13 Simple & Effective Ways To Save On Your Car Insurance
Car insurance is a singularly unique budget item. It’s expensive, the laws dictate you must have it, yet it’s an outlay of funds for something you hope intensely you’ll never need to use. But don’t even think about going without car insurance.
In Pennsylvania, allowing car insurance to lapse earns you a suspended vehicle registration privilege for three months. Insurance companies are required to notify PennDOT when a policy is canceled.
The registration plate, registration card, and drivers’ license must all be surrendered. Then you’ll pay a restoration fee and need proof of insurance before getting the registration back and driving privileges restored. Paying a steep civil penalty plus restoration fee plus proof of insurance is the only way around the three-month suspension.
So what can you do to make car insurance less costly? There are many approaches to saving money on auto insurance by exploring options up front. You want great coverage but shouldn’t pay for insurance you don’t really need. Let’s look at 11 of the best practices.
1. Compare, compare, compare
Similar to the realtor’s mantra of “location, location, location,” your best protection against inflated auto insurance is to thoroughly compare the rates various companies offer you.
Don’t skimp on the comparison. It may seem like a pain but just do it. Comparison will reward you with lower expenses each month. But there’s a right way and a wrong way to compare.
- Compare apples to apples. Each quote you get should include exactly the same protection limits. Be very clear about what you want. Get the protection you need, but don’t buy into offerings that don’t fit your needs. Cheaper isn’t necessarily better. You could seriously regret protection you didn’t.
- Compare the offerings of multiple auto insurance companies, not just two or three.
- Compare online rates with quotes received via a phone call, or meeting with an agent in-person. Sometimes, but not always, online rates may have different coverage options on the proposal than you requested. Make sure you look at all of the quotes, side by side, and that they are all the same coverage options.
- Compare rates annually or every couple of years. You may be surprised at what you discover.
- Compare before your current policy ends. Some companies give an “early quoting” discount if you shop for your insurance 7+ days before you need the new policy.
- Compare insurers before you buy your next car. Models with safety features, cars that are deemed safer vehicles, and medium-priced cars rather than expensive can significantly lower your rates.
2. Bundle your home and any other insurance with your auto insurance
Not only will you get discounts by using the same insurance company for multiple policies, it simplifies your financial communication by having just one agent. Multi policy discounts are nothing to overlook.
3. Raise your deductibles
If you ended up in an accident, how large of a deductible could you manage? If it’s $1000, rather than $500, you could save quite a bit on premiums.
Most people don’t need a deductible as low as $250 which is what some insurers suggest. Make sure to ask for the higher deductible figure on quotes you receive so you can calculate what deductible vs premium cost makes sense to you.
4. Lower the collision and comprehensive coverage on older cars.
Once cars are well past their prime, you may want to lower either or both of these coverages. Collision is for damage to your vehicle when your car hits, or gets hit by, another object (usually another vehicle). Comprehensive is for damage to your car from other forces such as vandals or thieves, hitting a deer, fires, etc.
Once your car’s resale value is low, it may not be worth continuing these coverages. You’ll most likely have deductibles (out of pocket expense) on both types. If you opt out of collision and comprehensive insurance, the best plan would be to put the equivalent of what you’re saving each month into an account that can be used toward your next vehicle. Make sure to look at what your car value is worth to weigh the options if it’s worth insuring your car. Example: you probably wouldn’t want to pay $300 / year to insure a car worth $1000 with a $500 deductible.
One word of caution regarding decisions to lower or even drop coverage. There’s some coverage you do NOT want to lower because of the unknowns involved. Liability insurance is a vital coverage because you don’t know ahead of time what the stakes could be from even one single accident.
The liability minimum for each state can be found online. Lowering your liability insurance on your car insurance policy may may sound appealing, but it’s a bad idea. Costly claims could put your savings at risk.
Additionally, you also will want to ensure that you know the difference between full tort insurance & limited tort insurance. This is not a place to make the cut to save on your auto insurance policy.
In Pennsylvania, companies offer full tort, which gives you the legal right to collect for pain and suffering if someone hits you. If you choose limited tort, you are limiting your ability to collect for the pain and suffering caused by another driver.
Limited tort can be appealing as it is generally 15%-20% cheaper, but there are other coverage options on your policy that you can cut back if needed with less risk.
When you choose to limit your right to sue or collect for pain and suffering – for the sake of saving some of the cost – the results could be disastrous. It’s far wiser to keep the higher liability limits, retain your rights to “full tort,” and save elsewhere.
