How to get cheaper car insurance?

Car insurance is an expensive line item in anyone’s budget.  After paying so much, it is also one of those items that I hope we never have to use. And lot of us keep paying that higher amount just because we are lazy [cough*cough*my husband] or just because a lizard told us he has the cheapest insurance in town . I know for us, it is the third most expensive thing we spend on every month. If there is anything I could do to reduce this cost, I will. Here is a 10 step plan I go through every year to see if we can cut away at the premium.

1. Understand your coverage and needs

Paying for car insurance, in my mind, is one of those necessary evils.  I hate giving up a significant amount of money every month to a company I only hear from once a year when its time to renew.  However, its something that will give you peace of mind (and protection from the law) if you do get into an accident.  That doesn’t mean you just call the first company you see during your evening TV sessions and sign up with them.  It might sound ridiculous but that is pretty much what hubby dear did when he first bought car insurance.  So how much do you need.  There is the minimum amount that is required by law but in many cases (especially if you have significant assets) it makes sense to go beyond the minimum to protect yourself from getting sued.

Some questions to consider

• Do you have a lot of assets? (you might want to consider higher coverage or even umbrella insurance)
• Do you owe more on the car than what it is worth at the moment? (Do you have to get GAP insurance?)
• Do you own a new vehicle? (you might want to get collision and comprehensive)
• What amount would let you sleep at night?

Check this post to learn more about different coverage and limits – Car insurance coverage

Decide how much coverage you need before you shop.

2. Compile your information

Now that you have a basic understand of the car insurance coverage, it is time to prepare to get the cheaper car insurance. There are some things that will make the online quotes/phone quotes easier and less time consuming. Write down the following information in one place for easy reference – Name, Age, License Number, Licensed State,Employer … [Check the PDF cheaper car insurance checklist or the excel sheet for complete information to collect]

3. Review your car insurance discounts and driving record

Review your driving history.  Make sure you refresh your memory on when you got that speeding ticket. If the points on your record from that ticket will soon expire, you might be better served by waiting for that time because you will most likely get a better quote. Check the Car insurance discount list, if there is something small like VIN etcher or taking a defensive driving class that you can do quickly, take care of it before calling. Also review your current auto policy and make sure you know exactly what all is covered and how much coverage you have in each category.  That way when shopping for quotes, if someone says they offer free rental car coverage for up to 3 days, you can immediately check if that is better than what you have or not.

Check the Car Insurance discounts post for more details on each type of discount. I have also included all the discounts in the Cheaper Car Insurance checklist PDF or excel sheet for downloading

4. Review your online presence

Clean up your online presence. This might be a little new to a lot of people but more and more insurance companies are checking your online presence as well. Did you brag about street racing (it is illegal, you shouldn’t be doing that anyway)? Did you post photos of you drinking and driving? Change your habits for the better and delete that online footprint as well.

5. Work your computer

Armed with this information, browse the web for a bit (yes, the shows on Hulu can wait a little).  Find websites or insurers that provide instant quotes.  This will help you get a feel for the lay of the land.  It also gives you a sense, especially if you have had a major change like changing states, what the range of prices are.  This helps you set expectations and also gives you perspective on how your present insurer is doing compared to the others.  Before you call anyone on the phone, make a list comparing all the different quotes and what is provided in each.  You will therefore know what target to beat to get yourself the best deal.

6. Compile the quotes and work the phone

Next call the different providers to get any specific questions you have answered.  You can also press them on other discounts they might offer.  Don’t forget to call providers that only provide a quote through a local representative.  Since you already have a fair bit of pricing information it will help drive your conversation. Make sure to ask about all the discounts to the agent. Online tools won’t ask for every possible discount. Record what you spoke and clearly note down everything in the cheaper car insurance checklist. Sometimes the agents can’t reduce the rate but throw in extra coverage, we got our rental insurance for free, which we would have paid for anyway. So compare the whole package.

Use this Cheaper Car Insurance checklist PDF or excel sheet to collect all your quotes and also for future reference

7. Choose the right insurance company

Now comes the selection phase.  You have all the quotes, but price isn’t everything. You also have to take into account which insurers give you the most peace of mind after an accident.  Do they lend you a helping hand immediately or make you jump through hoops?  What do other consumers think about them?  Are they still advertising a customer satisfaction award they got a decade ago?   Most of this stuff is available online. Some places to check the company are -

• A.M. Best & Standard & Poor’s ratings (financial strength of the company)
• J.D. Power and Associates’ consumer satisfaction surveys
• Local body shops and your State Dept. of Insurance

8. Review the policy

After choosing the best value, confirm the policy with the company. They will send you the policy details. Double check everything. See if there is any new stuff added (for example, if you have a loan, some companies automatically add a GAP insurance. But you might not need that, so check the policy to see you got exactly what you wanted – nothing more, nothing less). Check if there are any clauses that make you uncomfortable – like giving up the right to sue.

9. Set it up right

Companies usually charge $2-$5 each month if you pay by month. If you can pay in full for an year or 6 months, take that option. Also these days more and more companies are offering a “green discount”, a discount to skip the physical mail and opt for electronic mail. As long as you save a copy of your bills and policy in a safe place, I don’t see why you can’t take advantage of this discount.

10. Cancel the old policy

Shop Ahead

I wanted to stop at 10 but this has to be included – BEFORE you buy your next car, check on insurance. Some times you pay the same for 2 different cars but the difference in insurance will make one car a lot more expensive to own than the other. If you like them both equally you might as well get the one with lower insurance.