Since you're paying more for gas, maybe it's time to save on another expensive part of the driving experience: insurance.
According to the Bureau of Labor Statistics, in 2010 the average American spent $5.75 each and every day for gas. Since the average price per gallon is now approaching its record price of $4.11, you can bet that’s a bigger number now.
What’s a driver to do? You can try to use less by doing things like checking tire pressure, cleaning air filters, and rolling up (or down) your windows. You might even try to hedge prices by following the advice in The Single Best Tip to Beat High Gas Prices. But here’s an additional idea you may not have considered: Adjust your car insurance. The same BLS report referenced above shows the average American spends more than $1,000 annually on car insurance. Squeezing savings from your policy will ease your pain at the pump.
In the video below, Money Talks News founder Stacy Johnson offers three practical ways to lower your premium. Steer through it, then read on for a few more ideas…
Now let’s add some detail to Stacy’s suggestions and add a few more ways to drive down the cost of car insurance.
1. Break down your policy
Read Understanding, Organizing, and Saving on Car Insurance for a look at the spreadsheet Stacy mentioned in the video above, but understanding exactly what you’re paying for can help you save.
For example, if you have an older vehicle you own outright, it might make sense to drop comprehensive and collision coverage. These expensive components of a car policy cover theft, vandalism, and accident damage to your car when you’re at fault.
One rule of thumb suggests that if annual comp and collision coverage exceeds 10 percent of the car’s value, it might be worth dropping. So if your car is only worth $1,000 and comp and collision costs more than $100 a year, you might consider self-insuring against at-fault wrecks, theft, and other perils. But remember: If you don’t have full coverage on your car, you won’t have it when you rent one, either, which can mean paying outrageous rates at the rental car counter.
Another thing to remember: Don’t be penny wise and pound foolish when it comes to liability coverage. That covers other people, their property, and your butt if you cause an accident. It’s critical.
The point is that from roadside assistance to towing to comp and collision, insurance is made up of components, each with its own price tag. Go over your policy and understand what each part costs and what it covers. If you don’t understand it, there’s a simple solution: Call your company and make them break it down for you.
2. Raise your deductible
A deductible is simply what you’re willing to pay before your insurance kicks in. For obvious reasons, the more you’re willing to pay yourself, the lower your premium. The Insurance Information Institute says going from a $250 deductible to $500 can save 30 percent – and up to $1,000 can save more than 40 percent.
3. Ask about discounts
Many companies offer discounts for having anti-theft and safety devices, multiple policies with the same company, pay-as-you-drive, low mileage, non-smoking, no accidents, out-of-state student, over 50 – the list goes on and on. Even setting up online auto-pay can help. But realize that at many companies, although they may be aware you qualify for discounts on your policy, it’s their policy not to offer them unless you call and ask.
4. Comparison shop
As Stacy mentioned in the video above, he only does this every couple of years. But it can pay off, especially if you haven’t done it for a while. Take a few minutes and use our insurance tool to compare rates at the big companies, and then check out some smaller local ones after making sure they’re licensed insurers in your state. (Not sure about a company’s financial strength? Check their ratings at Standard & Poor’s.)
5. Maintain good credit
As Stacy explained in How Can My Car Insurance Go Up Like This?, insurance companies use lots of seemingly irrelevant information to set their rates, including your credit score. They’ve simply found people with bad credit are more likely to file claims. So work on your credit score if it’s not where you want it.
6. Drive cars that carry lower rates
Some vehicles cost more to insure – and not just Porsches either. While a low insurance rate may be way down the list of factors you consider when buying a car – certainly behind mileage – you can find out the least and most expensive cars to insure at Insure.com. For 2012, the cheapest to insure is a Toyota Sienna, and the most expensive is an Audi R8 Spyder.