Auto Insurance - Cut Costs, Not Cover!

Auto insurance is a minimum requirement for a car owner or driver in every US state, Canadian province and pretty much every country in the world. If you have a car, then auto insurance is something that you must have, period.

The downside, however, is that costs are continuing to rise, so it clearly makes sense to look for ways to reduce some of the expense, whilst still seeking the best coverage available for your dollars.

So, let’s look at some ways of doing this.

Firstly, use the power of the internet to get multiple auto insurance quotes, as well as utilizing the services of your local neighborhood broker. Try getting different types of quotes from the online direct-sell insurance companies as well as brokers both on the internet and in the “real” world.

Bear in mind here that the auto insurance that is cheapest isn’t always going to be the best. For example, is the insurance company known to you? If not, can you be certain that they are financially secure? How confident are you that they will be able to pay out if you have to make an auto insurance claim? Will they still be in business next year or even next week?

In other words, if you don’t know the company, check out their credentials before you give them your money. Not all auto insurance companies are created equal!

The first “slice” of the policy is almost always basic liability insurance, covering your liability to others in case of an accident which either injures them or damages their property. Indeed, it is possible to ONLY have this basic cover and still satisfy the legal requirements in many states and countries.

However, if you only have minimum liability coverage and you injure someone, their attorney can go after your personal assets, so, quite correctly, many people (and their insurers) would suggest that minimum liability is a bit of a gamble.

Auto insurance costs will vary dependent on the type of vehicle that you are insuring. Coverage for a flashy sports car or for one in what is considered to be in a high risk group (soft top convertibles, for example) is very different from insuring the family sedan or hatchback.

So, when you are thinking of buying a new car, it makes sense to think about the auto insurance costs before you do so, and maybe you might buy a car that "looks good" to insurance companies.

For example, the auto insurance companies are well aware of what type of cars are most often stolen. If you haven't purchased your car yet, find out what cars make this "good list" among auto insurers.

Consider how much coverage you really need to buy, and don’t “over-insure”, because the companies will not pay out more than the value of your car no matter how much cover you have been paying for.

For example, consider collision and comprehensive coverage, how much you will be reimbursed for the loss or destruction of your vehicle. Are you carrying $50,000 worth of collision coverage for a $20,000 vehicle?

On the other hand, don’t make false economies. If you don’t want to pay for comprehensive and collision cover, consider whether you be able to afford to replace it if it was written off? If not, then you need the extra cover, although you clearly don’t need the extra cost!
A a general guide, if your car is worth less than $2,000, then it won't be worth it to buy comprehensive and collision.

Likewise, if your car is an ancient relic, say, more than 12 years old, then again, you probably don’t need the most comprehensive cover, which can usually give big savings.

Consider bearing the risk of having a higher deductible (or “excess” as it is called in Europe), which is the pat of any claim that you will have to pay before your insurance policy kicks in and pays the rest. The higher the deductible, the higher your potential financial risk, granted, but this will also serve to keep your auto insurance policy costs down.

Buying a low mileage car and keeping your driving licence and record nice and clean will all help keep cots down.

If you’re a single males under the age of 25 then the bad news is that you are NOT the auto insurance companies favorite type of driver, and you will pay for it (statistically, this group are most likely to have accidents). Get yourself a nice sensible car, and leave the Ferrari at the dealership until you get yourself a wife and pass your 26th birthday!

Finally, look a other ways that your insurance company might reward you for taking steps that will reduce the risk of a claim, such as fitting your car with an anti-theft device or attending an advanced driver-training course. These kinds of proactive preventative measures are generally welcomed by the auto insurance companies, and are rewarded with reduced insurance fees.