Since there are so many factors that contribute to your insurance cost, there are many ways to reduce your premiums. Here are some key ways to save money. Not all are right for everyone, but you can choose those that would work for you.
• Bundle your policies. Having all your insurance policies (autos, home, etc.) with one insurance company is one of the easiest ways to save money. Ask about multi-car and multi-policy discounts. However, it’s wise to compare the bundled price from one carrier to the combined premiums for policies purchased from different carriers to make sure bundling really is the best option.
• Ask about ways to reduce the rates on your at-home teen driver. This could include assigning your teen as an occasional operator of your least expensive car, earning good grades, taking a safe driving course, etc.
• Drive less. The fewer miles you travel in a year, the lower your premium. Many insurance companies give a price break to policyholders who drive fewer than 7,500 miles per year.
• Increase your deductibles. Sometimes the savings for increasing your deductibles (collision and comprehensive) are significant and worth the added risk, and sometimes they’re not. Do some calculations to see how many years you’d have to go without damage or a theft to accumulate enough savings to cover the greater out-of-pocket costs. Set aside the amount of your deductible so that it’s there when you need it.
• Drop your collision and/or comprehensive coverage. This won’t be possible if you’re making payments on your car. But if it’s paid off, and it’s old enough or in bad enough shape that you would probably not repair it if it were damaged or you could afford to pay for a replacement if it were stolen, dropping these coverages might make sense. (It may help to know that collision is typically significantly more expensive than comprehensive.) Make sure the savings make up for the added risk and that you’re prepared to replace your car if necessary.
• Reduce your liability coverage. This should only be done if your coverage would still be adequate to protect your assets. Advisors overwhelmingly caution against purchasing only the minimum required coverage.
• Ask about discounts for things you could do such as taking a driver education course, installing a car alarm, or ensuring the car you buy has safety equipment that will earn you discounts. In addition, some car models are cheaper to insure than others—and it's not always the lowestpriced model that qualifies for the lowest premium.
• Find out from the insurer at what ages rates go down (for example, when young drivers turn 25, or for experienced drivers turning 40 or “mature” drivers turning 50). Then be sure to notify your insurer when you have a birthday that takes you to that magic age.
• It goes without saying that avoiding accidents and tickets will keep your rates down.
• Allow your driving to be tracked.
An insurance professional can give you the exact dollar amount of your potential savings and may even be able to come up with other cost-cutters. For more guidance in this area, check out "How to Save Money on Auto Insurance"
