There is a lot of talk about lowering your car insurance rates, and you have probably heard a lot of tips, suggestions and even warnings about premiums and what affects them. What is the truth about saving on car insurance? Take a look at these common savings beliefs, and whether they are true money savers or just a myth.
- "I can’t get a better rate elsewhere; I have an accident on my record." FALSE. Having an accident on your record can increase your rates, that is true, but it doesn’t mean you can’t find a better deal. Because every insurance company determines their own rates, an accident may cost you less at one company than another. When you have an accident is actually a good time to shop around for car insurance. You would be surprised at the variation in rates you will find when you compare.
- "Having a higher deductible will save you money." TRUE, but with a caveat. Carrying a higher deductible can lower your insurance rates, but you have to keep in mind that you will have to cover that amount out of pocket in case of a claim where your deductible is applied. How much money you save depends on how long you go with that higher deductible without having such a claim. Good drivers can save a lot of money over the long run if they carry a higher deductible and remain claim-free.
- "Every discount you qualify for is added automatically." FALSE. The insurance company may add some discounts automatically, such as multi-policy discounts or longevity discounts. But there are others you could be receiving that you might not know about, and the insurance company doesn’t know you qualify unless you tell them. If you have added a security system to your car, for example, you need to inform the insurance company as there might be a discount. Ask for a list of possible discounts and go over it with your insurance professional to see what you might be missing.
- "You can save a lot by having all your insurance in one place." TRUE. Most companies offer discounts if you have more than one policy with them. This means that if you place your home with the same company that insures your car, you will see your car insurance go down in price – and your home insurance policy could go down as well. When you quote your car insurance, consider having the same company quote your other policies at the same time.
- "You’re always better off staying with the same insurance company to benefit from longevity discounts." FALSE. While it’s true that many companies offer discounted rates to drivers who stay with them for many years, that doesn’t mean that is the best rate you could be getting. You will lose that discount if you leave and come back, so do your homework before you switch. But remember that shopping around for car insurance doesn’t mean you have to make a change; it just lets you keep up on the market and see what your options might be.
- "Insurance rates are basically the same at every company." FALSE. Insurance is a very competitive industry, and the more you shop around, the more likely you are to find a better deal. Many people are surprised at how vastly different insurance rates can be from one company to another. Shopping around is far and away the best way to save money on car insurance.
You car insurance rates are determined by a wide variety of factors, from your driving record to the car you drive. There are a lot of different ways to save money on car insurance as well as a lot of confusion as to which savings method really is effective. Shopping around, comparing rates and looking at all of your options with your current company as well are the top ways drivers can reduce rates and make insurance premiums easier to live with.