By Bill Siddons, III, Agent
January clearance sales are when millions of Americans buy new cars. Yet only one-quarter of drivers annually review their insurance coverage, and most don't know how to reduce their costs.
Before you hit the road this spring, consider this: Sitting down and discussing coverage with your insurance agent is important. It can ensure that you are getting the best deal possible on your auto policy; and it may even keep you and your family safer.
Talk with your insurance agent before you buy a car. Theft frequency, repair costs, and passenger protection can significantly affect insurance rates.
Consider where you live. Rates vary widely, even by county. Theft and vandalism rates, police response time, local road and traffic conditions, the quality and cost of medical care, and litigation rates are factors that may affect the cost of auto insurance in a particular area. Urban city residents pay substantially more than rural Texans.
Regularly review your policy to make sure that you are not over or under insured. In the last year, one-in-four auto insurance consumers have not reviewed his or her auto coverage.
Use higher deductibles to lower premiums. Insurance is designed to protect consumers from major financial losses. How catastrophic a $500 loss is depends largely on a consumer's income level or savings. Certain consumers should consider the cost-benefit of a higher deductible—the amount for which you accept responsibility before the insurer pays anything. The savings can be used to increase liability coverage limits that protect you from claims made by others. Choosing a higher deductible of $500 to $1,000 can reduce your premium by 10% or more, but may not be feasible for those who cannot afford to cover the higher cost.
Buy a low-risk car that is not a top theft target. Consumers can check the auto theft losses by make and model through the Highway Loss Data Institute's Web page: www.carsafety.org.
Take advantage of discounts. Most, if not all, agents and companies offer premium discounts, and 85% of auto insurance consumers say they take advantage of them. Depending on the insurance company, consumers can often lower their rate by 5 to 35%. Below are some of the most popular discounts available.
- Good driver/accident-free;
- Multiple cars on one policy;
- Anti-lock brakes;
- Multiple policies with one insurer;
- Passive restraints;
- Anti-theft devices;
- Drivers' education;
- Good student;
- Senior citizen/retiree;
- "Away at School;" and
- Good credit history.
Companion Credits. Many insurers offer discounts if they insure both your home and auto policies together. It also makes purchasing an umbrella policy easier and more cost effective.
Standard vs. Non-Standard Auto Insurance. Many people don't understand the difference. There is a reward for purchasing continuous coverage. Even a short lapse in coverage can cause your premiums to substantially increase. If you are insured with a non-standard carrier continuously for six continuous months, talk to your agent about quoting your automobiles with a standard carrier. The savings can be very rewarding.