Modify your policy

Vehicle insurance comes in many forms and delivers many options to choose from. When there are many different coverage options included into your policy it becomes very expensive. So your aim when optimizing your insurance costs is to strip off all the unnecessary coverage features and leave only those that are really needed. In fact, the only type of coverage that is legally required is the third party liability whereas all others are optional. Sure, it doesn’t mean that you have to strip down your policy to the bare minimums. But make sure to take some time and think about the things you really need with your policy and things you can leave behind. This will certainly cut your insurance costs effectively.

Adjust the deductible

As you may already know, deductible is the amount of money to be paid by you before the coverage actually starts to apply. It is used to prevent insurance claims due to minor damage to your car. And the higher you set the amount of deductible the lower is the premium. You can set the deductible up to $1000, however make sure that you can actually afford such an amount. Otherwise it doesn’t make any sense decreasing the premium and not being able to get any coverage when needed since you can’t meet the deductible.

Shop around

Comparison shopping is the best way to get the lowest price no matter what type of product or service you’re looking for and auto insurance isn’t an exception. With so many quote comparison sites on the web it’s really easy to shop around for vehicle insurance since it takes only a few minutes and you get plenty of quotes to compare. Try to get as many quotes from different providers as possible – this will raise your chance of finding a very good policy with plenty of coverage and reasonable premiums that will save your money.

Switch the car

Many car owners tend to forget that the most important factor contributing to the cost of auto insurance is the car they actually drive. Some cars are less costly to insure while others will automatically give you higher premiums even if you shop around a bit. In general sports, muscle, luxury and large cars are more expensive to insure. So if you feel that your auto insurance costs are unbearable consider buying a car that is less costly to insure in the first place.

Well, now technology has arrived that eliminates the risk of cheating – until someone learns how to hack the black boxes, that is. For now, insurers like Progressive are selling a basic policy plus monitoring equipment to plug into your vehicle. The insurer can then monitor when, where and how far you drive. Some insurers are even fitting a GPS transmitter. This is useful if your vehicle is stolen or you report a breakdown and a tow truck has to find you.

Many consider this new technology an invasion of their privacy. The question you have to answer is whether you want the discounts. As a low mileage driver, you pay a monthly premium based on how far you drive and whether you avoid driving at peak times. Before you answer, note some insurers also collect data from your vehicle showing how often you break suddenly, whether you swerve from side to side, and other features of your driving style. Should you have an accident and make a claim, the insurer has a record of how you were driving at the time. If you claimed you hit the other car because you were swerving violently to avoid a moose, the recording may show a slightly different story (ignoring the problem of explaining how there came to be a moose loose in your part of town).

Insurers are, of course, enthusiastic. They believe this new technology will encourage drivers to be more careful. If there are fewer accidents, this will result in lower auto insurance quotes for all of us. Federal government is also watching carefully because we may all be encouraged to drive more slowly. This will be good for the environment, reduce our dependence on imported oil and prevent global warming. Ironic that we might be thanking the insurance industry both for cheap auto insurance quotes and for saving the planet. Well, that’s an exaggeration, but you get the idea.

Have you heard of event data recorders (EDR)? These are the little black boxes for the vehicles we drive on our roads. In 2008, a report published by the National Highway Traffic Safety Administration (NHTSA) admitted between 65 and 90% of vehicles were already fitted with EDRs. The reason for the big range in the estimate is easy to explain. Almost every new vehicle rolling off the assembly line has an EDR fitted. It’s been a standard component for many years. But it’s not entirely clear how many older vehicles are still driving around without one of these recording devices inside. All we can say is that, as we slowly throw the old vehicles away, we’ll slowly move up to 100% installation. How can you tell whether your vehicle has an EDR? Curiously, until 2011, manufacturers did not have to tell you. Now, if you look in the driver’s manual, you’ll find confirmation.

Why should you care? Well, the NHTSA lists all the information these devices are supposed to collect. It’s very comprehensive, showing exactly what you were doing in the minute or so before the accident, i.e., how fast you were driving, whether you swerved, applied the brakes, whether you were wearing your seat belt, and so on. Anyone getting hold of this information can reconstruct how the accident occurred. You’ll be pleased to know EDR data is increasingly used to prosecute cases of vehicular manslaughter. Your insurance company will be able to compare your description of the accident with the EDR data. So, if you said you had to swerve to avoid an alligator on the road as you drove through the Everglades, you’d better be sure the EDR will tell the same story of a violent maneuver while braking sharply.

