Without a doubt, the most common question we get is “How can I lower my car insurance premium.” Naturally, this makes a great subject for an article, so I present to you (*trumpet fanfare*): Top 5 Ways to Lower your Car Insurance Bill!” (You saw that coming, huh?)
Tip 1: Get Your Car Insurance and Home Insurance from the Same Agent.
Note that I didn’t say company, that is because some companies will give you a Multi-Policy Discount if they are just with the same agent, not necessarily the same company. This is done by companies who write car insurance but not homes in California. (Fires, floods, earthquakes, paparazzi… Can’t imagine why…) Multi-Policy Discounts can save you 15% or more, depending on the company.
Tip 2: Group or Occupational Discounts
These are growing in popularty as insurance companies come up with new ways to reach their target markets. Many occupations and fields of study enjoy generous discounts of 10% or more on their car insurance, but it doesn’t stop there. Membership in organizations such as AAA or even Costco (both discounts available from Progressive) can earn you a discount with some insurance companies. The grandaddy (no pun intended) of all affiliation discounts though, has to belong to the AARP Auto Insurance program from The Hartford. AARP members enjoy a stunning 34% discount on their car insurance. The trick is, finding the company that has the right discounts for you. That’s where an independent agent comes in because they will undoubtedly have the best variety of companies and will ask all the questions necessary to find out which company is best for you. Which brings us to…
Tip 3: Go With an Independent Agent
Yeah, this one sounds obviously self-serving, what else is an Independent Agent going to say, but hear me out… Or read me out… With every other distribution method for insurance (meaning how the insurance gets sold to you), the (hopefully) licensed sales agent is selling just one company, that’s it. Let us guess which company they are going to recommend, um, theirs??? An Independent Agent is just that, independent, meaning they are not beholden to just one company. They make commission from whichever company you choose as long as you buy from them. It is in their best interest to offer you the most attractive option they can, meaning that they WANT to find the company that suits you best and all of the discounts they can so they can sweeten the deal. Other agents do too… as long as the company that suits you best is the company they are selling.
Further, Independent Agents are used to selling in your local area, they know which companies are most competitive in that area so they always try to make sure that they have those companies to offer. BUT, not all Independent Agents are equal either. Agents with long standing track records attract the best, most coveted (read: competitively priced like Mercury Insurance) companies to appoint them. Companies you have actually heard of. Less stable, newer agents can’t get those appointments as easily and therefore are at a disadvantage. Instead, they shout at the top of their lungs that they are going to insure you for $14. They run splashy phone book ads and have clowns waving signs at you. (It reminds me of the old saying (I am very loosely paraphrasing here): “If you don’t have good products or good prices, make a lot of noise.” Point being, longtime successful Independent Agents have the best companies for car insurance, benefit from their experience.
Tip 4: Make Sure Your Mileage Estimates are Accurate
Often, drivers’ situations change. You change jobs (or lose your job or retire), start carpooling or in some other way your vehicle use changes. In California, car insurance companies are required to let you know what mileage your rate is based on. Find it on your last renewal Declarations Page and then pull out your service records and do the math. If you are not driving as much as they think you are, call your agent and let them know, it’ll lower your car insurance rate, sometimes by a lot.
Tip 5: Shop for a Lower Rate
I saved this for last because this can be a hazardous proposition. Saving money is hazardous? How can that be? Next thing you know, I’ll be saying that broccoli is bad for you! The hazard lies in how they save you money. I see this all the time, ‘chronic’ shoppers that only focus on price are vulnerable to unscrupulous sales people who will strip away coverages and lower limits and raise deductibles just to give that low, low number that they know you want. Next thing you know, you have a bare bones car insurance policy which is OK when you pay the bill but disastrous when claim time comes. Just about a month ago, a former client came back to us (that happens a lot). This person had a good job and her husband owned his own business. When they left a few years ago, it was because they were offered a lower rate on their car insurance with, as it turns out, less coverage. Well, her husband had an accident and between the rental truck he needed and the $1,000 deductible he was sold, they were stuck paying $2,300 following that accident. Had they not been duped by the shady, sign-waving, $14-promising agent, they would have been out only a $100 deductible. Here’s the real kicker, the company we had them through originally had the better rates! Had the other agent offered them apples/apples, he wouldn’t have made the sale. He probably saw who he was up against, knew he had to low-ball to make the sale and did a slash and burn job on their car insurance policy. The double kicker??? He charged them a $150 Broker Fee for doing that to them! I guess someone has to pay the clown to wave the sign. They were actually lucky that it wasn’t a really bad accident with serious injuries because they had their liability coverage cut so low that they were at risk of losing everything (their house and their business) and having their future wages garnished for years to come. Every time they got behind the wheel, they were risking financial ruin and did not even know it!
So, point being, make sure you are getting apples-to-apples comparison and that they are not fudging the information the rate is based on (mileage, vehicle use, etc.). Of course the easiest way to do that? Use a good, reputable Independent Agent. The good ones have access to the rates of hundreds of car insurance companies and products and we will figure out what your needs are THEN find the company that has the best rate for your situation. They focus on YOUR need to have the policy that’s right for you, not THEIR need to make a sale.
Be sure to look for our companion piece that details “5 Ways to Save on your Home Insurance“. In the mean time, we hope this article has given you some insight on ways to save money on your car insurance.