How To Pay As Little As Possible To Insure Your Jalopy
Despite what certain geckos would have you believe, the art of saving money on car insurance goes beyond doing whatever television commercials tell you to do.
Better to follow the ways of the Gekko from movie Wall Street and stick with the mentality that greed is good — aim to get the most coverage you can for as little as possible. A World of Money and Markets blog post provides 10 ways to out-greed your insurance agent, half of which we're fair-using here:
1. Get Several Auto Insurance Quotes and Compare
You will want to start out by getting several auto insurance quotes. You can easily get these in just a few minutes online. Once you have your quotes, then you can compare auto insurance policies and see which one really is the best deal for your needs.
2. Avoid Most Wanted Cars by Car Thieves
Every now and then you will see lists in the news that talk about the Top 10 Most Stolen Cars in America - or something like that. By not buying one of these cars, you can keep your auto insurance lower than what someone will experience who buys one of them. The auto insurance company has to dish out replacement money when one of these is stolen and you can be sure that they will try to recover some of their money in the premiums on the owners of those cars. While the cars may be nice - the costly premiums are not.
3. Have More Than One Policy with Same Insurance Company
You can usually get reduced rates when you have more than one policy with an insurer. So, if you have a homeowner's insurance policy with a particular company and have had it with them for some time, you want to ask them for an auto insurance quote. Be careful about transferring to different insurers too often, however, because by staying with an insurer over the years you can get another discount.
4. Keep a Good Driving Record
Keeping your car under control - and yourself - can bring rewards like decent auto insurance payments. Keep a clean record and it will help you enjoy the benefits each month.
5. Keep Your Credit Score High
Around 90% of auto insurers will look at your credit report in order to determine your costs. If you have not seen your credit report lately, you may want to get a free copy from the credit bureaus and look it over. Mistakes are often found on credit reports and it could cost you plenty. Besides, fixing a bad credit report may also enable you to get better interest rates on other things when you need them, too.
A drawback to having several agents running your credit score while competing to offer you low rates is all that action shows up on your credit report and may temporarily ding your score, depending on whether the company does a "hard" or "soft" pull on your credit. Car insurance companies should be doing "soft" (won't affect your score) pulls because they're not making a lending decision, but you never know, so its something to keep in mind if you're about to make a big purchase (like a house) in the next few months.
Previously: 10 Things Your Auto Insurer Won't Tell You.
10 Ways to Reduce Your Car Insurance and Save Money [World of Money and Markets]
List of Institutions that pull HARD credit inquiries when opening a NON-CREDIT account [Fat Wallet]
(Photo: stirwise)
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Comments:
@valleyval:
I have AAA, but I don't believe I'm getting a discount on my car insurance because of it? What insurance company do you have? I have State Farm. Should I call them and ask for a discount because I have AAA?
And why should my credit score have any bearing on my car or homeowner's insurance? I've had exactly 1 property insurance claim, ever, and it was in 1988 from a wreck that the police report indicated 100% fault on the other guy. But, my credit has a couple of dings, so I get to pay a higher rate. Thanks, Insurance Industry.
Why should I pay more as a single person?
Why should I pay more as a male?
Why should I pay more as a urban dweller?
Why should I pay more since i use it everyday?
It sucks but it's the percentages
@jswilson64: Good, bad or indifferent: insurers look at risk. There is a corollary between credit risk and general risk. Very similar to the practice used by employers to determine who they want to employ.
@jswilson64:
This discussion has been had many times on Consumerist. The actuaries' data suggest that people with lower credit scores tend to have more claims. Also, someone who isn't careful financially may be more tempted to commit insurance fraud.
I'm not saying I agree with this, but that's just the way it is.
On a completely unrelated note, the thing on the site that counts how many views a post has gotten isn't working. All of the posts say "0 views."
Another way to lower your premium is to report to your agent (or direct-writing company) if your commute is shorter than it used to be or you're car-pooling or you have lost a job and therefore don't commute at all. The rates are different for cars that are driven every day to work than they are for cars just used for "pleasure".
Why would your credit score indicate anything about your driving habits? You know, it should be illegal to pull credit scores for anything other than actually extending credit. That includes employment.
This is very quickly becoming a means of establishing totalitarian control over people, and we all should be quite alarmed about it.
I'd love to know when it makes sense to drop comprehensive/physical damage/collision on a not new paid off car.
You could also move to a state that does not require its citizens to purchase auto insurance.
Your credit score doesn't tell them anything about your driving habits. Neither does your sex, your age, what kind of car you drive, or your grades in school. None of them tell an insurer anything about your driving habits. But thanks to the magic of statistics, they can combine all of those things to estimate how much you're going to cost them. Apparently there is a statistically significant correlation between credit score and your risk to an insurer.
