never advise people to decrease their liability coverage, (unless your only alternative is to drop your insurance entirely), if you are having trouble meeting your premium payments, take a look at decreasing your coverage for such things as collision and comprehensive, especially if you are driving an older vehicle.  If it is older than 6 or 7 years, you may want to consider eliminating collision and comprehensive coverage for it completely.

3.    Increase your deductible
An easy and very effective way to lower your premium is to increase your collision and comprehensive deductibles.  If you are carrying a $100 deductible, ask what the savings will be if you increase it to $200 or $500, for example.  You do have to have the funds available to cover that much of your damages should you have an accident, however, so do figure out your finances first.

4.    Take risky drivers off your policy
If there is a “risky driver” in you household, such as your brother who has gotten two DUIs, or your husband who just got his third speeding ticket this month, consider taking that driver off your policy.  Don’t do this lightly, however, because if you cave in and allow them to take your car, and they have an accident, you could be held financially responsible for the damages they cause and your insurance policy will not cover any of it.  On the other hand, it could save you a substantial amount on your premium.

5.    Buy cars that thieves don’t steal and stay away from ones they do
The top ten least stolen cars for 2008, according to Forbes Magazine, were 2005-2007 model years of:

1.    Mercedes E Class
2.    Buick Rainier
3.    Subaru Forester
4.    Buick Terraza
5.    VW New Beetle
6.    Ford Focus
7.    Volvo V70
8.    Toyota Prius
9.    Saturn Relay
10.   Ford Freestyle

Buy one of these, and your premium will likely be less than if you buy one of the following cars (the top ten stolen cars for 2008):

1.    Cadillac Escalade ESV (2007)
2.    Ford F-250 SuperCrew (2005-2007)
3.    Cadillac Escalade (2007)
4.    Dodge Charger (2006-2007)
5.    Ford F-350 SuperCrew (2005-2007)
6.    Hummer H2 SUT (2005-2007)
7.    Dodge Magnum (2005-2007)
8.    Hummer H2 (2005-2007)
9.    Dodge Durango (2005-2007)
10.   Honda S2000 Convertible (all)

6.    Buy a car that is less expensive to insure
There are certain cars that are less expensive to insure than others because either thieves don’t steal them as often, or they are typically driven by safer drivers who have better driving records.  These are individuals who are not as likely to speed or drive recklessly.  They are also not as apt to use the vehicle to commute to work, so they are not on the road as much during rush hour, also lowering the risk.  For 2008, those cars were: Ford Five Hundred 4WD (now the Ford Taurus), Buick Rendezvous 4WD, Buick Lucerne, Buick Rainier 4WD, Honda Odyssey, Ford Freestyle 4WD, Suburu Outback 4WD, Honda Pilot, Honda Pilot 4WD, Chrysler Town & Country, Buick LaCrosse, Chevy Uplander, Ford Escape, Volvo V70, Dodge Grand Caravan, Ford Explorer 4WD, GMC Sierra, Toyota Highlander, Toyota Sienna.  As you can see, these vehicles tend toward midsize SUVs, minivans or large sedans. 

7.    Move!
If you live in a high crime area, you are, undoubtedly, paying more for your insurance than your friends who live across town on a safe, tree-lined street.  In some states, your zip code is a factor in determining your insurance rates. 

8.    Increase your credit score
In many states, insurance companies use your credit score as a factor in deciding your premium.  A low score tells them that you are not the “responsible type” and may not maintain your vehicle as well as others, and may also make more claims.

9.    Buy a car with safety features
Cars that come with safety features, such as air bags, anti-lock brakes, an alarm system, a GPS tracking device, a back-up camera, child safety locks, a steering wheel lock, etc., will likely get you a policy discount that will save you some dough.

10.    Ask about multi-policy, multi-vehicle and other discounts
Insurance companies don’t often advertise their discounts, so you have to ask, but there are many available which will lower your premium by a significant amount when applied together.  Having all your policies or all your vehicles with one carrier, for example, can save you 5-10%.  Ask about discounts for low vehicle mileage, safety features, anti-theft devices, good driver, mature driver, good student, defensive driver classes, etc.

Try some of these tips and you will lower your premium.