Do any of you have any good tips or suggestions for lowering car insurance rates? I just renewed my car ins and was very pleasantly surprised when they told me my cost for the second year was substantially less than the first year owing to something called a “loyalty discount”. Essentially, that means that I drove for a year and never made any claims. I recently enjoyed reading Misnomer’s thread titled, “New Car” in this forum. I thought it might be a good idea to ask you all if you have any good ideas for keeping the cost of car insurance low.
I just renewed my car insurance. It is the second consecutive year I have insured the car through this same company. It is a 2010 Japanese luxry SUV. I am reluctant to specify too many exact details due to privacy concerns. My insurance for the first year was approx $2200 (Canadian) but only $1770 for the second year. That is a 20 percent reduction. The company called it a “loyalty discount”. I had never heard of such a thing before but I was very happy with it. I asked my agent just how far they would discount my rate in the future. She told me the biggest discount comes after two years. So I’m expecing to pay approx $1400 next year and subsequent years. I will tell you that I bought the car and had it thoroughly checked out by a mechanic who told me it was in excellent condition. It has never given me a single problem and I love this car more than any other car I’ve ever owned. She truly is a beautiful lady. At least that is the way I feel about her and I’m proud to tell you that.
I should tell you that I’ve been driving for 50 years and have a spotless driving record. I took all the usual deductions. The only extra thing I have is something called “accident forgiveness” for which I pay an extra $100 per year. It means that if I have an accident which is my fault, the ins co. will not raise my rates. But that only works for one accident. Any other accidents and they raise my rates “through the roof”. I don’t know the exact amount. But I’ve heard from other people that when you have an “at fault” accident the ins company raises the rates by an extremely large amount.
I’d like to ask if any of you have any good ideas for ways to lower car ins rates even further. I don’t think I want to assume higher deductibles or give up any of the existing things covered. After all, who forgoes theft ins or collision ins if the car is worth more than $1000?
But are there any other ways you know to keep the costs down? I’m not just asking for myself. I’d like this thread to offer suggestions for most anyone - meaning any age and any kind of claims history.
I considered calling around to some competitors. But I am currently insured by a large company with a good record for paying claims. If some other company offered me a very much lower rate, I would be suspicous how a much smaller company could afford to stay in business if they only charged a fraction of the going rate. What do you think?
I pay less than $60/mo for full coverage for my Rav4. I’ve been with the same insurer for probably 25 years, and get discounts for multiple policies (2 houses, auto, umbrella policy), for electronic payment, and for longevity.
I went to AAA to check, but they told me that since I had a good record and had been with my insurer for over 30 years, no one was going to be able to beat their rates. Moving to a cheaper state is about the only way. And not getting a new car. The safety features in new car increases the cost of components and thus the cost of a collision.
Check out exactly what you’re paying for “uninsured motorist” coverage, taking care to distinguish between UMBI = uninsured motorist bodily injury, and UMPD = uninsured motorist property damage. You do want the property damage element, but I removed the whole thing, since it turns out the property damage element is covered anyway under the main part of my policy.
UMBI would pay out only if an uninsured driver were at fault and caused injury to you or your passengers. It would cover any medical expenses, lost wages etc., for which that other driver is liable. However, provided you and your passengers have health insurance, what would happen is that your health insurance company would pay for your care, then take the UMBI money as reimbursement. So the expected value you get from UMBI is de minimus, likely only the usual out-of-pocket expenses under your health insurance in the event of serious injury.
Yet removing uninsured motorist coverage lowered the cost of my policy by one third!
We pay $38/month to State Farm for our 2012 Subaru. That includes comprehensive and collision. We would drop that since we can easily self-insure, but it doesn’t make that much of a difference ($12/month less). We also only drive about 8000 miles per year so I think that lowers it.
Ours is also bundled with home insurance.
I see some recommendation to remove underinsured. That is $4.50/month for us.
You’re paying the insurance company to take on risk, so the short, general version is this: if you want lower costs, reduce the risk that the insurance company is being asked to take on.
This falls into two categories:
#1: take on more of the risk yourself. Higher deductibles is one way, and the other way is reduced coverage. You’re required to have liability insurance that covers the damage you do to others, but you’re not required to have collision insurance that covers damage you do to your own vehicle. If you are wealthy enough (or your car is cheap enough) so that you can afford to quickly buy a replacement if you total your own car, then statistically, you’re likely to be better off in the long run if you don’t pay for collision coverage.
#2: reduce the total risk. Drive a low-value car; insurance on a new Cadillac will cost much more than insurance on a '99 Honda Civic. Shorten your commute. Reduce the total miles you drive per year. Store your car in a garage instead of outdoors (reduced risk of vandalism/theft). If you store it outdoors, park it in a driveway instead of the street (reduced risk of damage from passing vehicles). Obey traffic laws, especially re: DUI, since your insurer will learn about them and adjust your premiums accordingly. If you get stopped for a traffic violation, be polite/deferential to the officer you’re interacting with, and keep your hands in view; this goes a long way toward getting your citation reduced from the max possible, or even getting away with a warning instead of a citation.
In short, think of all of the questions that the insurance company asks you when you’re setting up coverage for a vehicle you just bought. The answers to those questions are the things they use to determine what your premium will be.
I have considered these two categories and I learned that in my area there is a third category although, unfortunately, it doesn’t seem like it would help me very much.
