Maximizing Auto Insurance Savings: A Traveler's Guide

Car insurance is a necessary expense for many, but there are ways to save money on it. Firstly, it's important to understand your specific needs and the factors that could help you get the best coverage for your money. Consider your car safety features, how much your car is driven, and who drives it. You might be able to get discounts for having multiple policies with the same company, or by using a telematics-based program that tracks your safe driving behaviour. Paying in full or through electronic payments can also help you save money.

Research insurance costs before buying a car

It is important to research insurance costs before buying a car. This is because the type of car you drive may impact your insurance coverage and rate. Be sure to check the cost of insurance before you finalize your car purchase or lease. Insurance rates may vary widely depending on the type of car, repair costs, safety record, and many other subjective points.

Steps to take

• Narrow your vehicle selection: With so many makes and models to choose from, it’s not practical to get an insurance estimate for every available vehicle. Instead, select your top two or three choices based on your budget, available features, and lifestyle.
• Estimate the coverage you'll need: At a minimum, you need to buy enough coverage to meet your state’s insurance requirements. However, that’s rarely enough to protect you from a financial loss if you’re in a severe accident. Instead of sticking with the minimum limits your state requires, consider purchasing coverage that’s at least equal to your assets.
• Get quotes from multiple insurers: Insurance companies use proprietary formulas to calculate rates, so pricing can vary significantly from insurer to insurer. That’s why it’s essential to shop around before purchasing coverage.
• Choose the right deductible: Your deductible is the amount you must pay before the insurance company pays for a covered loss. Typically, policies with higher deductibles cost less than policies with lower deductibles. When selecting your deductible, choose an amount you can afford to pay if you need to file a claim.

Factors that affect the cost of car insurance

• Your car make and model: Sports cars and other high-performance vehicles get built for speed. Driving a vehicle with more horsepower often leads to speeding, which increases the insurer’s risk. Plus, these types of cars usually have more expensive parts, making them more costly to insure.
• Your car's age: In general, newer vehicles are worth more than older ones unless you have a classic car. If the insurer declares the car a total loss, they’re on the hook for the car’s current market value. The newer the car, the more they’ll have to pay.
• Your location: Every state has different car insurance minimums, and factors like your neighborhood's crime rate and population density will affect your insurance price.
• Your credit score: Drivers with poor credit typically have higher car insurance rates. Insurers use a credit-based insurance score, which is different from your regular credit score, to determine the likelihood you’ll file a claim.

How to save on car insurance

• Compare car insurance companies and costs: Do your homework and then talk to your insurance agent or carrier about what your needs are.
• Ask your agent about available discounts: It’s a good practice to check in with your insurance agent at least annually to find out if you are eligible for a better car insurance rate. You may receive discounts if you bundle coverage, such as buying insurance for your home and car from the same company.

Raise your deductible

Raising your deductible is one of the most effective ways to lower your auto insurance premiums. The deductible is the fixed dollar amount you must pay as the policyholder towards the financial loss from a covered car accident. The insurance company will cover the remaining balance, up to your coverage amount, if your damages exceed your deductible.

When choosing your car insurance coverage, you select your deductible amount and coverage limits. You are required to pay up to the deductible amount before your insurance company covers the rest. For example, if you choose a $1,000 deductible and have an accident causing $2,000 in damage, you would pay the first $1,000 of a covered loss before insurance kicks in.

There are two main types of car insurance coverages that typically include deductibles:

• Collision: This coverage helps pay for damage to your vehicle if it hits another car or object, is hit by another car, or rolls over.
• Comprehensive: This coverage helps pay for damages to your vehicle that are not caused by a collision. Examples include theft, vandalism, glass-only damage, hitting a deer or other animal, and storm damage.

After you pay your applicable deductible, your insurance will cover the cost of the damages to your vehicle, up to the limits of your policy.

Your deductible impacts your car insurance premium, so you need to choose it based on your budget and other factors. In general, the higher the deductible you choose, the lower the premium you'll pay. Conversely, the lower the deductible, the higher the premium. For example, if your current policy has a $500 deductible and you decide to increase your deductible when your policy is up for renewal, your monthly premium will likely decrease (assuming all other factors remain the same).

• Can you afford to pay the deductible? If you're in an accident, you may need to pay your full deductible, so it's important to choose an amount you can afford. Consider starting an emergency fund to save up some money in case you have an accident that requires you to pay your deductible.
• How much is your car worth? The value of your vehicle may impact the deductible you choose. Generally, the more expensive your vehicle, the more it costs to insure, which can translate into greater savings if you choose a high deductible.

