Saving money on auto insurance

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Insurance is expensive. There’s no arguing the point. But it’s not only legally mandatory; it’s essential protection for anyone with a financially sound life.

But just because auto insurance can be costly doesn’t mean there aren’t ways to save. Here are some you may have overlooked:

1. Buy coverage wisely
While most people could cover a $500 deductible, a $500,000 lawsuit would be a different matter. So why do so many consumers pay extra for low deductibles and carry close to the minimum on liability coverage? Raise your deductible and increase your liability coverage. Your premiums should remain roughly the same.

2. Keep a good credit rating
Many insurance companies use your credit rating to determine whether to insure you and how much to charge. See our upcoming chapter on credit scores for more information.

3. Shop around
You can pay more than double for the same insurance, so it does pay to shop around. Some states offer price guidelines for various types of coverage in different areas, and a few states even put the information online. Call your state insurance department, and ask if they have pricing information available.

If you call around for quotes, include a few brand name companies as well as a few independent agents who will shop more than one company for you. And don’t assume that you’ll pay more for a well-known entity.

4. Take advantage of every discount
If you’ve gone a certain number of years without an accident or ticket, store your car in a garage or drive less than a certain number of miles each year, your company will probably give you a discount. Ditto if your car has safety features such as airbags or anti-lock brakes, or anti-theft devices such as a tracking system or alarm. You often get breaks if you have more than one car on your policy, if you buy your policy through the same company that insures your home or if you pay your premium annually. Senior drivers can get a discount for taking a defensive driving course. Likewise, teens can shave a little off the premium by maintaining good grades or taking a driver education course.

If your teen is away at college, change your policy. According to industry professionals, teen drivers add anywhere from 50 percent to 500 percent to a premium. However, many insurance companies will discount the rate when a child is away at school. Another option is even cheaper, but more risky. If children are going to school more than 100 miles from home, you can take them off the policy and save a serious chunk of money. Two caveats: The kids can’t drive at school unless they get their own insurance, and if they come home for a break, don’t lend them the car.

5. Get married and get older
OK, this isn’t something you can do overnight — and getting married to save on auto insurance is foolish — but it’s a reality that young singles pay more. Find out where the age breaks are on your insurance. If waiting a year means you fall into a lower risk category, it might make that new sports car affordable. The same applies if you plan on getting married soon. Wait to buy a new car until after the wedding and you could save a lot on insurance.

6. Install a car alarm
Most companies give discounts for anti-theft devices. But don’t tell the agent you have one when you don’t. That could void the policy if you make a theft claim.

7. Pay without financing
Pay six months in full, twice a year, rather than financing the premiums: Insurance is expensive enough without adding finance charges.

8. Buy a car with safety features
Insurers give discounts for such things as anti-lock brake system, alarm and air bags, but not all devices are covered. Anti-lock brakes and basic air bags are not necessarily discount items any more. Ask before you buy.

9. Move to a “better” ZIP code
Although illegal in some states, insurers in states that do allow it offer better rates to drivers who live where theft and collision rates are lower.

10. Keep your driving record clean
Nothing cuts an insurance premium more than a driving record free of citations, accidents or claims. And don’t think you can fudge on mentioning that fender bender. Computer systems have made everything instantly accessible to your agent.