Jeffrey Wade
There are several ways to lower your insurance rate, and it's a good idea to ask your insurance provider about these options. While you can't negotiate the base insurance rates, you can negotiate with an agent and ask about additional discount opportunities, special programs, coverage restructuring, and discretionary credits. You can also shop around for different providers and compare rates. Many insurers offer unadvertised discounts for things like professional associations, alumni groups, and payment methods. You can also save by bundling your insurance policies, lowering your liability insurance limits, and dropping optional coverages.
| Characteristics | Values |
|---|---|
| Compare quotes from different providers | Shop around for quotes to get the best deal |
| Discounts | Ask about discounts for alumni groups, professional associations, defensive driving courses, good student records, multiple policies, paperless billing, autopay, etc. |
| Driving record | No accidents or violations in 3 years |
| Mileage | Properly report your mileage |
| Coverage | Remove unnecessary coverage options, adjust liability insurance limits, and consider usage-based insurance |
| Deductibles | Raise your deductible |
| Vehicle | Choose a car that is cheaper to insure |
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What You'll Learn
Discounts for professional associations, alumni groups, and payment methods
Car insurance prices are state-regulated, so insurance companies cannot alter the base rate. However, there are other ways to get lower premiums. Many insurance companies offer unadvertised discounts for professional associations, alumni groups, and payment methods that can save you 8-15% with no reduction in coverage.
GEICO, for example, has contracts with various membership entities and organizations, and offers discounts to those who are members, employees, or affiliates of these groups. GEICO has the longest list of affiliated professional organizations, alumni associations, or credit unions, but Liberty Mutual offers the largest student discount. Liberty Mutual has extensive partnerships with universities and alumni associations, including Saint Louis University and the University of Alabama.
In addition to alumni discounts, Liberty Mutual also offers insurance discounts for young people aged 16-25 with a B average or higher, even if they graduated a few years ago. You can also stack the alumni discount with other discounts.
Some companies offer reductions to drivers who get insurance through a group plan from their employers, professional, business, and alumni groups, or other associations. Ask your employer and inquire with groups or clubs you are a member of to see if this is possible.
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Lower liability insurance limits
Lowering liability insurance limits is one way to reduce your insurance premium. Nearly every state requires a minimum amount of car insurance, but your coverage might include more than what's required. If this is the case, you can consider lowering your liability insurance limits.
Liability insurance covers the other party's injuries and damages if you're at fault in an accident, but not your own expenses. It encompasses both property damage and bodily injury coverage. The limit you choose is the maximum amount your insurer will pay out for a claim. For example, if you cause $10,000 in property damage and have a liability coverage limit of $10,000, your insurance provider will pay that amount. However, if your limit is $5,000, your insurer will only pay up to that limit, and you'll be responsible for the remaining $5,000.
While lower liability limits may have been adequate in the past, today, higher limits are recommended to ensure adequate protection in the event of a collision. This is because collisions have become much more expensive in recent years due to supply-chain slowdowns, a shortage of repair professionals, and the higher costs of repairing newer-model vehicles.
Before lowering your liability insurance limits, it's important to understand the risks involved. While it may reduce your premium, it could also result in higher out-of-pocket expenses if you're involved in an accident. Therefore, carefully consider your financial situation and the potential costs of an accident before making any changes to your liability insurance limits.
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Drop optional coverages
Dropping optional coverages, such as comprehensive and collision insurance, can help lower your car insurance premium. However, it is important to consider your car's value, the likelihood of repairs, and your state's weather patterns and regulations before making this decision.
Comprehensive and collision coverages are often required when you have a car loan or lease, as lenders and lease companies want to protect their interest in your vehicle. However, if your vehicle is paid off and has a low market value, you may consider dropping these optional coverages. For example, if your car is worth $8,000 and your collision coverage costs $900 a year, you are paying 11% of the car's value, which may not be worth the coverage.
Additionally, consider the repair costs for your vehicle. If the repair costs exceed your car's value, it may be more feasible to self-insure, especially in states with lower repair costs, such as Indiana, Iowa, and Alabama. On the other hand, if you live in a state with severe weather conditions, such as Texas, Oklahoma, or Florida, keeping comprehensive coverage may be beneficial as it protects against natural disasters.
Before dropping optional coverages, it is essential to review your policy carefully. Understand your state's requirements, the potential financial impact of repairs, and your ability to self-insure. Remember that while dropping optional coverages can lower your premium, it may also increase your financial risk in the event of an accident or damage to your vehicle.
By evaluating your specific circumstances and making an informed decision, you can balance the benefits of lower premiums with the need for adequate protection for your vehicle.
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Compare rates and switch companies
Comparing insurance rates and switching companies is a great way to save money. It is recommended to get quotes from at least three companies to ensure you get the best deal. When comparing rates, be sure to ask about any discounts or special programs that may be available. You can also inquire about restructuring your coverage or bundling policies to lower costs.
When switching insurance companies, it is important to remember to cancel your previous policy. You can do this by contacting the customer service department or your agent. Be aware that some companies may charge a cancellation fee, and you may receive a refund for any unused portion of your policy. It is also essential to have new coverage in place before canceling your existing policy, as driving uninsured is illegal in most states.
You may consider switching insurance companies for various reasons, such as finding a better rate, needing less expensive coverage, or wanting a benefit or perk that another company offers, such as free roadside assistance or gap coverage for a leased vehicle. Additionally, if your rate has increased or you have moved to a different state, it may be time to switch providers.
When comparing insurance rates, be sure to get quotes for the same types and amounts of coverage to ensure an accurate comparison. You can also research the insurer's reputation for customer service and handling claims by checking online reviews or asking friends and family for recommendations. Remember to consider the financial stability of the company as well.
By comparing rates and switching insurance companies, you can save a significant amount of money on your insurance premiums.
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Adjust your deductible
A deductible is the amount you need to pay before your car insurance policy kicks in and starts paying for claims. In other words, it is what you pay "out of pocket" before your car insurance pays. Typically, the higher the car insurance deductible you are willing to pay, the cheaper the premiums will be, as you will be responsible for paying more out of pocket in the event of a claim. Conversely, a lower deductible means your insurer assumes more financial responsibility and will, therefore, charge a higher rate.
For example, if your car suffers $2,000 in damages and your deductible is $500, you will pay $500 and your insurance will pay the remaining $1,500 to repair your car. Your insurance will not pay for anything until the deductible is met. If the cost of the damage is below your deductible, you will be responsible for paying for the entire cost. For instance, if your car suffers $400 in damages and your deductible is $500, your insurance will not pay for any of the repairs.
You can change your deductible at any time, and it is a good idea to have pre-calculated options for raising deductibles to show you are serious about financial decisions. Increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage cost by 15 to 30 percent. Going to a $1,000 deductible can save you 40 percent or more.
However, it is important to remember that raising your deductible means you will have to pay more out of pocket in the event of a claim. Before choosing a higher deductible, be sure you have enough money set aside to pay it if you have a claim.
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Frequently asked questions
Insurance rates are state-regulated, so you cannot ask your insurance company to lower your rate. However, you can negotiate with an agent and ask about additional discount opportunities, special programs, coverage restructuring, or discretionary credits.
Many insurers offer unadvertised discounts for things like professional associations, alumni groups, and payment methods. You can also qualify for a discount by taking a defensive driving course, having a good credit record, or being a long-time customer.
You can lower your insurance rate by properly reporting your mileage, adjusting deductibles, removing unnecessary coverage, and comparing rates from different providers.