Tip #6: Don't get insurance with Allstate. Unless you like paying a lot of money and when the time comes to make a claim you like to get lied to and screwed.
@Ihaveasmartpuppy:
When (premium $ + deductible $) * time > Car's value.
The "Time" part of the equation is the only variable each individual needs to consider. Insurance = Risk... so how much risk, as an individual, are you willing to take?
With regards to the credit score, watch out for Progressive, Esurance, Geico, and any other online insurance quotes. The quotes they issue in via their step by step process are for some people with 900+, I know you cant have a 900 credit score, but still, Mine was in the mid-upper 700's and when it came back from underwriting the cost was more because of my "credit score" I was 22, they knew I was 22 from the information provided, how can they think I'd have an 800+ score. I called and asked about it and their bs is they cant know what a persons credit score is when they are quoting so they use a really high one and up the premium if the persons score is lower, not true bait and switch but annoying all to hell.
If you don't drive very much, some insurers offer a discount for cars driven under particular threshholds. For a couple years I was hardly ever driving except to the supermarket, and for driving less than 8,000 miles a year, I got a substantial discount. My insurer had another threshhold at 12,000, IIRC. (The rationale, of course, is that the less you drive, the less likely you are to be in an accident.) My agent just had to look at my odometer once a year to extend me the lower rate for the next year.
Doesn't hurt to ask.
@Ihaveasmartpuppy: I would say when you get to the point where the value of the car is equal to about 2 to 3 years of insurance premiums.
Well, frankly, the industry says there is, and why would they lie? If they're using a metric that doesn't help assess risk, they're only hurting themselves because they're mispricing insurance.
@HurtsSoGood: sorry, you don't own your credit score/report. You don't solely own the history of you transactions that it's based on either. That said, you are definitely entitled to have errors corrected.
Not allowing insurance companies to check credit reports will probably increase your insurance rates since won't be able to discriminate as well.
There's nothing wrong with using credit report/score for anything it legitimately correlates to so long as (1) it's not the only criteria and
(2) the rules for improving your credit report/score are clear.
@tbax929: I assume you put quotes around pleasure to let us know that the cars are used in those sleazy Internet pornography videos?
#5 Keep your credit score high. Ya know, everyone talks about getting a free copy of your credit report. Thats all you get. The credit report. If you want your credit SCORE they charge you. So yes, copy of credit report shows everything is fine, but get out your credit card if you want that all famous score everything is based upon. Hence, the most important part is not free.
Well, the fact is, there _is_ a correlation between insurance losses and credit scores (see the study I referenced above).
I have AAA for my home and auto insurance. I got quotes from 3 other insurance companies, and AAA cost at least half of all 3 for the home and auto insurance. You have to get a AAA membership which adds $50 (I think) a year, but you get all the benefits of a AAA membership, travel discounts, roadside assistance, etc. I swear I don't work for them, I was just really surprised when we got home insurance from them this February, that is was half as much for the exact same amount of coverage. Anyway, they are awesome.
@jswilson64: I couldn't agree more. Every facet of our lives seems to revolve around credit ratings. Its a system with many flaws so I resent it. Makes me want to live off the grid some days.
@Galactica: Looks like NeverLetMeDown did my work for me.
Waiting... waiting for a emotional response that is simply wrong or OT.
Car insurance has proven, for me, to be one of those areas where it really has paid to talk to a real person on the phone.
I was shopping around for quotes on a new-to-me (a 1996 Camry that had been registered to my father in between my grandfather's willing it to me and my taking it, because I lived in NYC when he died and no way was I having a car there) car just this past February. I received WILDLY different quotes from about 8 different companies, and picked the lowest, Geico. They quoted me one price throughout the whole process, and as soon as I had entered my credit card information, the price I was quoted became 40% higher.
I screamed and yelled at my fiancé for a few minutes but then calmed down and called Geico and spoke (politely) with a human on the phone. She had it all sorted out in under three minutes and I pay the original, absurdly low rate.
I disagree with some of this - I own a car that's made the top ten of 5 or 6 years worth of most stolen car lists, and my insurance isn't overly expensive, even with full theft/glass and high limits.
@jp: I don't think that's the point. Getting a free credit report is about correcting errors. If the score is low because of an error, you could have figured that out with just the report. If there's nothing to correct, you pretty much only need the credit report. If you need the score because you're getting a loan, suck it up.
@cuchanu: My issue was a couple years ago when I was rear ended. Allstate just wanted to total my car instead of repairing it. They didn't want to even consider that I had zero qualms whatsoever going with good used parts instead of $$$ for new, just to keep [u]their[/u] costs down.
