How to Save Money on Car Insurance

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No this is not a GEICO commercial and I am not a cave man either. What I am is a car insurance shopper who helps my parents manage their finances. I want to share with you how to save money on car insurance as I’ve learned from my experiences.

I have successfully managed to get their car insurance premiums lower each time I shop around.  There are a few steps involved in my shopping approach and I hope detailing these out will help you as well when you shop around for insurance quotes.

There are “experts” out there that say you can easily save $50 if you start shopping early.  But “early” relative to what?  “Early” refers to the date your initial policy period is scheduled to end.  Experts typically recommend shopping outside of 30 days prior to the expiration of your existing policy.

Why is this effective? Because your insurance company will do everything in its power to retain you as a customer. The sooner they lock you in, the lesser of a chance that you shop their rates around.

At the same time, other companies are aware of this and would be willing to offer great deals to get your business. Just as you may be thinking, you can take one company’s quote and ask another company to match it.  You should be able to save money on car insurance if you start early.

Check Your Renewal Policy

If you decide to stick around with your company and simply renew the policy (many do this because it’s convenient), make sure you review the insurance rates and any changes from the previous year.

If you see any increases, call your company and negotiate a lower rate, preferably to the same rate you had previously.  Let them know that you have the option to take your policy to the market and ask other companies for their quotes. This simple exercise alone can help you save money on car insurance.

Don’t Shop Around Too Late

There are rumors out there that say if you shop within 30 days, insurance companies perceive you as an “irresponsible customer”.  For this reason they don’t give you the best possible rates. Whether or not this is true is debatable. In my personal experience, I have never run into this situation (knock on wood).

I had validated this rumor somewhat when I spoke to my parent’s insurance agent. I asked her if this was true.  She said it sure is.  She asked me to go back and review my parent’s policy renewal dates and to notice how the effective date on the renewal was always 30 days out.

This made sense to me.  By issuing the policy 30 days out from the time of renewal shows that you are rewarded for shopping early.

Shop Around Frequently to Save Money on Car Insurance

You should look into insurance every year or two to ensure you are getting the best deal possible.  Even if you are happy with your provider, it is good to know what else is out there and what other companies in the industry are doing to get ahead.

Companies are always changing around their products and offering discounts to get business.  What you will find many times is that your company will gradually increase your premium year after year.

Many consumers don’t care, since the increase is typically just a few dollars, but that can add up over time.  Most people simply let that slide and others simply don’t care because they have always stuck to their company from the very start. Laziness? Not sure, but too comfortable for sure.

Ask For Discounts

Many insurance agents will simply take your information and run it through the system. Always ask what discounts you qualify for.  When you are given a discount (i.e. multi-vehicle discount, student driver, alarm system, etc), write these down.  When you call other companies to shop around, ask them what discounts you qualify for again and compare notes.

If the agent doesn’t mention any of the ones you already have on your shopping list, ask the agent specifically about them.  Keep calling more companies and the list of discounts should increase until you know absolutely everything you are entitled to.

When you finally decide the company you want to go with, make sure they honor all discounts, not only ones that they had initially offered you, but also those that other insurance companies offered you.

Tip: Many companies will offer discounts if you have taken a driver safety course.  Go to DriversEd and take a quick class.  As long as your record shows that you have taken driver safety education, the insurance savings will be well over what you spend on the course.  This is free money so take advantage of it. You can check out some classes here.

Credit Score Affects Your Premium

I had no idea about this initially but your credit score makes a difference in your insurance premiums.  So if you are married, here is a neat thing to keep in mind.  Determine who has the better score of you two.  Have the person with the better score apply as the main policy holder on the account.  Then list the other as a co-applicant.

It’s always good to run the quote both ways, once with your name and once with your spouse’s.  This will give you a good side by side comparison.  It all does make sense if you think about it. Yet another simple solution to how to save money on car insurance.

Get to Know Your Agent

If you have that extra time (and care for it) I recommend you develop a relationship with your agent.  Insurance agents have a lot of power in their hands (including price manipulation).  When you get to know someone on a personal level, they will share all kinds of information with you, most importantly discounts that you qualify for.

I have gathered so many tips from my parents’ agent over the years that have collectively saved them a lot of money.  Simple tips such as shopping around early can make a big difference in the policy premium.

Independent Screening Resources

When you shop around you may come across smaller regional companies or even local companies that do not go beyond the state you live in.  Not all these companies are “bad”.

But make sure you do your due diligence before you take out a policy with them.  Many times, smaller companies have a cost advantage and can write premiums at a lower cost.

Here are some neat resources you can use in your research:

http://www.badfaithinsurance.org/

www.bbbonline.org

http://www.naic.org

My Three Cents on How to Save Money on Car Insurance

To simplify insurance shopping, the entire process really boils down to three key steps.

1) Shop early (outside 30-60 days before renewal)

2) Always shop around and get quotes from at least three insurance companies

3) Shop around every couple years to stay on top of competitive market rates

What tips can you share with us on how to save money on car insurance?

2 Responses to “How to Save Money on Car Insurance”

1. Mary says:

   August 26, 2012 at 8:58 pm

   I had no idea my credit score effected my car insurance. Wow! Big business really knows how to kick, pummel and flatten the guy who’s already down.

   Reply
   • Sunil says:

     August 27, 2012 at 8:26 am

     you’d be surprised what else it impacts in your personal life. awareness is key. welcome to the blog Mary

     Reply