I am making my last payment on my car this month and am wondering if I can reduce the cost of my insurance since my car will be paid off. I want to keep the comp/collision so I’m not sure what can be reduced. If there is anyone in the insurance biz I’d appreciate some advice.
I’m not an insurance dude, but any time I’ve paid off a car without changing coverage, there’s no rate change. Do remind the insurance company to change the loss payee though, and they’ll probably want a copy of the release of lien from the bank.
You may consider dropping the amount of your broad, collision, or comprehensive insurance, though. Figure out what your car’s worth so that in a complete total you’d usually get fair market value. Since there’s no loss payee, the insurance company may let you change these. Also consider decreasing your liability coverages. Depending on your lender, you may have had to carry a minimum coverage beyond your state’s minimums. I don’t know the exact numbers, but I remember when I changed the insurance from a bank financed vehicle to a GMAC financed vehicle, I had to increase some of the liability coverages per my contract with GM.
Similarly depending on who financed the deal you may have had a lower deductable than you really need. Raising your deductible will usually lower your cost, sometimes considerably.
In my state, if the accident isn’t 50% or more my fault, I don’t have to pay the deductable at all on collision claims. Of course that’s only if you’re worried about collisions only (still have it on comprehensive and so forth).
Also, my state’s a no-fault state – I’d keep collision coverage even if I was out of lien. I’m not positive how it works in non-no-fault states, but if you’re in one, and you’re positive that you’ll never be at fault in an accident, maybe you could just drop the collision coverage and go after the other schmuck’s insurance company in an accident situation. Anyone know anything about non-no-fault insurance that makes this scenario possible? Of course, if you’re the cause of an accident, well, then, you don’t get your own car fixed.
I’m in California so I think it’s a no-fault state. I will definately find out the blue-book value and see if I can lower the comp/coll part.
Thanks.
Careful about how you determine the value of your car. The best way to do it is to see what similar cars to yours are selling for. Mileage is a huge consideration. Most companies are going to pay “fair market value” which is determined by examining other cars just like yours, coming up with an average price, and then adjusting that price up or down based on its condition, odometer and features. (Kelly Blue Book will almost ALWAYS be higher than reality and will set you up for disappointment. NADA is pretty good as is the Autotrader website.)
To lower your premium you can:
- reduce your liability coverage (this gives me the willies)
- increase your comp/collision deductibles or eliminate this coverage
- get older (age 30 is the magic date for many states)
- avoid getting tickets/at-fault accidents (Comprehensive losses like windshileds and hitting animals don’t usually count)
- Check to see if your insurance company gives discounts to long-time customers. I currently enjoy a 20% discount for being with my company for 10+ years & accident-free.
You don’t pay extra just for having abank listed as loss payee on the policy. A lender will often require comp/collision deductibles be no higher than $500, and lease companies will often require (reasonably) high liability coverage like 100/300/50 as opposed to state minimum (I think CA is 25/50/15)
California is NOT a no-fault state.
You could also shop around for another insurance company. If you change insurance company before the current term is up you should be able to get a pro-rata refund for the unused days. If you prefer to stay with your current I.C. I suggest you call them and ask what might be done to lower the payments. There may be things you/we haven’t even thought of such as good student discount etc.