The EDR holds out the possibility of being able to detect more fraud, e.g. that you weren’t driving fast enough to cause the whiplash injury you now claim. If insurance companies can filter out more dishonest claims, this will reduce the overall cost of loss and, if the insurers are honest, reduce the auto insurance rates. Across the US, it’s estimated that several billion dollars in fraudulent claims are successful. Reducing this means more affordable if not cheap auto insurance for all us honest drivers.

The rates come down faster if you marry and have children. Now as the owners of vehicles likely to be carrying your family, you are assumed to have a safer approach to driving. Even if you don’t marry, you still earn a lower rate if you’re the owner of the vehicle. It’s assumed you’ll drive your own vehicle more carefully. This leads to a more general point. If parents insure their children, they pay the penalty if there are accidents or convictions. Premium rates are likely to triple or cover may be refused if underage children are caught driving while intoxicated. The same can apply if they are caught for underage drinking even while not driving. The parents are likely to face nonstandard rates or surcharges. Perhaps curiously, DWI/DUI convictions can also affect other home-based policies like those covering a jetboat or snowmobile. These higher rates will stay in place until the child leaves the home and will no longer be a driver of the family cars. This makes it better to encourage younger drivers to take out a policy in their own names. The sooner they learn the cause and effect of financial responsibility the better.

Remember that, in many states, there’s an open records law and many convictions by young people are not considered confidential. The states will disclose anything relevant to an insurance company on request. So whether the application for insurance is made by the parents or the children, the fact of convictions is likely already known. If you find it difficult to find coverage, many states also operate a program to support high-risk drivers. If you are being refused, apply to the local office of the Insurance Commissioner and you’ll be assigned to a local insurer. Because this is a “forced” insurance, the insurer will usually charge a top rate but some cover is better than no cover. If you manage to go several years without a claim, you should shop around. Get car insurance quotes from as many different insurers as possible. As soon as you start receiving quotes and the rates are falling to more reasonable levels, your rehabilitation is complete and you can apply for regular cover. As with all services where there’s competition, auto insurance for younger drivers is available at lower premium rates if you look around and talk to as many agents as possible.

Yet, when a talking head does appear above the parapet to talk for the industry, the message is always the same. The rates are going up because the repair and medical costs have been rising faster than inflation. Indeed, when you look at all the evidence on medical costs, you can believe what these insurance apologists are saying. Then you have to ask yourself about the value of the US dollar. It’s been falling steadily over the last three years. So the cost of all those imported spare parts from foreign manufacturers has also been rising. If these same insurance companies were not announcing increased profits to their stockholders, you would almost feel sorry for them.

So here’s something closer to the real problem for them to consider the next time. In some states, up to 20% of the vehicles on the road are uninsured. The reason for this is, in the main, that the premium rates are unaffordable to an increasing percentage of the population. In case you hadn’t noticed, we have the highest rate of poverty seen in the last twenty and more years. So all those drivers wealthy enough to pay these rates are now forced to pay more to provide against the risk of being hit by someone uninsured or underinsured. Like that’s the way insurance is supposed to work when holding a valid policy is mandatory. If we combined the databases of the insurers and the state vehicle licensing authorities, we could quickly identify people without insurance. But no politician is going to push for that because it would mean taking on the insurance industry to reduce their rates or paying a subsidy to poor drivers.

It’s a shame when big business gets too big and politicians feel intimidated. Or perhaps they feel bought given the amount these insurers pay into lobbying the politicians. Many would never have enough money to run campaigns were it not for the contributions of rich businessmen. So until we get big business out of government and have a more representative system, we have to accept the auto insurance quotes will keep on rising every year without any prospect of limits. The only way this will stop is when a sufficient number of electors in each state coordinate their efforts only to vote for politicians who not only say they will control the auto insurance rates, but then take effective action to do so.

