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Long Term Ways to Save on Car Insurance

Long Term Ways to Save on Car Insurance

Anytime I write about saving money on car insurance I can’t help but think about all of those cheesy commercials that are played over and over during all of my sports broadcasts.  Well, let’s cut from the norm on this one and not even talk about changing providers to help lower your insurance costs.  After all, unless your an idiot, you already know that it pays to shop around.

In this article, we’ll go out and find ideas from the web and then add our own comments to how reasonable these ways are.  For starters, there was an article on the front page of Yahoo this morning (yes, I still have Yahoo as my home page) about how to cut your auto insurance in half.  They actually list a lot of reasons, but I chose to highlight these two ideas because they are somewhat non-traditional.

Most people believe getting a good deal is about the here and now, as in, finding the lowest cost provider or raising your deductible.  These two techniques require a long term commitment.  Here are the ideas:

#4 – Improve Your Credit Score
How you spend money says a lot about how responsible you are. Depending on the state, insurance companies could look to your credit score when determining if you are likely to be a safe or more reckless driver.

“For many insurers, credit-based insurance scoring is one of the most important and statistically valid tools to predict the likelihood of a person filing a claim and the likely cost of that claim,” says Worters.

What makes up your credit score? Factors such as your payment history, any unpaid debt, your credit history length, or bankruptcies help formulate these credit-based insurance scores, according to Worters.

#5 – Maintain a Good Driving Record
Drive smart, drive safe.

Insurers often reward good driving habits with reductions in rates or lower initial rates, according to the “What Determines the Price of My Auto Insurance Policy,” an article on III’s website.

For example, look at these annual sample rates – randomly produced by the Texas Department of Insurance’s Price Guide – from three insurance companies:

  • Male, 25-65, no violations: $495, $365, $599
  • Male, 25-65, 1 at-fault accident in the past three years: $767, $459, $699

Between the three companies, the motorist with no violations could have saved $272, $94, and $100 per month, respectively.

You can read the rest of this Yahoo article at how to cut your car insurance bill in half.  Notice that credit scores now matter when it comes to getting insurance rates.  That’s because a credit score is really an assessment of your risk level.  A low credit score means that you are a bad investment for a creditor, it also correlates to the possibility that you are careless in other aspects of your life too.  That’s why insurance companies can justify giving better rates to “safer” drivers.  It’s not just insurance companies that give better rates for high credit scores though.  Banks, mortgage companies, cell phone providers, landlords and even employers give you an advantage for having good credit.  Regarding the driving record comment above, I’m sure you already knew this, but this illustration actually gives the the difference in the quotes, so you can actually quantify the cost of a bad driving record.

We also found an article on Fox Business that discussed many of the same ideas that everyone has, like changing providers and raising your deductibles.  They did have two interesting points.  One was to reduce your commute by moving closer to work.  I think that is a great idea.  I always try to live within walking distance of work, or at least I used to.  The other idea they had is summarized here:

Buying a new car is a very expensive way to save money on car insurance.

If your current car is old, a much newer one will always cost more to  replace, thus the risk for an insurer is more. You’ll owe taxes and fees, and  the whole point is to save money anyway, right?

But if you’re already in the market for a car, one that’s cheaper to insure  can save you thousands of dollars over its long and happy lifetime with you.

For example, according to data gathered for us by Quadrant Information  Services, a 2011 Volkswagen  Jetta S Sport wagon would cost a typical driver $1,367 a year to insure. Its  fancier diesel counterpart, Jetta Sport TDI wagon, would cost $1,605 a year.

Over a five-year car loan, that’s $1,190.

Read the rest of this article at 3 ways to save big on car insurance.  I actually like this bit of advice, as it’s true that it doesn’t make sense to switch cars just for the insurance, but by planning ahead and looking at the rates on the cars you are shopping for, can save you a lot in the long term.  Most people think of insurance as an afterthought, after they buy the car.  And hey, if you’re thinking about car insurance before you buy a car, you should also look into the estimated five year cost of ownership for the car you are buying.  It includes estimates for maintenance, gas mileage and insurance.

Hopefully these longer-term ways to save on insurance will stick with you and you can start planning now to take advantage of them.

Have any other ideas to save on your car insurance?  Drop us a comment.

{ 3 comments… add one }
  • AlwaysAMama May 15, 2012, 11:10 pm

    Great tips! A good driving record really makes a difference! For my husband and I one of the best ways we have saved on insurance is by saving money and buying our vehicles outright. This allows us to carry less insurance than we would be required to if we had a loan on our vehicle.

  • Patricia Coldiron May 23, 2012, 2:37 pm

    You made some good points Chris. I would add take advantage of every discount the insurer offers. These include good driver, student discounts, and multi-car discounts.
    The safer driver that you are, the more money you will save. Also, shop around for the best rates, but don’t sacrifice doing business with a quality company, in order to save money with a questionable company.

  • sundcarrie May 29, 2012, 12:15 pm

    Great tips but I don’t think I will ever sacrifice my love for a hot fast car to save on insurance. I already have a great credit score and so does my hubby. We save money by having a storage policy on one of our vehicles most of the time. We have three older vehicles with a 1999 being the newest vehicle we own. This way if one dies and we need two vehicles I can call up my agent and say start the policy for the third car again. We don’t buy new cars either we find quality used cars from private owners and take care of them. We also save money because we don’t put a lot of miles on the cars we try to keep most everything we do close to home.


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