I have been bugging a friend and former coworker from our dot com startup days to give my readers some helpful advice on a topic I know nothing about…insurance!
Elena, who works for State Farm, is our go to agent for all our insurance needs. What I like about working with Elena is the personal touch. If ever I have a question or an issue, I know I can call her directly instead of waiting in the queue using some toll-free number. As an example, we needed insurance to host our rehearsal dinner at a private clubhouse and she made sure we were taken care of lickety-split. One less stress to deal with during our wedding planning.
Elena has crafted these helpful hints on reducing the cost of your car insurance. I look forward to hearing more tips and advice from her in the future.
9 Car Insurance Tips to Cut Cost
What is your car insurance actually insuring? Although you’re buying a single insurance policy covering a specific vehicle, a number of components make up the final cost. A policy review with your insurance agent can help to identify which coverage can be modified or removed.
While it is dangerous to be underinsured, having too much insurance can be an expensive mistake as well. Here are some pointers help reduce the cost of your car insurance:
1. Two costly coverages that may be either modified or removed on an insurance policy are the comprehensive and collision coverage. Collision insurance covers damage to your vehicle when your vehicle collides with, or through your fault is hit by, another vehicle or another object. This coverage generally comes with a deductible. Comprehensive insurance covers damage to your car from theft, vandalism, fire, wind, flood, and other non-accident causes. Comprehensive also carries a deductible.
Aging vehicles decrease in value. At some point, it may not be cost effective to carry comprehensive or collision insurance. Your vehicle may have lost so much value that the cost of the repairs are more than the actual cost of the vehicle. If your vehicle is worth less than $3000, it may be a good idea to drop your collision coverage. Another good idea is to review your policy and see what your annual premiums are. If the cost of the collision coverage is over 10 percent of what you would get for the vehicle in case it was totaled, it may be a good idea to consider dropping coverage.
2. Other coverages that may be removed or reduced are rental car reimbursement. If you have spare vehicles at home, you may consider removing the rental car coverage from your insurance policy.
3. If you purchased a new vehicle that comes with a warranty, the warranty typically includes emergency road service. If that’s the case, you can remove the emergency road service coverage from your insurance policy.
4. Remaining with the same company long-term may save you money. Some insurance companies offer loyalty discount based on the number of years that you’re insured with them. State Farm offers a loyalty discount program after just 1 year and that discount grows annually.
5. Consolidating insurance policies with the same company may save you money on each insurance policy. When combining auto with renters, homeowners, life or health insurance at State Farm, the discounts can amount to as much as 22% in savings on the auto insurance. In addition, when consolidating all car insurance policies within the same company, may qualify you for a multicar discount. This can be an additional 20% in savings on each vehicle. Bottom line, it saves you money to insure everything in one place.
6. If you got a traffic ticket, consider either doing traffic school. A ticket stays on your record for 6 years and impacts your insurance rates. Going to traffic school removes the ticket from your record so that your rates are not affected.
7. If you have young drivers at home there are several discounts that you can apply for to lower their cost of insurance. If the young driver has a clean driving record, they are eligible for a unique safe driver discount which would cut their insurance costs by 10%. If the young driver is a full-time student and has a GPA of 3.0 or above, they would be eligible for a good student discount. Combination of these two discounts could save you 20% on the car insurance. Newly licensed drivers who are married or single but with a child, will benefit from receiving a reduced rate on their car insurance as well.
8. Driving less mileage can save you money two ways; 1. If you drive under 7,500 miles/year, you may be eligible for a low mileage rating. 2. If you drive over 7,500 miles/year, State Farm offers a unique program where you pay only for the miles that you drive. Both of these programs are designed to save drivers money on their insurance.
9. Last but not least, choose a less expensive car to insure. Insurance premiums are based partly on the price of the vehicle, which affects the replacement cost if it is stolen or “totaled” in an accident. How expensive the vehicle is to repair — including parts and labor — can also affect the cost. In addition, surcharges may apply to vehicles that are frequently stolen or involved in accidents. According to statistics, the lowest injury claims are from large vehicles — cars, pickup trucks, and sport-utility vehicles. Small 2- and 4-door cars have the highest injury claims. Small cars also are among the highest in collision costs, along with sports cars.
Elena Sadur, Agent
State Farm Insurance