When you drive around our great nation, there’s a one in five chance the driver of the vehicle crashing into yours is uninsured. This woeful state of affairs persists despite there being a mandate requiring all drivers to carry a minimum of liability cover. The practical reality is a lack of enthusiasm to enforce the laws. Since most uninsured drivers feel they stand a good chance of avoiding prosecution, they save the money and leave the rest with the risk. Yes, that’s right. Unless you paid for collision cover and, possible uninsured/underinsured cover, you pay for all losses arising from the crash out of your own pocket. So you have what the Brits call Hobson’s Choice. You either pay more in premiums or you pick up the bill for all losses. Either way you pay more. If the law on mandates was actively enforced, we would all pay less – assuming, of course, the insurance companies would pass on their savings to us. But if you ask politicians to fund active enforcement on budgets in deficit, they back away (usually on foot), claiming it’s more important to use the little money available to keep schools open and pay someone to keep the streets clear of rubbish.

So Assembly Bill 299 has been passed by the Senate Commerce, Labor and Energy Committee. This will add 50c to everyone’s insurance policy to create a fund. If any citizen of Nevada is really poor and produces an income tax return to prove it, they can claim a subsidy to buy a new low minimum liability policy. The theory is this will encourage the virtuous poor to use what little money they have to buy insurance. Needless to say, the Republicans oppose this, advising all the poor to abandon their vehicles and take a bus if they have somewhere to go. Obviously none of the Republican lawmakers have ever tried to use the public transport system.

What makes all this interesting is the evidence offered by State Farm which estimates the average policyholder would find their auto insurance quotes reduced by $50 per year. So let’s be straight about this. The Republicans want to defeat a bill making you pay 50c and force the poor on to buses. By doing so, they want to deny every driver in Nevada a potential reduction of $50 per year on their auto insurance quotes.

Well, here comes a new experiment from the motor industry. General Motors is flexing its muscles now it’s recovering from the Chapter 11 reorganization. During the last ten years, its reputation has taken a beating and sales of its brands has been declining year-on-year. The last financial year, 2010, was the first time it showed a profit since 2004. It has also shown a slight increase in sales volumes – the first increase after ten years of losing market share. To boost sales this year, it’s offering one year’s free insurance if you buy one of the eligible models. Before you all get too excited, this only applies to the good folk who live in Oregon and Washington, and the offer expires come September. But we can assume more of these offers will be made if sales in the models shows significant increase. So why is this potentially a good thing for you?

Not everyone manages to drive for years without getting into an accident. Once you have a claims record, rates tend to rise. The rates will also be high if you fall into a high-risk group, e.g. you are a teen or have the misfortune to pick up a conviction for DWI/DUI. This offer of auto insurance is “as of right”. If you buy the vehicle, you are insured. Although there are questions asked by the insurer, this is not to refuse you cover. All insurers like to know who you are. GM is also promoting the plan as “good” for other drivers. We have an increasingly large number of uninsured drivers on the road. GM says this is “free” insurance and the number of uninsured drivers will fall. Well, that’s less than honest because most everyone who can afford to buy a new vehicle can afford to insure it. Most of the uninsured drivers cannot afford the high premium rates, even for basic liability cover. That said, this is a convenient way of buying a new vehicle. It’s one-stop shopping. At the end of the year, the insurer will send you a renewal notice. Whether you renew is up to you. It’s at that time you should get auto insurance quotes from as many companies as possible. That way, you’ll find out whether the renewal offer is a good deal or not.

So, from the earliest years, we’re taught to shop around. Family and friends laugh at us if we accept the first price offered in the first shop we walk into. Everyone knows you have to go into at least three shops to get an idea of how much goods of this type actually cost. Only then can we see what represents good value for money. Would you start walking round car lots and showrooms without having an idea of the current prices? Would you simply agree to pay the asking price? Almost everyone is prepared to ask for a discount. Haggling may not be everyone’s strength but, in these tough economic times, we should all make the effort. It’s the same with insurance to go with the vehicle.

Your journey starts with the make and model. You should always find out how much it’s going to cost to insure. There’s no sense in chasing a dream car if you can’t afford to insure it. Then think carefully about the extent of the cover. All banks and finance companies that give you an auto loan require you to buy both collision and comprehensive cover. It’s their way of protecting the security of the loan. But if you pay cash or get an overdraft or loan that’s not tied to the vehicle, you could take the risk and only buy liability insurance. This is a lot cheaper in the at-fault states. In the no-fault states, the savings will be smaller but real if the value of your vehicle is low. Work on the basis that, if you have an accident and the value of the vehicle is low, it’s always going to be better value to throw the wreckage away and buy something else cheap to replace it. There’s no sense in paying more than you need. Indeed, you can build this in by agreeing to the maximum deductible (usually $1,000). Not only does this give you a discount on your auto insurance, it also ensures your vehicle will most likely be totaled in any accident. As you probably know, the labor costs for repairing vehicles are high these days and, when you add in the spares, you don’t get much for your money.

