Insurance

How to Buy Car Insurance? The Best Tips and Tricks

 

We all know the importance of staying on top of our financial decisions, yet sometimes, even the most diligent of us fall into complacency. For years, I’ve been advising my readers to consistently prod their car insurance brokers to seek out fresh policies, rather than settling for those uninspiring renewal rates. However, life has a knack for sidetracking us. Busy schedules and other priorities often lead us to neglect this crucial aspect of our finances. It took a significant life event – buying a new house and consequently needing a new homeowner’s insurance policy – for me to finally instruct my broker to explore new options for my car insurance as well. The result? A savings of $600 annually, coupled with an increase in coverage.

The lesson is clear: by taking the time to shop around for a better deal, you can get more coverage and cut costs. If you’re looking to pay less for your car insurance, here are some tips for making the smartest choices.

 

Utilize a Broker (But Don’t Overlook Online Options)

I’ve been with the same car insurance broker for years because his quotes align with what’s available online. Having an agent has its perks, such as handling the tedious task of soliciting quotes from various insurance companies on your behalf. However, it’s essential to recognize that your broker may not approach every available option, and repeatedly sending proposals might lead to a less cooperative broker. To get a comprehensive view of the market, consider obtaining quotes on your own from time to time. These days, obtaining a quote online is a breeze.

By visiting the insurance company’s website, inputting basic information, and waiting a few minutes, you can get a quote. If you discover a better deal, ask your broker to match it. If the quotes match, that’s fine too – keep checking periodically to ensure you’re always on top of your options.

 

Unearth Unlikely Discounts

Surprisingly, many insurance companies offer discounts for affiliations with specific companies or organizations. Some go as far as extending special discounts for individuals associated with them. For instance, Geico, a part of Warren Buffett’s Berkshire Hathaway, offers a discount to shareholders. A friend of mine received this discount simply by mentioning that he owned Geico stock, without any need for proof.

While it’s important to be truthful, it’s fascinating to see how some discounts can be unlocked through such simple affiliations. (By the way, Berkshire Hathaway is a pretty good stock to own).

Avoid Blindly Following Friends

It’s common for friends to recommend their car insurance providers based on the premiums they pay. However, keep in mind that premiums are highly individualized and determined by factors such as the type of car you drive, your driving history, location, and credit score. Your insurance company might weigh these factors differently than your friends’ companies do.

 

Unless your circumstances align exactly with your friends’ (same neighborhood, same cars, same driver ages) – which is unlikely – your prices and discounts will differ. While it’s a good starting point to consider your friend’s recommendations, don’t limit your search.

Constantly Shop Around

Car insurance rates are in constant flux, influenced by real-world data and your evolving life circumstances. To safeguard your financial future, make it a habit to shop around regularly. While it’s unreasonable to pester your broker with weekly requests for new quotes, checking annually or biannually is a sensible approach. Failing to do so can be a costly mistake. I saved $600 annually by reevaluating my insurance needs, but I could have saved even more if I hadn’t procrastinated.

 

Don’t Wait for Renewal to Switch

Unlike many prepaid services, you can switch your car insurance at any time without losing your money. It’s not a binding contract. Even if you’ve paid for six or twelve months in advance, you’ll receive a refund for any unused portion if you decide to cancel early. You can use this to your advantage. You don’t need to wait until your renewal month to make a switch.

If you find a better deal, you can switch immediately. Even better, if you paid with a rewards credit card, you’ll likely keep the rewards you earned after the insurance company sends you a refund check.

Ensure an Apples-to-Apples Comparison

When seeking multiple quotes, ensure that you are comparing identical coverage options. Car insurance offers various customization choices, including deductible levels, comprehensive collision coverage, and rental car reimbursements. By comparing different coverage options, you can’t accurately assess the price differences.

Double-check all the information you provide to insurers, from your driving record to your vehicle identification numbers (VINs) and affiliations. Sometimes these details have a significant impact on your premiums, and overlooking them can lead to an inferior policy.

Inquire About Discounts

When communicating with insurance companies, be sure to inquire about all available discounts. While some discounts are obvious, like military or senior citizen discounts, others may be less well-known. For example, some companies offer discounts to first responders, healthcare workers, and students. Don’t hesitate to ask and do your research – Google can often help uncover lesser-known discounts that could save you money.

Consider Raising Deductibles Rather Than Lowering Liability Coverage

If you receive multiple quotes, and all come back with high premiums, you might consider lowering your coverage. However, this could increase your potential liability in the event of an accident. Instead, contemplate raising your deductible. While you’ll have to pay more out of pocket if an accident occurs, your coverage remains intact.

The key is to find a deductible level that you can comfortably manage without straining your finances. Whether it’s $500 or $5,000, increasing your deductible will typically lead to lower premiums.

Don’t Assume Multi-Policy Discounts Are the Best

Bundling your home and auto insurance can lead to savings, but it’s not the only path to the lowest rates. My assumption that bundling was the best option proved to be wrong. In my case, I saved even more money by insuring my house and cars separately with different insurance companies. So, while bundling can be a great money-saving strategy, don’t assume it’s the only way to secure the most competitive rates. If you can save by spreading your coverage across multiple insurers, go for it.

Check Car Insurance Rates Before Buying a New Car

Few people consider insurance rates when shopping for a new car, but they should. The cost of insurance varies significantly depending on factors such as the year, make, model, size, and engine power of the vehicle. Even cars with higher theft rates can come with higher insurance premiums. Before buying a new car, call around for insurance quotes on your shortlisted vehicles.

You may discover that one choice will cost significantly more (or less) to insure than the others. It’s disheartening to realize the extent of insurance premiums after purchasing a new vehicle. Be proactive, and factor in insurance rates when budgeting for your new car purchase.

Conclusion

Acquiring car insurance has become a straightforward process, with the option to choose a broker or obtain quotes directly from insurance companies’ websites. Online services can even automate the process of obtaining quotes from multiple insurers for you. There’s really no excuse not to explore better deals regularly. Numerous ways exist to save on car insurance, but they all require a bit of effort. As with most things in life, the more you put into it, the more you get out of it. So, make it a habit to periodically reevaluate your car insurance needs and keep your financial future on track.

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