How to Lower Auto Insurance

Auto insurance is a large expense for the average household. Premiums, especially for newer and larger vehicles, can be quite high. Many variables factor into the premium amount. While many of these variables are not directly controllable, the average insured can lower auto insurance costs by eliminating unnecessary coverages, by increasing deductibles, and by periodically comparing premiums offered by competing insurance carriers.

Things You'll Need

• Automobile bluebook.

Instructions

1. Explore premium options from all discount insurance carriers at least once a year. Premium options change over time.

2. Explore discounts available from insurers who provide multiple lines of insurance coverage. Many carriers provide discounts for customers who purchase both homeowner’s and automobile policies from a single carrier.

3. Determine your vehicle’s fair market value, which is the most an insurance company will pay if the vehicle is damaged in an accident.

4. Drop all collision and comprehensive coverage, for vehicles with low fair market values. The potential benefit cannot justify the required premium.

5. Drop any miscellaneous coverages that are provided by other protection sources. For example, AAA members have no need for emergency towing coverage since this is a primary benefit provided by AAA. Many automobile manufacturers also provide emergency roadside assistance during the first several years of vehicle ownership.

6. Complete a state-approved defensive driving class. This option is particularly helpful for lowering insurance rates of drivers who have one or more points on an existing driving record.

Tips & Warnings

• Medical payments coverage is another redundant coverage for many drivers. Health insurance generally provides for payment of necessary medical expenses, thus rendering medical payments coverage unnecessary for many drivers.

• For comprehensive and collision coverages, carry as high a deductible as your finances will allow. Moving a deductible from $300 to $1,000 can result in marked overall premium reduction.

• Do not look to cut expenses by reducing liability insurance coverage. The amount of this coverage directly determines the point at which you will become liable to a third party in the event of an at fault collision. Reducing liability limits will directly increase your potential personal exposure to third parties.