How can you save money on the cost of car insurance?
Buying car insurance can be confusing — and expensive. And what if after spending all the money for insurance, you get in an accident and find out you didn’t have the coverage you thought you had?
Even more expensive than the cost of car insurance is the cost of not having enough or not having the right kind of insurance.
Saving on Car Insurance
Emily, a recent college graduate with student loans to pay back and a 2-year-old to support, wanted to save money on car insurance, but she didn’t want to skimp on coverage. She turned to The Zebra for suggestions. The Zebra is a website that offers side-by-side comparisons of insurance quotes. You can look at your choices, make a decision and purchase coverage all in one site visit.
Emily started by plugging in her ZIP code, then the make, model and year of her car. She uses her ’06 Ford Fiesta mostly to get back and forth to work, take her daughter to daycare and do errands. When she bought the car two years ago, she chose the four-door model because it was easier to get her baby in and out with her car seat.
After submitting her name, address, email and phone number, Emily was able to get quotes for different levels of coverage for her car.
1. Drop Comprehensive and Collision
An unnecessary expense many drivers unknowingly take on is paying for comprehensive and collision coverage.
If you are in an accident and the other driver is at fault, their insurance company pays to fix your car. However, if you are at fault, your insurance company will only pay to fix your car if you carry collision insurance.
The odds of getting into a car accident vary greatly due to a number of factors, including where you live, how many miles you drive, what type of car you drive, your gender and your driving record. Most accidents are caused by drunk driving, speeding and reckless driving, so if you don’t do any of these, your odds of getting in an accident are drastically reduced.
Emily was a safe driver, paid attention to her surroundings and never texted or talked on the phone while she drove, so she felt that she could do without collision insurance.
Even if she did somehow cause an accident, because of the age and condition of her car, Emily could save a lot of money by opting to only repair mechanical damage to the car. Bodywork and other cosmetic repairs can cost thousands. Emily was once in an accident in which her hood was bent so that it would no longer close, and by replacing it with a different colored hood from a junkyard, she saved several hundred dollars.
Comprehensive car insurance covers damage from accidents like a tree falling on your car. If you opt to buy comprehensive, you are also covered for vandalism and theft.
But realistically, Emily calculated the risk of someone stealing her old car as fairly low. Moreover, if someone vandalized it, she may be unlikely to notice, as the body was already in rough shape.
So Emily believed she also did not need comprehensive insurance. However, the cost of comprehensive insurance is often only $10 to $20 per month, so some drivers choose to keep this coverage.
Unfortunately for Emily, she has seven more months of car payments to make, and until she holds the title to her car, the bank requires her to carry collision and comprehensive insurance. After all, they want to protect their investment.
So Emily will have to continue paying for this coverage, but once she owns her car, she is free to drop both.
2. Opt for a Bigger Deductible
In the meantime, Emily can save money by choosing a high-deductible car insurance plan. Similar to health insurance, the more you agree to pay if you end up using the insurance, the less your premiums are.
It’s a gamble. Emily will save money on her policy if she chooses a $1,000 deductible and she doesn’t have an accident. If she chooses a $500 deductible, her premium will be more, but she won’t have to pay as much if she gets in an accident.
Factors to consider are:
- The difference between the two premiums
- The odds of getting in a car accident
- Whether she would get full repairs
- How much the car is worth
Calculating these numbers and estimating your risks will help you make a more educated decision.
3. Avoid flashy models
If you have not yet bought a car and are merely researching what you can afford, keep in mind that the type of car you buy can affect your insurance rates. According to the National Insurance Crime Bureau, the cars most often stolen are the Honda Accord, Honda Civic, and Ford pickups.
No one is likely to claim any of these models are sexy, but these cars are stolen more often simply because there are more of them — they are top sellers. So when narrowing your options on a car to buy, check with your insurance company to see which would be cheaper to insure.
The best way to save money on the cost of car insurance is to pay off your auto loan quickly and drop the coverage you no longer want to carry.