Nobody needs insurance, until they do. Having good insurance is important if and when you get into an accident, but in the meantime, watching those premiums float out every month is soul-crushing. Luckily, you can minimize that cost by knowing what your options are and making smart decisions.
Know what the kinds of coverage are.
“Car insurance” is actually a bunch of different things. The big one is liability insurance.
Bodily injury liability and property damage liability are both there to protect the other person if you are at fault in an accident. If you hurt someone, kill someone, or destroy their property, your insurance kicks in to pay for that. Liability insurance is mandatory almost everywhere.
- Medical Payments: This takes care of you and the people in your car in case of injury.
- Uninsured motorist: This takes care of you if you’re hit by someone who runs away, or who doesn’t have insurance.
- Collision Coverage: Protects the car if it’s hit, up to the book value
- Comprehensive coverage: Covers non-accident problems like theft, floods, and fire.
- Towing: Pays for a tow truck. If you have AAA or some other roadside assistance program, you probably don’t need this.
- Glass Breakage: Often isn’t covered by basic insurance. Might cost too much to be worth it.
- Rental: Gives you a rental while your car is being repaired or replaced.
Know how much risk you’re willing to live with.
As you can see, there are a lot of options. Liability insurance is required almost everywhere in the US, but many of the others are judgment calls. If your vehicle is older or less valuable, consider going only with liability insurance. If you opt for high deductibles, you can greatly decrease the cost of your policy. Just remember that if you get into an accident, you’re stuck paying that premium.
Your vehicle affects your insurance.
A lot of factors that determine your insurance cost are out of your control – your age, your gender, your physical location – but there are a lot of things that you can control. Keeping a clean driving record will help. The make and model of your car will help – stay away from sporty cars and be choosy about SUVs. Keeping low mileage will help, so take alternate transportation when you can. And stay current on the payments – if you’ve lost coverage in the past, the premiums will be higher for you now.
This may seem obvious, but it bears saying. Each company bases their premiums on their own experience, so if a company has a lot of accidents with your car model, they’ll charge more, so get quotes from multiple companies to be sure you’re getting the best deal. See what discounts they have that apply to you specifically. Remember that bundling your car insurance with homeowners’ or renters’ can save you money. And research the company online – insurance doesn’t do you any good if the company never pays out. See what customers are saying about them before you sign on.
Look for discounts that apply to you.
If you’re a student, look for a good-grades discount. If you’re retired, look for a retirement discount. Take a defensive driving course. Check each year when you renew to see if there’s a loyalty incentive (and shop around if there isn’t). See if your place of employment has an affiliate discount. Again, bundle multiple vehicles or your home to save money. There is no shortage of ways to save. Take advantage.