Saving money on your auto insurance is all about making the right decisions and having the right attitude. Gather information by shopping around and have the courage to haggle with the insurance companies to get the maximum discounts.

Why Consider Switching?

It’s easy to continue with your current coverage when you’re in the habit of paying your monthly premium. Sometimes, your current provider will have the best prices for you. Many insurers offer rewards to longtime customers, so if you do begin searching for an alternative, make sure you’re aware of all of the discounts you’re currently receiving, and factor those into potential future rates, or you may miscalculate and end up paying more than originally expected.

However, it is also not unusual for other companies to have better offers. This is particularly true if your circumstances have changed since you started your current plan. For instance, if you recently turned 25, your auto insurance should drop significantly due to the risk factors associated with drivers under that age.

If you received a speeding ticket or were in an auto accident, that will go on your record for 3-5 years and can immediately hike your rates. If this happens, it’s a good idea to start looking for alternatives, since some companies care more about these incidents than others. When the incident drops off your record, call your policy provider to have them drop rates accordingly.

In the event that your teenage driver needs to be covered, consider insurance shopping, as policies for teens can vary greatly from one firm to another, and your rates could go up more than 50 percent. That being said, you will generally get the best deal by adding them to your current policy, even if they are the primary driver of the vehicle.

Buying a new vehicle can also greatly affect your rates. Providers look at maintenance costs, safety ratings, and how often a car is stolen when determining their rates. High performance cars with six or eight cylinders also tend to be more expensive than four-cylinder vehicles.

How to Cancel Your Current Provider

Generally you need only to tell your current provider in writing that you intend to cancel, but be aware of several factors.

First, it is usually a good idea to cancel within a month of the end of your current policy’s renewal date. This will avoid penalties for canceling your insurance in the middle of your term. When you do cancel, make sure you have another plan in place. Going for any length of time, even 24 hours, without insurance can be catastrophic: if you get in a fender bender before your new policy begins, you could very likely face huge rate increases or be denied coverage altogether.

Your current insurer may request information on your new insurance policy. In many states they are required to confirm that you have a new policy in order to reduce the number uninsured drivers.

Always confirm your cancellation to avoid erroneous bills, and do not simply stop paying your monthly auto insurance premiums. This could affect your credit.

Check our online auto insurance quotes to maximize savings.

The simple fact that car insurance is a must makes a lot of drivers think that they are made money on. Of course, having mandatory auto insurance helps maintain the order on the road with so many vehicles out there. By insuring your car you get the financial back-up for nearly any situation that may happen on the road. But sometimes this back-up comes at a price that’s not too wallet-friendly and that’s when car owners start questioning car insurance in general. Sure, getting rid of insurance altogether is not the smartest thing to do both financially and socially: you are acting irresponsibly towards other drivers who you may have an accident with and you risk ending up with enormous costs to cover out of own pocket in case the accident takes place after all. So what can be done about auto insurance in order to reduce its costs?

If you had your auto insured for long enough, you probably know that a typical policy consists of different coverage options. Third party liability coverage is the only mandatory part, consisting of bodily injury and property damage that have to meet the local state requirements. All other coverage types are purely optional and that’s where you have all the freedom to cut your auto insurance costs. Collision and comprehensive coverage is definitely a good way to cover your cur, but if your ride is quite old and doesn’t have much market value then you don’t need these types of coverage as they will only cover the actual market value of the vehicle if it gets into a crash. Rental car insurance may be a good addition to the policy, covering your rental car expenses while your car is being repaired, but let’s be honest – do you think you will need it more than once or twice? Even if you never use this option you’ll still have to pay additional money for having it in your policy.

And let’s not forget about the deductibles. A deductible is a set amount of money you have to pay out of own pocket before the coverage kicks in. Deductibles have an inverse relation to premiums. This means that the higher is the deductible in your policy the lower is the premium. Typically, a deductible of $250 is set with most policies but you are free to raise it up to $2,000. Of course, you should only choose the amount you can actually afford, otherwise there’s no sense in saving money on auto insurance this way because you won’t be able to meet the deductible in the first place. But by raising it from $250 to $500 can give you an average 10% cut in premiums. Sounds nice, doesn’t it?