Ugh! Shopping around for car insurance is not something we want to spend our free time doing. Every six months when my insurance renewal came in the mail, I said to myself, “Yeah, I should really go get another insurance quote.” Of course, I never would, so that same scenario played out for years until I finally motivated myself to get another quote.
My car and home insurance policies were bundled together and I was paying $920 a year to insure my 2005 BMW E46 sedan and my 950-square-foot condo. I had already increased my car and home insurance deductibles from $500 to $1,000 and adjusted my coverages down, but I still wasn’t satisfied with how much I was paying for insurance.
So, a little over a year ago, I called GEICO up to get a quote.
With my current insurance policies in hand, I talked with an awesome GEICO agent named Arthur. Far from a greasy, high pressure, slimy salesman he was able to get a quote put together for the exact same coverages, including liability, comprehensive and collision.
The quote was $495 a year, a savings of $425!
I then called up American Family Insurance to tell them I wanted to cancel my policy, expecting them to try and keep me as a customer. They asked me why I was leaving and I told them about GEICO’s quote. The agent checked to make sure the coverage being quoted was the same, which it was, and then told me they could come down a little but wouldn’t come close to the GEICO quote. The savings were so drastic they were forced to let me go!
Better yet, by saving and investing that $425 for the next ten years, it will grow to over $6,000:
I want you guys to have the same experience, so here’s four easy steps you can follow to lower your insurance premiums.
1. Find out what coverage you need
Nearly every state requires you to carry insurance, but the coverage varies from state to state. Take a moment to find out what coverage is required where you live; you can use this Wikipedia page for that information.
Keep in mind that you’re on the hook when costs exceed your coverage limits, and that’s why people get policies that cover more than the required minimums. A good rule of thumb is to make sure you’re covered for an amount equal to the total value of your assets (like your house, car, savings, and investments).
For example, if you have $50,000 of bodily injury liability coverage but have $100,000 in assets, attorneys could try to seize your assets if you’re at fault and the other party’s medical bills exceed $50,000.
2. Find out your current coverage
You should have your current policy. If you don’t, call your insurance agent to have them email you a copy.
3. Adjust your coverage if needed
The general recommendation for liability limits are 50/100/25. That is, $50,000 bodily injury liability for one person injured in an accident, $100,000 for all people injured in an accident and $25,000 property damage liability.
Be aware that you don’t have to buy comprehensive and collision. Comprehensive – which covers costs if your car is stolen or damaged outside of an accident – and collision – which covers repairs to your car after an accident – for older vehicles may not make sense financially. You can determine this by comparing the annual cost of comprehensive and collision with how much your car is worth (find out by using Edmunds TMV).
Choose the highest deductible you can afford because it will significantly reduce your premium. It’s better to spend $500 on repairs when you need them rather than paying an extra $50 a month whether you need them or not. I only recommend this if you have an adequate emergency fund in place to cover the cost of the deductible. The last thing you want is to go into debt to cover repairs.
There is always a way to get a discount on insurance.
First off, purchase your car and home insurance policies from the same provider because chances are you’ll receive a multi-policy discount.
Then, in the next step when you’re talking to an insurance agent, be sure to inquire about any other discounts they can offer. You may get a discount if your car has airbags, anti-lock brakes, if you don’t drive your car that far or often, if you take a defensive driving course, if you have an accident-free driving history, if you’re a member of a credit union and so on.
Request a list of all possible discounts to see what you qualify for.
5. Comparison shop
With the coverage you want in hand, start calling around to get quotes. The following insurers are good, and I’ve even given you guys the phone numbers to make this super easy. You can get quotes online as well, but I like working with a real person when it comes to insurance.
Remember to ask about discounts!
- Geico – Call them at 1-800-861-8380 or get an online quote.
- Progressive – Call them at 1-800-776-4737 or get an online quote.
- Esurance – Call them at 1-800-378-7262 or get an online quote.
- Nationwide – Call them at 1-877-669-6877 or get an online quote.
- Farmers – Call them at 1-800-327-6377 or get an online quote.
Be sure to play one insurer off the other. For example, after you get your first quote from GEICO and are on the phone with Progressive, make sure you mention you are shopping around and give them the quote GEICO just gave you. Then, when you call Esurance, mention you are shopping around and give them the lower of the two quotes you’ve gotten between GEICO and Progressive, and so on.