5. Get a newer vehicle with safety features that can lower your premiums.
Insurers typically reward you with lower rates if your car is crash-worthy, includes airbags, crumple-zone design, or has other features promoting safety. Compare (there’s that word again!) the make and model year of several vehicles before purchasing a new vehicle. Make sure to do this BEFORE you purchase your new car!
6. Drive safely
Are you aware that risk factors are what actually determine your premiums? If you’re considered a higher risk, you’re going to pay for it. If you tend to be a lead foot, stop speeding. Speeding tickets increase your rates, and the significant ones will lead to higher premiums for years before they come off your record.
Many insurers offer discounts when you are accident-free or have no moving violations. Some companies offer plug-in devices to monitor your driving habits. If evidence shows you have good habits, they’re likely to decrease your rates.
7. Make a payment in full (pay premiums for 6 months or a year at a time)
This one’s pretty straightforward. It’s not that you’re getting a lower rate than other people, it’s simply that the company is willing to charge less for the premium period when you pay up front instead of monthly. Their administrative costs are lower.
If you can’t pay for the entire policy premium upfront, opt in for EFT monthly drafts vs receiving a bill in the mail. A lot of carriers charge less to auto draft than mail a bill.
8. Consider using an independent agent
One of the best ways to find the best auto insurance is to use an independent agent. Truth be told, it can be challenging to compare multiple insurance companies against each other. Especially when each quote might have slight changes in the coverage options. It’s easy to lose track of information and forget who offers what.
Independent agents are able to shop multiple insurance carriers for you at once, ensuring that you find the absolute best insurance for your needs. Independent agents have your best interests at heart – since they are licensed with multiple insurance carriers. They are committed to finding the best overall package for you no matter what insurance company that’s with.
By using an independent agent, you save time, ensure all of the quotes have the same coverage limits ( apples vs apples ) and more importantly – you only have to talk with one person.
9. Drive less
Some quotes are usage based. The average vehicle is driven about 12,000 miles per year. If you have a short commute or take the bus to work, or just don’t travel very much, ask if that will earn you a lower rate.
10. Improve your credit rating
Details about your credit history count toward determining your insurance rates. Why? Statistics reveal that people with higher credit scores have fewer accidents. Those with lower credit scores are associated with more car insurance losses and higher claims. They’re a greater risk to insurance companies.
11. Look for teenage and student discounts
Parents are often shocked at the steep cost of insuring their kids. Rates for them are notoriously high. Fortunately, there are reductions for things like good grades or driver’s education courses needed to obtain a license. Additional courses may be offered by the insurance company. (Incidentally, even adults can sometimes get a discount by taking a defensive driving or refresher course.)
If your son or daughter is away at school without a car, definitely ask insurance companies if that can lower their rates. The privilege of driving provides parents the opportunity to manage kids’ driving habits – make it clear from the beginning that unsafe driving means a loss of that privilege.
There may be other less common discounts. If you have an extra vehicle, you could skip the rental reimbursement insurance you’re entitled to when a car’s been in an accident and is out of commission for repairs. Personal injury protection (PIP) may not be needed for those with great health coverage. On the other hand, there are certain coverages that are quite low, such as towing insurance, that can provide serious savings if you ever need the service.
12. Sports Cars and Classic Cars
Do you have a car that you only drive 6 months a year, or do you have a classic car that you only take out to car shows? Let your agent know this – there may be some strategies that you could save some money on the premium of these vehicles. Especially, if you drive very low miles per year with the car.
13. Check on an annual policy vs 6 month policy
With some companies – you have the choice to have a 6 month policy or an annual policy. Both have pro’s and con’s. With a 6 month policy, the premium for the 6 months is generally a little bit cheaper than an annual policy.
With an annual policy – you are “locking” in your rate for 12 months instead of 6 months.
Make sure to weigh your options when choosing your policy term.
Do The Work…You Won’t Regret It
It’s worth it! Make sure to call all of the insurance carriers and spend about 30 minutes with each one. It may take 5-10 hours doing it this way… OR – you can do the easy option and speak with an independent insurance agent and they will do all of the work for you.
Make sure you choose someone you are comfortable with. Remember, if you end up reporting a loss, these are the folks you’ll have to work with closely until everything is resolved.
Excellent insurance coverage is the prudent choice. If you ever have the misfortune of an accident you’ll be very grateful afterwards that you selected a policy sufficient for your needs.
If you would like us to shop your insurance for you and see how much we can save you, fill out the form below or call 412-833-1500.
Invest ample time and effort beforehand to ensure that your insurance will meet your unique needs. You could save hundreds of dollars each year on your premiums, and have peace of mind knowing the car insurance is there if and when you need it.
