A Careful Look at 3 Common "Can't Fail" Ways to Save on Car Insurance
The Internet is filled with articles preaching "foolproof" ways that purport to teach you how to save on car insurance. While the following three options are generally cost-effective, there may be drawbacks to each. Let us at Traffic School Online educate you on how best to implement these procedures.
Raising Your Deductible...Very Carefully
This tip might seem like one of the oldest insurance money savers in the book: raising your deductible (the money you pay for the insurance kicks in) almost always lowers your premiums (or payments) and can save you huge amounts of money over the long-term.
However, you simply can't raise your deductible and hope for the best. It's actually a somewhat tricky process that requires careful consideration. For example, let's say you increase your deductible from $100 to $200. Your insurance company makes an appreciative decrease by lowering your premium $50 per month.
In theory, you'll be saving $600 a year, but what happens if your car suddenly breaks down? At that point, you'll be paying $200 for your deductible, $100 more than you would have in the past. As a result, your savings drop to $500.
Essentially, you have to make sure your premium drops enough to make up for the difference should you need to use your insurance. On newer cars, this is probably not a big deal, because you'll less frequently need repairs. But in older cars (such as those that might need five or more repairs a year), you can actually end up paying more.
Bundling Multiple Policies Isn't Always Effective
Bundling two or more policies into one insurance package is another common way that people try to save money on car insurance. This type of policy is known as a "multi-line policy," and insurance companies will generally lower your deductible and premium should you go this route.
However, bundling doesn't always work out for the best. Remember: your car insurance company is trying to make the most money out of you as possible. They wouldn't offer bundling if it didn't somehow help them at least break even.
Take into account the fact that bundling will often make you ineligible for other types of discounts, such as "safe driver rewards." It also immediately makes you ineligible for discounts offered on singular policies.
And don't forget: policies often change wildly from year to year. People with multi-line policies often keep them the same one for too long and miss out on potential savings and discounts.
That's why you need to carefully read the fine-print of each policy and compare and contrast individual savings versus a bundle. Your agent may try to hurry you through the process, but don't let them. If you're careful, you may be able to save even more money without bundling.
Paying It All In Advance...If You Can
In the old days, people purchased policies in six or 12 month increments. That's why monthly payments were set up: to help people who couldn't pay a huge lump sum. However, there was a catch: people would inevitably spend more overall by paying by month.
There's no real reason for this discrepancy beyond trying to make extra money off of you. That's why many drivers just pay off their insurance in one or two lump sums. Many insurance companies will offer savings of 5-20% off your total bill.
Put that into perspective: if you pay $1,200 for car insurance, 20% savings would lower it to $960. Unfortunately, many people simply can't afford to pay that much money in one lump sum, making monthly payments necessary.
However, there are ways you can save money if you can't afford lump sum payments. A few of these options include:
- Switching to paperless payment
- Auto-scheduling your payments online
- Decreasing superfluous coverage options
- Scheduling bi or even tri-monthly payment options
Clearly, saying money on car insurance isn't impossible. But, it does take a careful and measured approach. Never jump head-first into any of these options without careful research or you might end up swimming over your head in insurance debt.