You can save more money than you might think by shopping around for the lowest rates, tweaking your … [+]
The auto insurance industry remains open as an essential business, and the Internet makes comparing rates and shopping for coverage a no-contact no-brainer. If you’re working at home, and especially if you’ve been furloughed and are receiving unemployment compensation, you should take the opportunity to ensure you’re paying the lowest premiums possible.
We’ve all seen television ads touting the benefits of comparing quotes among multiple providers, and indeed it can pay off big time. According to recently compiled research conducted by CarInsurance.com, drivers can save an average $1,127 a year by looking for the lowest rates. Specifically, the website found a 153 percent difference between the highest and lowest costs for state minimum liability coverage for the same policy among different carriers, and a 138 percent difference for full coverage.
CarInsurance.com determined that, on average, policyholders pay the least for full coverage annually via Geico ($901), Nationwide ($1,227), State Farm ($1,313), Farmers ($1,351), and Progressive ($1,415).
“Comparison shopping is one of the most effective ways to save on your car insurance,” says the website’s editorial director Michelle Megna. “That’s because no two companies charge identical amounts for the same policy.”
Indeed, the so-called actuarial formulas used to compute car insurance rates are moving targets that can vary significantly among carriers, with some charging more or less to cover the cost of what’s perceived to be additional risk, based on a variety of factors. These include one’s age (younger drivers pay more), gender (women pay less), marital status (singles are charged more than couples), driving record (at-fault accidents and moving violations will hike rates), credit rating, zip code (urban dwellers pay more and rates vary by state), and the model driven (costly luxury models and red-hot sports cars cost the most to cover).
The experts say it’s wise to shop around for the lowest rates on an annual basis, especially if there’s been a change in your personal profile. This includes buying a new vehicle, adding a second or third car to your policy, and adding or removing a driver from your coverage. Other triggers include getting married or divorced, moving to a new address, or buying a house. You should definitely go shopping if your rates spike because of a major moving violation, an accident, or a downward change in your credit score.
Fortunately, the Internet affords an easy avenue in which to compare insurance premiums from multiple carriers. Individual providers can give quotes online and show the cost differences for various coverage options based on what you drive, where you live, and so on. You can also visit any of the myriad websites that provide quotes from multiple carriers. Be prepared with the make and model of car, the name of your current auto insurance carrier, the date of the policy’s expiration, and details regarding any past insurance claims and moving violations on your record. You can seal the deal online, though you may want to speak with an agent to ensure you’re getting all the coverage you need and all the discounts for which you’re eligible.
Carriers typically issue discounts for having anti-theft devices like alarms, ignition kill-switches and GPS vehicle recovery systems installed. Teens who’ve taken approved driver training and/or get good grades will often receive a discount, as will older drivers who’ve completed a defensive driving course. You’ll also typically save a few bucks by paying a year’s premiums annually, rather than on a quarterly or monthly basis; you might also catch a break by receiving your bill online and/or setting up automatic payments.
You may also qualify for a usage-based discount if you drive fewer miles than a given insurance company’s threshold, say 7,500 miles per year. Some insurers will grant their customers additional rate deductions for having a device installed on their vehicles via the “OBD II” diagnostic interface that monitors their driving habits.
Even if you don’t switch carriers, you can cut the cost of auto insurance premiums by tweaking your coverage. Every state mandates minimum liability coverage that every policy must maintain. While it can be prudent to carry additional coverage if you have a great deal of assets to protect, adhering to only the minimum amounts in this regard will result in the lowest applicable rates.
Another way to save money is to raise the out-of-pocket deductibles for collision and comprehensive coverage, which applies to physical damage and theft. If you’re driving an older model that might cost more to repair than it would to replace, you may want to drop collision and comprehensive altogether. If you and your family are covered by health insurance, consider canceling or declining the medical payments section that covers injuries to the driver and passengers.
You can also save a few bucks by waiving rental reimbursement coverage, especially if you take public transportation to work or own multiple cars that can be called into service if one is in the shop; ditto for towing coverage, which can be redundant for those already having a new-car roadside assistance plan. You’ll also save money by insuring more than one vehicle on the same policy, and by bundling car and home insurance with the same carrier.
Finally, keep in mind that you don’t have to wait until your current policy is about to expire before comparing costs—you’ll be reimbursed for the unused coverage if you decide to switch companies. But never let your current coverage lapse while shopping around for a better deal. Not only could you be subject to legal penalties for driving without insurance and being responsible for liability costs if you get in an accident, you’ll pay higher rates to get your policy reinstated and might even find it difficult to obtain new coverage from another company.
