Welcome back to another week of The Teacher’s Salary series. Feel free to leave me a comment or send me an email if you have any suggestions for future topics.
Click HERE to see links to some of my previous posts from this series.
Recently, I’ve been going through different areas of our monthly budget, looking to find out if we could trim anything. One of the areas I’ve been focusing on lately is transportation and car insurance specifically. Car insurance is one of those must have insurances – one you hope you will not need but that you have to have. The good news is that there are some options to help reduce costs.
But before I get to some of the ways to save on car insurance, let’s review the 5 main types of auto insurance coverage, for those of you who may find the topic to be a little daunting.
Liability coverage:
Pays for damages you cause to someone else {bodily injury} or their property due to an auto accident.
Medical expense benefits:
Pays for injuries that you or passengers incur due to an accident. This covers things such as medical treatment, funeral expenses, and income loss.
Uninsured motorists:
Pays for bodily injury or property damage when you’ve been in an accident with someone who doesn’t have coverage at all or is under-insured. Hit-and-run accidents would be included in this.
Collision coverage:
Pays to repair your vehicle when you are in an accident with another vehicle. If the damage is deemed to be more than the value of the car, then you are paid for the value of the vehicle.
Comprehensive coverage:
Pays to repair your vehicle from damage that occurs due to something other than a collision such a hail, hitting an animal, or theft.
{Please note: I am not an insurance expert, so please clarify with an insurance professional before making decisions regarding your coverage. Ask lots of questions so you know what you are getting for your money!}
Now that we are finished with the technical stuff, let’s talk about ways to save money on car insurance.
1. Examine your coverage closely
When I started reviewing our car insurance policies, I started by double checking our coverage. Liability coverage is a must because no one wants to be sued for a large sum of money. I’ve heard that liability is one of the cheapest forms of insurance around, so get as much as you can afford.
Since we drive older cars that are paid off, we had to examine whether collision or comprehensive coverage was worth the extra cost. If you have enough money saved to cover these costs, then you may not need this coverage and you could consider dropping. From what I have read, the general rule is to drop it if your annual premium for this coverage is more than 10% of the Kelly Blue Book value.
2. Consider adjusting your deductible
Another way to save is to increase your deductible. If you have an emergency fund, then you could consider increasing your deductible since you have the money to cover it.
But, ask yourself whether the savings is worth the risk. How much will raising it actually save you?
If you raise your deductible from $500 to $1000 and save only $50 on your annual premium, then you’d have to go 10 years without an incident before you broke even. If you saved $150 on your annual premium, then you’d only have to go 3 years to break even. Things to consider…
3. Ask for other discounts
I’ve learned that it never hurts to ask for additional discounts. Many insurance companies will give discounts to teachers, military, and other professions. They also offer discounts for: good driving record, anti-lock breaks, seat belt wearers, and cars stored in garages. If you’ve been with the company for a number of years, ask them if they offer a loyalty discount. It can’t hurt to ask!
4. Shop around periodically
I tend to be a loyal person by nature. If a company treats me well, then I like to stick with them. But, when it comes to saving money, shopping around is a must. It’s nothing personal!
You might find that you can get the same coverage for a cheaper premium if you simply take the time to get quotes from other companies periodically. You could try to negotiate a better rate with your current company or you might find that making the switch to a different company is worth the savings.
We recently switched because the company we’d been with for 15 years simply couldn’t match the rates we were quoted with another company. We’d heard some great things about the customer service at the new company, so the switch was a no-brainer for us.
5. Bundle insurance policies
When I recently got some quotes from other companies, one of the most asked questions was regarding where we had our homeowner’s policy. Many companies will offer discounts if you have multiple policies with them, so consider consolidating.
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What ways have you found to reduce your car insurance costs?
