How To Save Money On Your Car Insurance

With seemingly hundreds of car insurance companies writing policies offering a variety of coverage options, shopping for a policy has become such a confusing ordeal that many people don't bother to comparison shop, ending up paying more than they need for premiums.

Car Insurance - Tip #1

In order to compare car insurance rates, you must first understand that car (and truck) insurance is actually a bundle of many different types of coverage, all rolled into a single insurance policy.

Here is a brief description of ten kinds of insurance coverage in a typical car insurance policy.

1. Liability & Property Damage: This covers damage that your car causes to physical property. This is usually another car, but may also be a garage, building, fence, or the like.

2. Liability- Bodily Injury: This covers the medical and other related expenses of someone injured (or even killed) in an accident you cause.

3. Collision: This is for damage done to your car when it collides with other vehicles or other objects.

4. Comprehensive: This covers damage to your car that results from something other than another vehicle. For example, a tree limb falling on your car, or a rock hitting your windshield. It also includes coverage for theft.

5. Medical Payments: This pays medical expenses for you and your passengers if your car if it is involved in an accident (usually regardless of who was at fault). This also covers you as a pedestrian if you are hit by a vehicle.

6. Uninsured Motorist Coverage: This pays for injuries if you're hit by a driver who doesn't have insurance.

7. Personal Injury Protection: Also known as "P.I.P." or "No-Fault" insurance, this is mandatory in most states. P.I.P. allows you to collect lost wages, medical & funeral expenses, up to a stated maximum, regardless of fault.

8. Additional Equipment: This covers expensive add-ons to your car (examples: after-market car stereo, big rims, monster tires, etc.) If you do not insure expensive after-market equipment, you will NOT have coverage for those items.

9. Rental Car Reimbursement: This reimburses you for your rental car when your car has been damaged in an accident and is not usable.

10. Towing: This reimburses you for towing charges.

(Note: some terminology, definitions and provisions may vary by state.)

Car Insurance - 10 More Money-Saving Tips

1. Consider raising your deductible.
The "deductible" is the amount you pay on a claim before your insurance pays. Compare the savings available on a higher deductible. For example, compare a $500 and $1,000 deductible. The $1000 deductible will increase your potential out-of-pocket expense by $500, but your savings might be $100 or more per year. Is it worth $100 per year, every year, for an extra $500 in coverage?

2. Are "add-ons" worth the cost?
Policies are sometimes offered with "add-ons" such as a Travel Club, Motor Club, or Accidental Death Insurance. These products are usually legitimate, but are they worth the price and are they needed?

3. Inquire about "safety equipment" discounts.
Often, insurance companies offer discounts for safety equipment such as air bags and anti-lock brakes. Front and side air bags can reduce injury and may qualify you for a discount. An approved alarm system or other devices that deter theft can get you a savings of five to ten percent.

4. Inquire about "good driver" discounts.
Companies typically reward a good driving record with a premium discount. Look for these discounts when shopping. No claims or traffic tickets for 36 months may qualify you for a reduced premium. Drivers over age 50 with a clean driving record may also claim a rate reduction. A teenage driver with a good academic record may qualify for a discount.

5. Do you need collision and/or comprehensive insurance on older vehicles?
For example, assume your car is worth $2,500. With a $500 deductible, your comprehensive and collision premium might be $1,000 per year. In the event of an accident, your "cost" would be $1500 ($500 deductible + $1000 premium) to insure a car valued at $2500. Is the insurance worth the cost?

6. Some cars cost less to insure.
Some cars cost less to insure because they are less expensive to repair. Some cars hold up better in accidents. Some are less likely to be stolen. The next time you shop for a car, consider the insurance rate as part of the car's total cost. Example: high-performance cars are fun to drive, but they're costly to repair and the premiums can run two to three times higher than less expensive cars.

7. Never allow your policy to lapse.
Most companies will only give their best rates to customers who have prior insurance with no lapse in coverage. If you allow your coverage to lapse, you will start in a higher priced tier (no safe driver discount) and have to work yourself up one year at a time.

8. Ask about future price reductions.
Some companies have lower premiums for longer-term customers with a good driving record. When comparing plans and rates, look for companies that offer price reductions beginning after the first or second year.

9. Combine policies with one carrier.
Most owners with two or more cars will know that it makes sense to insure all their vehicles under one policy. But you can also get a multi-vehicle discount if you insure a trailer or recreational vehicle on the same policy as your car. Also, many car insurers will reduce your car premium if you buy other coverage from them, such as homeowners' or life insurance. But don't switch carriers unless the rates for the other policies are competitive.

10. Use public transit or a carpool to get to work.
Drivers who hold their driving below 7,500 miles a year generally qualify for a discount, and lessening or eliminating your use of a car to commute can trim your premium.

A good local car insurance agent should be happy to assist you in ways to lower your car (or truck) insurance premium. See Local Agents for tips on how to identify a "good" car insurance agent.

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How To Save Money On Your Car Insurance

Car Insurance - Tip #1

Car Insurance - 10 More Money-Saving Tips