Is it really possible to save over 600 dollars on your auto insurance in a year? Of course, although your results might be different. Money saved depends on what you are currently paying in premiums. You could save a bit less or you could actually save more than I do. Curious? Let’s have a look at some easy ways to save on your auto insurance.
Change Insurance Providers
You might like your insurance company, but sticking with them is doing you no favors at all. Insurance companies count on your complacency. They know that people like the “status quo” and that most people think that changing auto insurance providers is a big hassle. The truth is that it is not a hassle at all. It is actually quite easy to change insurance, even if you have a lien holder on your policy.
By changing your insurance company, you will take advantage of new client discounts. On my last few policy renewals, I switched from Progressive to Mercury and then back to Progressive again. Each time I qualified for a new policy discount and that saved me roughly 200 dollars per 6 month policy term.
Loyalty is a great thing but not if the company you are being loyal to is hiding discounts from you. If it has been years since you have shopped your auto insurance, shop your policy around to at least 3 different companies. The results will likely be shocking.
Pay Your Policy In Full
Insurance companies like to lock you down for the entire term, which is typically just 6 months these days. To do this, they will give you massive discounts to pay your policy in full. Sure, paying your policy out monthly is an easier way to budget and less of an immediate family burden, but it is costing you.
On top of the lost “pay up front” discounts, paying monthly generally costs you a monthly processing fee. This is usually around 10 dollars a month or 60 dollars over the course of your policy term. Altogether, with the lost “pay up front” discount, you are paying anywhere from 25 dollars to 40 dollars extra a month by paying monthly.
But what if you can not afford to pay your policy in full? There are a couple ways to get it done.
Use A Credit Card
Put it on credit, really? Well, maybe. First you have to do the math and make sure it is worth it.
Let’s say that your 6 month policy costs 1000 dollars if you pay it monthly and 800 dollars if you pay it in full. That represents a savings of 200 dollars. If your credit card is charging you 20 percent interest, you would pay roughly 80 dollars in interest over the course of 6 months. That is still earning you a savings of 120 dollars.
One caveat to going this route is that you need to make sure you calculate how much you need to pay every month to get the credit card balance paid off in 6 months. If you only pay the credit card minimums, you will lose in the end.
Use A Windfall
If you are paying monthly, you have the ability to cancel your policy at any time. Should you receive a windfall such as a bonus at work or perhaps a tax refund, use it to get yourself on track insurance wise. Switch insurance carriers and get all of your discounts by paying in full with your windfall. Then, take the money that you would be using to pay your policy monthly and put it into savings. By doing this you take advantage of your up front payment discount and will have money in savings to do it again when your policy is up for renewal.
Take Advantage Of Good Driving Apps
Those apps that track your driving are a nuisance, but they can really put money back in your pocket.
Being a safe drive would obviously make you a good customer for an insurance company. What insurance company would not want to keep collecting premiums without having to pay out any money? Those apps allow you to prove to your insurance carrier that you are one of these coveted safe drivers.
But how much can you save? In my experience, enough to make it very much worthwhile. On my last insurance renewal, it earned me a 100 dollar savings on my 6 month premium. That was with a B rating, so your results could be better if you are able to stay off your phone more (got dinged for that).
Coupled with my 200 dollar discount for paying in full, this saved me 300 dollars on my most recent 6 month insurance policy renewal. That actually made it worthwhile to stay with the same company this time around.
To Sum It Up
Saving on car insurance does take a little work, but it is minimal. I save roughly 300 dollars per 6 month policy and invest about an hours worth of time. Not a bad trade off. Even if you only save half as much, it is time well spent.