I learned that insurance companies divide each city into several small areas - much like election ridings. The rate for car insurance can be very different for people living on one street and people living very near by - but on a different street.
I say this is unlikely to help me because I’m not going to move just to save a few hundred dollars per year on car insurance.
Still … I find this quite intriquing. How much sense does this make? Did they just compute how much they had to pay out in claims in each area and then base their rates for the following year on that? Seems quite arbitrary in some ways.
I could not disagree more strongly. UIM insurance is critical. In my experience (representing injured people) almost all drivers who hurt people have very minimal insurance. 13% of drivers have no insurance at all. It is not uncommon for someone to be permanently disabled or otherwise suffer a huge loss of income after a car collision. Many have significant long term injuries causing severe pain or disfigurement. While health insurance companies may have a right to subrogation (reimbursement) of some of the proceeds, it’s not always the case. (In Washington, for example, a health plan cannot collect subrogation until the injured party is “made whole,” which typically doesn’t happen). UIM insurance also covers you if you get hit by a vehicle while crossing the street.
Collecting $100,000 or $500,000 or $1,000,000 in UIM benefits after a tragic accident doesn’t make everything better, but it sure does help.
I hate to sound like a shill for the insurance industry (my daily foe) but UIM insurance has made a huge difference in the lives of some of my clients, and the lack of it has been devastating to others.
I worked at the State of Confusion with a gentleman who had a degree in civil engineering and was in a position of responsibility. In a general discussion, he admitted he carried only the minimum insurance rquired by law.
My eyes bugged out of my head. I tried to explain simply backing out of your driveway and hitting a car–all at low speeds–would easily rack up claims much greater than his policy limits.
“They’ll get the minimum and that’s it. They can’t get any more if I don’t have it!”
He’s married, three kids, owns his own home. All of that could go down the drain because of his inadequate coverage, an attempt to “save money.”
~VOW
Statistical risk varies considerably by geographic area, so the insurance companies’ basic approach to risk analysis makes sense. And you have to draw lines somewhere to define areas, so close to those boundaries things may look arbitrary or unfair. But that applies to many boundaries - is someone 6575 days years old more qualified to vote than someone 6574 days old?
In principle, market forces will favor insurance companies that analyze geographic risk (or any other aspect of risk) at the greatest level of granularity. If your safe street has been bucketed with a bad part of town in one insurance company’s relatively crude actuarial analysis, it should be profitable for another insurance company to recognize that and seek your business for a lower price. In practice, of course, there’s a cost to doing actuarial analysis, and a requirement that the sample size be large enough for the statistics to be valid. It will often be the case that no insurance company has an actuarial model that will give you fair credit for some risk-reducing factor that should lower your premium. When that’s the case, all you can do is to self insure as much as possible - take the largest possible deductible, decline anything you are allowed to decline if it’s a loss that you could absorb.
Thanks for the different perspective. I’m retired with no dependents, which made the loss-of-income aspect irrelevant for me, and the coverage was capped at $300k. The way the economics worked out on my policy, I think I was hugely overpaying for the coverage, when the bulk of that risk is something that I’m already paying for in health insurance. That may well be because I was just lumped into a single insurance pool.
I understand (at least I think I do) but the areas - as I understand it - are as small as a city block. So, if that is correct, does it seem reasonable that someone living in one city block pays perhaps $1,000 but their neighbor in the adjacent city block pays perhaps as much as $1,600?
I apologize because I have no solid numbers to present to you and I’m just trying to determine if this can be fair or if there may be something nefarious going on where the ins company has found a way to artificially increase their profits just by running some statistical analysis routines?
In other words, suppose they try every which way they can imagine to cut up the city into these areas and compute how much revenue they get using each config. Then they just accept the config that gives them the maximum revenu.
Am I presenting this in a way that is understandable such that my point is evident?
I don’t think I understand. You seem to favor UIM. But to the best of my knowledge, UIM is not legal at all anywhere in Canada and I think the reason is that govt here became alarmed because it had to pay when people drove without insurance. My guess is that many of the people who were permitted to drive without ins tended to drive recklessly and had a greater percentage of accidents since they just didn’t care much if they cause huge damage amounts to innocent victims. They knew the govt would foot the bill for them.
It makes sense to me that if you enable people to drive without ins, they will have a natural tendency to not be as cautious as other people who have to pay extra for liability ins. I know that if I cause an accident, my rates will skyrocket and I understand why.
But when I was a youth, I’m sad to admit I just didn’t have much concern for others and I often drove recklessly just for the thrill of it. Thank Goodness I never had any accidents. Buy I had a friend (honest) who was the most insane driver you can ever imagine and he did cause one accident that caused the most horrible injuries to others. He never expressed any regret beyond losing his car and his driving privileges for 3 months. The families of the people he injured? They wanted to kill him.
Am I missing the reason you seem to favor UIM? Is it just so that people who need to drive but cannot afford ins will be able to drive? I’m sure that many of those people are reasonable folks who would not want to injure others and then leave them to pay the costs themselves. But it just seems so incredibly unreasonable to me.
Uninsured motorist coverage certainly is legal in Canada, and is often one of the optional coverages typically sold with a policy. Here in Alberta, it’s called the “SEF 44 Family Protection Endorsement.” The name belies its purpose:
Emphasis added. The SEF 44 protects you against damage caused by uninsured motorists. I’ll add that it’s dirt-cheap. My SEF 44 coverage cost me all of $25 last year. In other words, it’s not something you want to drop in order to save money.