Drop collision and comprehensive coverage for older cars

Dropping collision and comprehensive coverage for older cars can be a way to save money on auto insurance with Travelers. Collision and comprehensive insurance are optional types of coverage that are not required by any state. Collision insurance covers repairs or replacements if you collide with something like a car, guardrail, or tree. Comprehensive insurance covers repairs or replacements if your car is stolen or damaged by problems like floods, fires, or vandalism.

As your car gets older and less valuable, you may want to consider dropping these types of coverage to save money on your insurance premiums. The general rule of thumb is that when the cost of your insurance premium is more than 10% of your car's value, it may not be worth keeping collision and comprehensive coverage. For example, if you are paying $2,000 per year for full coverage on a 10-year-old car worth $6,000, you may want to switch to liability-only insurance.

However, it's important to carefully weigh your options before dropping collision and comprehensive coverage. Consider your car's value, the cost of repairs, and the likelihood of accidents. If you have an older car that is still drivable but has lost a significant chunk of its value, dropping these coverages may make sense. On the other hand, if you have a high-value vehicle with expensive parts and labour, you may want to keep the coverage for added protection.

Additionally, if you lease a car or have a car loan, collision and comprehensive coverage may be required by the lender or leasing company. In this case, you won't be able to drop the coverage until your loan is paid off.

By evaluating your specific situation and considering the value of your car, you can decide whether dropping collision and comprehensive coverage is the right choice for you to save money on your Travelers auto insurance.

Save with accident forgiveness

Accident forgiveness is an optional coverage type that can be added to your policy or awarded to those with a good driving record. It prevents your auto insurance rates from rising if you cause an accident, offering peace of mind that you won't be penalised.

Accident forgiveness is particularly useful because one of the top factors considered by insurers when setting rates is your driving history. So, if you have an accident or two on your record, you could be seen as a high-risk driver.

Accident forgiveness only applies to your first at-fault accident and not to subsequent ones. It also won't stop accidents that you caused from showing up on your overall driving history.

Accident forgiveness can be earned or purchased, depending on the insurer and your state. For example, GEICO offers free accident forgiveness to drivers who have been accident-free for five years or more, while other insurers require you to buy it as an add-on.

While accident forgiveness can be a valuable safety net, it's worth noting that it may cost you more in the long run. Accident forgiveness is rarely free, and you'll be paying extra for a mistake you might never make.

Compare car insurance companies and costs

Comparing car insurance companies and their costs is a crucial step in finding the best policy for your needs and budget. Here's a detailed guide to help you through the process:

Understand the Factors Affecting Insurance Rates:

Before comparing insurance companies, it's essential to know the factors that influence your insurance rates. These typically include personal factors such as your age, gender, driving record, credit history, vehicle type, and location. Insurance companies weigh these attributes differently, resulting in varying quotes for the same driver.

Gather the Necessary Information:

When comparing insurance costs, you'll need to provide specific information. This includes personal details such as your name, date of birth, address, occupation, driver's license, and marital status. You'll also need information about your vehicle(s), including the make, model, vehicle identification number (VIN), mileage, and purchase date. Additionally, be prepared to provide details about your driving history, insurance history, and current or previous insurance coverage.

Choose the Right Liability Coverage:

Liability coverage is crucial, as it protects your assets in the event of a serious accident. Opt for liability coverage limits that are at least equal to your net worth. For example, a policy with coverage limits of 100/300/100 provides $100,000 per person for bodily injuries, $300,000 total for all bodily injuries, and $100,000 for property damage.

Understand State Requirements:

Different states have varying requirements for car insurance coverage. Some states mandate personal injury protection (PIP) or medical payments coverage (MedPay), while others require uninsured/underinsured motorist coverage. Ensure you're aware of the specific requirements in your state to comply with the law.

Decide on Full Coverage:

Consider whether you need full coverage, which includes liability, collision, and comprehensive insurance. Collision coverage pays for damage to your car in an accident, regardless of fault. Comprehensive coverage protects against non-collision incidents like weather damage, animal collisions, and civil disturbances.

Collect and Compare Quotes:

Obtain quotes from at least two or three insurance companies, including both large and regional insurers. Ensure that each quote includes the same levels of liability, uninsured/underinsured motorist protection, and deductibles for collision and comprehensive coverage. Also, factor in any discounts you're eligible for, as these can vary by company.

Research Insurance Companies:

In addition to cost, consider the insurance company's customer service, claims handling, financial strength, and reputation. Check customer reviews, complaint records, and financial ratings to gauge their reliability and responsiveness.

Choose a Reputable Company:

After comparing costs and researching the companies, select an insurer that offers competitive rates and has a positive track record in terms of customer satisfaction and financial stability.

Remember, while cost is an important factor, it's not the only consideration. Opting for the cheapest option may compromise the quality of service and coverage. By following these steps, you can make an informed decision about your car insurance, ensuring you get the best value for your money and adequate protection.

Frequently asked questions