Fitting Auto Insurance Into Your Budget
I have worked in auto insurance and real estate, and feel that saving money on auto insurance is something that you can do. You have to choose wisely and make sure that you are adequately covered. I feel that some of the things I have learned may help you in choosing auto insurance and then using it wisely. Price isn’t the only consideration. I am all about saving money and budgeting, but you should get the best coverage you can afford.
Now if you think I am a person who will advise you to just have state minimum coverages, you are wrong. I don’t recommend that to anyone. Get the best coverage you can possibly afford, or you may regret it.
The reason for having auto insurance is that you are protecting yourself from financial hardship should you be held responsible for damage to someone’s property or bodily injury. Think of the high cost of medicine, hospital services, doctor bills, rehabilitation services. And add on to that the cost of auto repair. Those repair shops charge a certain amount per hour to repair your car. And you may say “My car is older, so it won’t cost as much to repair.” I’ve heard that so many times!
If this is your reasoning, next time you are at the repair shop, look around for a chart that says:
- Labor hourly on 1999 – 2005 models $50
- Labor hourly on 2006 – 2010 models $75
- Labor hourly on 2011 – 2015 models $100
THERE IS NO SUCH THING!
Yeah, the part costs are different, but don’t we all know it’s the labor charge that kills you?
And the property you damage, most often it’s another car. But think about it. What if the property is a $170k luxury car? Or a city bus? Or you take out the side of a steakhouse? Fix that property with minimum limits of property damage liability at $25000! (Ohio just raised its minimum from $7500 in 2013.)
“Well, they can’t get it from me if I don’t have the money.”
Not right now, but they can possibly take a piece of your paycheck for the next 40 years (if that is permitted in your state) Worth checking in to, right?
Insurance regulations and requirements vary state by state. Be sure to check with your Insurance Carrier and policies for the specifics which apply to you.
Think about these notes if you think you need to make a claim :
Be sure not to call the insurance company unless it seems to be a substantial amount of damage.
If it is small enough to fix on your own, you may not want to have your insurance company involved.
As an example: a small ding on your door from a shopping cart. Don’t use your insurance company as a repair estimator! If you think you may want it repaired, get a free estimate from a car repair shop. Then make the decision, based on your deductible, and whether or not you want to make a claim. If it is $700 in damages, and your deductible is $500, just bite the bullet and get it fixed yourself. Rates are based on claims! (among other things) You don’t want claims on your insurance if you can avoid it.
Insurers are more afraid of a client who makes many small claims, than a client with one big claim. Protect you insurability by not making a claim unless you feel you must.
Check the insurance rate on a new car.
If you are looking to purchase a new car, call your insurance customer service department and get an insurance estimate on what the rates are for that particular vehicle. This will avoid a horrible shock when you call in AFTER the purchase and find out this particular model is very expensive to insure. A rate increase from one vehicle to the other can be substantial, so make that part of your criteria when you purchase a car. Generally speaking, if you are young, your rates are higher than for older people. Males are usually higher than females, single people are higher than married people.
Be sure to note all safety features to report to the insurance company for extra discounts. They add up. But don’t let a salesman set your expectations too high.
He might say: You save 10% on your auto insurance for the anti-theft alarm! Yes this could be true: but what is left unsaid is that the 10% discount is the on the amount of that part of the premium which pays for the comprehensive coverage which is what includes theft coverage. If the premium for comprehensive is $50, your 10% savings is $5. This is not a discount on the TOTAL premium.
Insurers base their rates partly on their claims paid out (among other things like your driving record and credit) so if it has been a bad year, such as a lot of flooding or tornadoes in your state with many vehicles destroyed or damaged, rates may go up across the board for everyone, even if you didn’t make any claims yourself. If you did make a claim, the rate you pay may be higher than for the person who didn’t.
Marketing is a Practice For All Companies
Remember to listen closely to the ads from insurers. They may say in their ads that your rates won’t go up just because you make a claim on your auto insurance. But remember, your rates may go up due to a general rate increase for everyone in the state. A lot of claims in your state made by other people can affect your rates.
Remember to listen closely to the other ads saying we will never cancel your insurance , you have guaranteed renewal. Sure, but if they renew you at an $500 increase in your rates, are you going to stay with them? So see what I mean? They guaranteed to renew, but they didn’t say at the same price now did they?
Strive For a Great Credit Score
Most insurance carriers are using your credit score as one of the criteria to set your rate. The belief is that the better a person’s credit rating is, then the better risk they are for the insurance company. So protect and keep Good Credit to keep your rates down. Check your score often and make sure you clear up any problems or errors.
But you are all about Budgeting right? You’ve got that in the bag!