Tune Up your Auto Policy
Are you paying too much in premiums? Shop around.
Okay, you religiously change your oil every 3,000 miles, get regular tune-ups, and check your tire pressure. But when was the last time you rechecked your auto insurance policy?
Maybe all you need are a few minor adjustments, or perhaps it's time to trade in your old policy for a more economical one.
Review your old policy
If you're happy with the way your current insurer handles claims and your premiums aren't increasing, stick with the company you have. Also, don't plan on switching if you've had an accident or received a ticket in the past three years.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
If your driving record is clean staying with the same company for at least three years can bring discounts. Also, an insurance company likely will be more lenient on long-term policyholders if they have an accident or get a ticket. You'll miss out on these benefits if you jump from company to company.
Even if you're not thinking of switching insurers, review your policy at least once a year to make sure there are no gaps or overlaps in your coverage. For example, an auto policy's medical coverage might duplicate medical coverage you have through your employer. Liability amounts may meet state minimums, but may not be enough to protect your assets if you're sued. For more on building a solid auto policy and how much coverage you need, see the "Smart Shopper's Guide to Auto Insurance."
Other money-saving moves:
- Special discounts. Update your agent on any changes in your lifestyle or your vehicle. For example, if you've moved closer to work or started taking public transportation you might be able to knock off added surcharges for daily commuters. Installing anti-theft devices and even quitting smoking might have an impact on your rates.
- Boost your deductible. By increasing your deductible from $100 to $1,000 you might be able to shave as much as 25% from your annual premium (if you're financing the car you might be limited to a $500 deductible). But be realistic. Keep the deductible at a level you can afford.
- Consider dropping collision coverage. If you have an older car -- like the one you gave your teen -- consider removing this optional coverage. The highest payout you can possibly get, minus the deductible, will rarely be worth the price if the car is worth less than $1,000 or if the insurance costs more than 6% of your car's value. Look up the car's value in the Kelley Blue Book to see how much the insurance company probably thinks your car is worth.
- Consolidate your coverage. You get a break for the second and successive cars covered by the same policy, so it's usually more economical to put all your cars on one policy. Similarly, consider using the same company for other policies. Some insurers offer discounts of up to 10% if you cover both your car and your home with them.
For more about keeping a lid on your premiums see "How to Get a Good Deal."
Shop around
Premiums for the same coverage can be all over the map, so to be sure you're getting the best rates and services get quotes from several different companies.
Mary Bonelli of the Ohio Insurance Institute recommends checking with three sources for quotes:
- The Internet. Web sites such as Progressive.com and InsWeb.com allow you to search for insurance quotes on your own time, but be prepared to answer a lot of questions.
- An agent who represents only one company -- such as State Farm or Allstate -- or companies such as Geico or USAA that deal directly with consumers.
- An independent agent. Independent agents are in the comparison shopping business. By selling policies from several companies, an independent agent can recommend those that best fit your situation. The Independent Insurance Agents of America Web site can help you locate an independent agent in your area.However, if you purchased your last policy from an independent agent don't assume that he or she will alert you to a better deal. Customers who want their agents to shop for better policies must ask.
Also, find out if your employer offers a group insurance policy, which might be cheaper than an individual policy.
When comparison shopping on your own, be sure to provide the same information to each company or agent. And to get a more accurate price comparison, make sure you ask for the same coverage.
For the lowest rates, ask about discounts for such things as vehicle safety features, driver training or a clean driving record. And remember: Insurance companies can and will access your driving records.
Check out the company
Once you've narrowed your search to a couple of prospective policies, contact your state insurance department to find out how the company's complaint ratio compares with its competitors. Some states do not gather or release complaint information.
Your final evaluation should focus on the company's financial stability, particularly if it's a smaller insurer you're not familiar with, says Jeanne Salvatore, spokeswoman for the Insurance Information Institute. She recommends checking with the insurance rating firms A.M. Best (search for a company; about the ratings) and Standard & Poor's (search).
Finally, don't cancel your current policy until your new one has started. Once you've signed with a new company, let your previous insurer know the date you're planning to switch coverage and ask for a cancellation request form.
To continue reading this article
please register for free
This is different from signing in to your print subscription
Why am I seeing this? Find out more here
Award-winning journalist, speaker, family finance expert, and author of Mom and Dad, We Need to Talk.
Cameron Huddleston wrote the daily "Kip Tips" column for Kiplinger.com. She joined Kiplinger in 2001 after graduating from American University with an MA in economic journalism.
-
How to Retire Early by 40: Build the FIRE Now
It's not easy, but you may be able to retire by 40 or 45 if you take these FIRE (Financial Independence, Retire Early) steps now.
By Jacob Schroeder Published
-
If You’re Preparing to Move, Should You Buy or Rent?
Both prospects are expensive these days, but there are several questions you can ask yourself to help you decide what’s right for you.
By Justin Stivers, Esq. Published
-
When's the Best Time to Buy a Domestic Flight? The Kiplinger Letter
The Kiplinger Letter A new study by CheapAir.com has crunched the numbers.
By Sean Lengell Published
-
Woes Continue for Banking Sector: The Kiplinger Letter
The Kiplinger Letter Regional bank stocks were hammered recently after news of New York Community Bank’s big fourth-quarter loss.
By Rodrigo Sermeño Published
-
Anxious Flyers Take Note: The Kiplinger Letter
The Kiplinger Letter Whether it's the routes to avoid that have the most turbulence or the safest airline, we've got you covered.
By Sean Lengell Published
-
The Auto Industry Outlook for 2024
The Kiplinger Letter Here's what to expect in the auto industry this year. If you’re in the market for a car it won’t be quite as daunting as it was during the pandemic and after.
By David Payne Published
-
Two More Travel Trends for 2024: The Kiplinger Letter
The Kiplinger Letter As the world gets moving again, two more travel trends to consider: Solo cruising and airline passengers with loaded guns.
By Sean Lengell Published
-
Three Travel Trends Will Drive the Industry This Year: The Kiplinger Letter
The Kiplinger Letter New travel trends like set-jetting, destination “dupes” and tour traveling will propel the travel industry in 2024.
By Sean Lengell Published
-
State Economics — Spotlight on New England: The Kiplinger Letter
The Kiplinger Letter After a better-than-expected 2023, New England states will see only modest employment growth in 2024.
By David Payne Published
-
2024's Social Media and Smartphone Trends: The Kiplinger Letter
Video-sharing giant, YouTube, dominates as teens' go-to social media outlet.
By John Miley Published