Affordable Protection: Mastering the Art of Finding the Cheapest Car Insurance

Six Steps to Lower Car Insurance

These are the six steps that you should take to lower your car insurance. The first way is to understand the type of policy that you have as far as the liability limits, and the coverages that you have, and just do kind of an overall checker review. If you aren’t working with an agent, I would recommend you either find a local agent or I’ll put a link in the description below to where you can work with an agent to have them kind of review the policy and then chop it for you. That’s usually the best part is to work with a company that’s willing to put the coverages first more than the price. I get it.

Avoiding Over/Under Insurance

You clicked on the article because of the price, but you want to make sure that you’re not overinsured. In some scenarios, the same follows true as if you’re underinsured. I recently just wrote an insurance for a doctor a couple of days ago that they had $10,000 in property damage. They have millions of dollars to protect and they have barely anything for coverage in our state. So in that scenario, we were able to catch that as quickly as possible.

We revamped it. So now if they have an accident, they’re covered for hundreds of thousands of dollars versus the 10,000 that they could have been sued for. The one thing I want to warn you too is that when you are looking at this, number one, this actually came from an article that I was reading from The Zebra and they said you should shop your rate every six months. I would burn that and throw it out the window and say goodbye to that. Who has time for that one?

Revisiting the Six-Month Shopping Theory

And if you care that much, then sure do it every six months. But the reason they put that there is because they get paid when you shop it with them. So they sell your information to another company, which isn’t necessarily a horrible thing. It’s just that they want you to shop as often as possible. That loses what’s called the longevity discount.

And that’s the first thing you should think of and look at is have you had three years with an insurance company? If you have great companies, the top companies will give you a discount for longevity. If you’ve had five years with an insurance company, you’ll get an even bigger discount. Honestly, it cuts off after that. I’ve had people come in that have had 32 years with a company.

They didn’t get any better of a discount than the person that’s been with them for five years. So five years or more, you’re going to have the best possible rate. So if you are with a company and the rate hasn’t changed that much and you have a couple of months left or six months left, it might make sense to run a quote, assuming that you’ve had that prior, to see what kind of a discount change you might get if you wait a little bit to switch your insurance. The second piece, and I kind of agree with the zebra here, is they say to be careful with claims. And yeah, I get it.

Navigating Claims: Impact and Considerations

The insurance guy telling you not to file a claim. Typical. Here’s the thing that they look at. When you have a claim, there are two types of claims. There are minor and major.

Those two thresholds are prices that they count for. And, in some states, there’s even the medical. So if someone got injured, that’s an additional possible rate change. You’ve got the minor, the major, and any type of medical payout. So the medical payout is going to be the worst because you’ve injured somebody.

And that’s what car insurance companies are scared of. They know what your car is worth. They know what most cars are worth in your area. So they know kind of what they’re going to pay even if you total the car, 18,000, 50,000, whatever that case is. But you carry hundreds of thousands, if not millions to protect somebody.

If you injure them in that scenario, they don’t want those types of claims. So that would hurt you the most. But what would happen is if you think about the cost of a claim because you will have a rate increase unless you end up having to find a different company. After all, now that you’ve had the claim, the risk has changed for you. Right. And you may be better off with X Company versus a company.

Cost Analysis of Claims and Rate Impact 

In that scenario, the cost of a claim, if it’s under $2,000, and when I worked at Farmers Insurance if it was anything under $1,500, it wouldn’t impact it as much. So you’d have a lower impact for a minor claim because it wasn’t a lot of payout. And they said we kind of half forgive it anyway. In this article, it’s 2000. But when I worked at that other company, it was 2500.

So some companies have different rules that they’ve gotten approved that x amount charges more, less amount charges less. Now you might be saying I’m in a no-fault state. It doesn’t matter because I fix my car and they fix their car. And because it wasn’t my fault, it doesn’t raise my rate. Well, that’s half true.

Most of those states have a guideline or a rule that if you have a second claim that’s not at fault, they can revert to the first claim. And now you’re getting charged for those because it’s impacted. Your risk has changed as far as the odds of you having another accident. So they’re allowed to show that there’s proof, or at least some sort of reason that they would have a larger increase for your premium. Love it or hate it, that’s honestly what the numbers are.

And I kind of agree with this article. It’s kind of cool to see. But the average cost of a claim, if you had one year with the claim and the claim exceeded $2,000, they’re saying your rate increase would be about 700 ish plus for the first year. It would increase by about 1500 for the second year, and you’ll have a total paid back of about $2,300. So if you really think about it, if you had a $1,000 claim and let’s say a $500 deductible, you’re going to get $500 back.