The other party, State Farm, did listen, and the repair bill was over $600 lower. Indeed, the only part that was brand new was the bumper cover, which I did insist that it had to be OEM (CR did a test a while back, and the aftermarkets failed horribly). That was $20 more than the knockoff, and $30 cheaper than a repaired one.
As someone with a high credit score, I for one welcome our new totalitarian credit-score checking overlords.
I think it's kind of odd that they left out defensive driving courses. Most insurance companies have a discount for up to three years per course certificate, and while the course itself costs $25 online in my state (TX), I'm getting almost $35 in discounts per policy term on two cars; that adds up to $210 in savings for a $25 class over three years (even with one car, it's $120, which is still WAY more than $25).
Geico actually was the cheapest insurance for me and my wife. We were with Allstate, but the last bill for $1100 for 6 months made me shop around. Geico was by far the cheapest of the big insurance companies. Ended up saving close to $600, so I was super happy about that.
I've got a '98 Outback and got them to give me a discount because I didn't want comprehensive insurance on it. I mean on top of the lower rate you normally would get. I just mentioned that assuming I wrecked my car wouldn't I be saving them money by not asking them to reimburse me for it and the lady knocked off $30.
Then I told them my wife was a school teacher and they knocked off $30 more.
You missed my point. #5 of this article said to "keep your credit score high". You have to buy the credit score to find out what it is in oder to "keep it high". I ordered a copy of my credit report and every thing looks good but I have no idea what the score is. 710? 720? 780? How are we supposed to "keep credit score high" if we don't know what it is unless we pay for it. Furthermore, how high is high? 720 can be 'high' for a loan but low for auto insurance discounts. So just because my credit report "looks good' and has no errors doesn't mean I have a high enough score for a auto dsocount. I have to purchase that score to find out. Everyone say get a free copy of your credit reprt. What they don't say is, the score will cost you. That is my point.
Hey, folks, don't worry in a year or so 300 will be a GOOD credit score... (Thank you Mortgage Industry)
@Elcheecho: You mean people of various colors are better/worse drivers and should pay more? Well, everybody knows Asians can't drive but has anyone actually proven this to be true?
@Bobby Smith: My auto insurance is also through AAA. It's actually Travelers insurance and it saves me A LOT.
Because people with their finances in better order (i.e. people with good credit) are more likely to pay for small at-fault damages out of pocket rather than take the hit to their insurance that filing a claim would involve. The insurer isn't measuring how good a driver you are or how likely you are to have an accident. They're measuring how likely you are to generate a claim that they'll have to pay for.
They don't care about your driving habits. They only care that they don't have to pay out claims. People who are in good financial shape will be more likely to pay for small accidents out of pocket rather than file claims for them and take the subsequent hit to their insurance rates.
If you live in an apartment, definitely try to get your renter's insurance and auto insurance through the same company. My multiple policy discount on my auto insurance is greater than the premiums for the renter's policy that gets me said discount. A $100/yr renter's policy saves me about $170 on my auto policy.
Be very careful of Geico and other big insurance providers that advertise discounts aggressively. They will be happy to sign you up,but when you have an accident ,you're toast.You could find yourself being dropped while dealing with other side issues related to your accident (injuries ,death , loss of transportation). These companies business model is based on risk management ,not poilcyholder service. No insurance company wants to pay a claim - Thats just common sense. But these kinds of companies will go to just about any length to avoid having you around for a second claim.
One more note- If you have kid that are 11-15 years old ,their driving days will be here sooner than you think. It is much easier at that age to get an umbrella liability policy that will give you a lot of peace of mind for their driving years. If they hit someone and the bills are really high (or ,God forbid ,they are drunk) that extra liability coverage can sure come in handy. You will generally have to carry higher liability coverage than you are used to , but peace of mind is never free. Get it now and the premiums will be about the cost of a really good dinner. Insurance carriers are skittish about issuing them once your kid starts driving.
When I was young they said my high rate was due to my age. When I got older it was because I bought nice cars. Now they factor credit in. With a good record, good credit, no claims, no tickets, both cars and house with the same company (that took some doing for a gay couple in TX), I still get screwed.
When someone can tell me WHY there is a relationship between claims and credit score, then I will believe.
@Galactica: I believe the formulas used by underwriters are proprietary, and I doubt you'll get the actual statistics used by the insurance companies.
6. Live in a "flyover" state - far, far cheaper here.
My auto insurance recommended I get AAA to save money. I spend $72/year on AAA for my husband and myself and save about $250/year on the car insurance. And AAA is also saving me money on my eyeglasses so it's a win all around.