Oct 06 2008

Time to renew our car insurance: Ideas for saving the most money

It’s time for me to renew our car insurance once again. Just like I did six months ago, I’m shopping around and scrutinizing our policy to make sure that we’re properly covered and are getting the best price possible.

When was the last time you carefully examined your car insurance premiums? Companies hope that you’ll just renew with them year after year, but by taking just a little bit of time, you really could be saving a ton of money.

Want to save money? Start with your current policy. Look at the itemized coverage amounts.

Is there a chance you’re over-insured?

We don’t have the optional rental car or tow coverage on our policy. We can pay those out of our emergency fund if we need to. Plus, my car already has a roadside assistance benefit through the limited manufacturer’s warranty. We’ll have AAA for another month or so, but we won’t renew that. Again, we’ll self-insure for this need.

The rest of our coverage limits still looked good. Last time, I determined that we were both over and under-insured in various categories–especially the first-party benefits which include medical, income loss and funeral expenses. We have other insurance policies in place to cover these needs, so we don’t need double-coverage on our auto insurance.

If we’re still driving our car in 15 years and the thing is only worth $1,000 or so, we’d probably drop the comp/collision altogether.

Do make sure that your policy will protect your assets in the event of some serious damage. If your health insurance is limited, it might be a good idea to make sure you have enough coverage here. And, it might be worth looking into an umbrella policy to cover yourself and your assets.

Update: Oh geez. In Pennsylvania, you either pick “full tort” or “limited tort” which describes your rights and limits to sue for pain and suffering, in the event of an injury. With limited tort, you can still sue for pain and suffering damages if you have “serious” injury (whatever that means) but at no other time. It can chop a ton off your premium. After reviewing the details, I decided to go from full to limited tort. I’ll get a $9 credit for the remainder of this policy, and after increasing our coverage limits slightly in other categories, I’m looking at a $371 premium. Right on.

Now that you’re sure your policy covers all of your needs, take a look at your deductible. In my experience, increasing a deductible from $250 to $500 will give you the greatest savings on your premium. Only make the increase if you do in fact have at least $500 in your emergency savings. If you don’t, then start working on your emergency fund so that in six months, you can afford to increase your deductibles.

If we went with a $250 deductible on our comprehensive and collision, we’d pay $268 for that portion alone. Increasing the deductibles to $500 each changes it to $188, or a savings of $80.

I looked into increasing our deductibles from $500 to $1,000, and Shane and I decided it just wasn’t worth the savings. Changing the comprehensive and collision each to $1,000 would only save us about $19 per six months.

Now that you’re certain of the exact coverage you want, shop around for the best deal.
You’ll want to make sure the agent is comparing the exact policy so you can have an apples-to-apples comparison. Some people have been able to save money by having their car and renters/home insurance with the same company. Not true for me, but it’s worth investigating.

I started with Insweb, which was recommended in the latest issue of Reader’s Digest. Other comparison sites include Netquote (and there are plenty more out there). If you have an account with MyPoints.com, go there before accessing the NetQuote site. You can get 5,000 points if you switch policies thanks to them.

Be warned: When you get quotes through these sites, you’ll be contacted by a variety of companies via e-mail and over the phone. If you’d rather be in control of who contacts you, you might try contacting companies individually for quotes.

I’m going to stick with Geico. Our premium did increase by $14 to $380 for six months, but it’s still way cheaper than I’ve been able to find anywhere else. Some companies gave me quotes as high as $850 per six month for identical coverage. No thanks!

Pay yourself monthly installments so you can easily pay your premium in full.

We had been paying ourselves $61 per month into our ING Direct savings account so that we had some money available to pay ourselves in full. Doing so makes a one-time premium much easier to handle, and even though our premium went up, it’ll have a minimal impact on our budget.

We earned a small amount of interest on those deposits and we’ll avoid monthly installation fees (would have been $4 per month).

This time around, I think I’ll increase our monthly insurance savings to about $66 per month in case our premium increases again in May.

How often do you shop around for car insurance? Do you have any other ways to save money?



7 Responses to “Time to renew our car insurance: Ideas for saving the most money”

  1. We have our insurance through SafeCo. We used to have Geico but they were so expensive! When we switched to SafeCo, we saved a ton of money. We were paying like $400 a month for insurance (young and driving a Mustang) but when we switched it was under $200. SafeCo has been great for us and goes down every 6 months. We’ve been very happy with them.

    We didn’t have full coverage on our one vehicle and a tree fell on it so we were out the money for it but it wasn’t worth that much anyway. It wasn’t a ficus. :)

    I think it’s great that you know so much about insurance. That’s awesome!

    MrsMoney’s last blog post..Yard Sale Earnings and Tips

  2. Thanks for the tip! I just got a quote through SafeCo. It was $1100. Um. What?!

  3. HOLY CRAP. Sorry about that!! That is nuts. I don’t know why ours was so cheap. Ours costs $900 for six months and that’s for two vehicles (2002 and 2005). I wonder why that came back so high. I feel bad now! :( Sorry about that!

    MrsMoney’s last blog post..Yard Sale Earnings and Tips

  4. I’m in NJ, the land of very high car insurance. I finally switched to another company last week after being with one for 4 years. And I saved $400 a year, which in NJ is a lovely thing. So shopping around frequently is highly recommended.

  5. If I were you, I would reconsider having car rental on your insurance policy. Due to bad information from the financial officer where I purchased my car (he said car rental was included in the extended warranty — not so, only for mechanical failure), I was personally out $700 when I was in an accident and had to pay for the rental vehicle out of my own pocket. I chose to rent the cheapest car available; however, my car was in the shop for one month. At less than $5 per month on my insurance policy, I think it is well worth it. You can bet I have it now!

  6. Yeah, I dunno. I mean for a 23-year-old to rent a car, it’s like $50 per day or something ridiculous. So for the month, we’d be out a good $1,500.

    But, if we absolutely *had* go go one month without a car, we could make it work.

    We live right on a bus line and Shane would still be able to get to work no trouble. I could either take a bus to my midwife appointments or even spring for a taxi.

    And there’s a grocery store and shopping plaza that’s superclose to our apartment.

    It would be a pain, but we could swing it. I’m sure that if our car really was in the repair shop that long, I’d be kicking myself about not having that coverage. But, the money is in our emergency fund if we need it.

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Hey! I'm Kacie, wife to Shane and mother to Jonathan (7), Vivienne (5) and Amelia (2) . I write about my family's finance: how we save money, improve our spending, and plan for the future.

I hope I can inspire and encourage you to improve your situation. See disclosure.

I'm adopting a much slower-paced posting schedule, and treating this as a hobby blog now.

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