But over the course of the next three years, you end up paying 2300 back. It raises the question, is it even worth it? The third way to lower your car insurance is to look at the deductibles that you carry. If you are carrying a lower deductible and you can afford more out of pocket and you want to just, let’s say, save some of the money away, so if you have $200, 250, a $500 deductible, it can lower your price roughly $200 every year. If you do $1,000 deductible, that’s kind of the average that you’ll see across the board.

Optimizing Deductibles for Cost Savings 

Now keep in mind, if you have an accident now you’ve got an additional 500 or whatever, the cost is more to come out of pocket. So make sure that you have the funds available, and that it’s worth it. If it’s something that you can’t afford, then keep the lower deductible and pay a little bit more per month. It makes sense. Just in case something were to happen, the fourth way is to bundle your home and auto.

The Power of Bundling Home and Auto Insurance

If you’re not working with the same company as your home and the same company for your auto, you could be missing out on a ton of discounts because of the rate increases. I have seen that it has been changing a little bit to where the home and auto don’t always make the price less expensive. And the reason is that maybe they had a rate increase on the home, but not a rate increase on the auto. With Company A and Company B might have had the opposite. So sometimes company A and company B are better separated.

But honestly, I would say 70% of the time they’re more powerful and less expensive. If you were to combine those all, if you don’t own a home, that’s the same as renters insurance. At least in the majority of states that we work in and sell insurance in, they have the same rating as if you were a renter versus if you were a homeowner.

So spending $15 to $20 for renters insurance to save $50 on your car insurance makes sense. By the way, if you are shopping for car insurance, I’ll put a link in the description below where either my agency or several people that we work with can help you out as far as doing that shopping, we work with multiple companies, so it’s a lot easier to take the coverages that you’re looking for and try to match them up with the companies that have the best rates.

Valuable Discounts Beyond Policy Bundling

Apart from that, the fifth .12,345, number five, six, seven, whatever number we’re at. The biggest thing is to look at the discounts. Although we didn’t necessarily go over the discounts, there are like ten or 15 different discounts. I’ll actually link an article at the end that goes over them. But let’s talk about some of the major ones that you would want to think of.

The most popular, and the number one controversial one is telematics. If you are willing to give up your data for 90 days with some companies, or other companies, I don’t recommend it if they make you do it forever because now you constantly have to show proof.

But if you’re willing to show your driving history that you don’t break hard, you don’t accelerate fast, you don’t drive between twelve and 05:00 a.m. And you don’t touch your phone while you’re driving with some companies. So if you know that those are the scenarios that you can show proof of for 90 days, it might make sense to do the telematics.

Telematics and Other Major Discounts

I think the average telematics saves between twelve to 18%. Most of the people that I’ve worked with have been closer to the 20%, but it just depends if it’s a fit for you and if you’re willing to share that data with an insurance company. The second major discount is if you’re a homeowner, you don’t have to bundle to be considered a homeowner. If you are a homeowner in some states. They’ve kind of started to outlaw it in other states because it hasn’t been proven to be fair.

But there are still some states that give homeowners a better deal. The second major one is something that you can’t change today. It’s you just being a good driver. If you are a good driver, you haven’t had claims that were your fault in the past three to five years. You likely already are getting the discount.

Most companies will automatically just trigger that and put it on your policy. But if not, talk to your agent and find out if that’s a discount that you have applied. Those are very large pieces with most insurance companies, and they will give you probably the best deal as far as going with the new rates.

The next one is kind of a combo, is multicar and multidriver. So if you’re in a home with other family members and you are okay and comfortable sharing the risk, keep in mind the liability has to be the same for everybody.

Leveraging Multi-Car and Multi-Driver Discounts 

The car insurance, like all of the pieces that you do, you’re tying yourself with people. If it’s just you on a policy and someone else in the home on a policy. When you combine those together, there’s the multi-car discount, which is actually a fairly good discount. There’s also the multidriver. Now, the multidriver isn’t a listed discount, but what it does is it splits the risk.

Because even if you have one car and two drivers, having that second driver pulls some of that liability risk away. And then adding the second car, sure, it adds more to the policy, but it’s less expensive than if they were on their own. No, you cannot do it if you don’t live with the person because you have to have one household. Those are the major ways that you can lower the rate on your car insurance.

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