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How To Get The Best Deal On Auto Insurance

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How would you like to earn $500 for one hour of easy work? If you’re like most people, you would jump on that opportunity in a heartbeat. What if I told you that you already have the chance to do it?

By calling around or looking at prices online, you can save that much money on your auto insurance, potentially in just one year.

Auto insurance isn’t cheap. One study showed the average amount one pays for car insurance over their lifetime is about $94,000.

That means by taking advantage of these best practices for purchasing insurance — you could potentially save over ten thousand dollars in your lifetime.

How To Get The Best Deal On Auto Insurance

#1. Compare Prices

This tip should come as no surprise but it still shocks me how many people don’t compare prices at least once every other year.

Prices from one insurance company to the next will differ, often significantly. More so, insurance companies sometimes discount rates for new drivers.

There are a lot of great companies to choose from. One of the highest-rated companies consistently is USAA.

Esurance is another good choice. They give several discounts for those who qualify, including multi-car, good driver, paid-in-full, vehicle safety, homeowners, and more.

Take a few minutes to get a quote from these two providers, chances are there are some big savings to be had.

#2. Compare Policies

It’s important to compare coverage to get a complete picture of which company is truly offering the best deal.

To do that, you have to look at the policies. If the coverage isn’t there, that low price isn’t a bargain after all.

While the minimum limits of liability coverage vary from state to state, I would recommend staying with at least $100,000 in coverage, e.g. 100/300/100.  Even if your state only requires $20,000, it’s not worth the risk.

It’s not worth going with less than that and facing financial ruin just to save a few dollars a month.

Here is a real-life example to show you how quickly that coverage can be eaten away. A friend of mine who works as an orthopedic surgeon got into an accident recently. My friend’s car was totaled, and it caused a few days of missed work. Just that alone can add up quickly to over $25,000 in damages.

#3. Is Pay-Per-Mile Insurance Right For You?

If you’re like me, you can get a lot of benefit from switching to an insurance company that bases their rates off of how many miles you drive. That’s what I just did. I switched to Metromile, and it’s working out great for me. Since I work from home and drive under 5,000 miles a year, it makes perfect sense for me.

If you have a long drive to work every morning, obviously this isn’t going to be the right insurance for you.

Progressive is another company that offers a pay-per-mile program. But their program also tracks your driving behavior. So if you hardly ever get tickets and are a great driver (or want to really change your driving behavior), you may be able to save a chunk of change by switching to them.

#4. Raise Your Deductible

If you seem to be a magnet for hitting deer or you’ve been in multiple fender benders, you won’t want to implement this tip. But if you’re a safe driver and you’ve been fortunate to have a near spotless driving record, you could increase your deductible.

That will save you money on your monthly or annual payment for your insurance.

#5. Do You Need Collision Coverage?

If your car isn’t worth much, you have the option of dropping collision insurance altogether.

When you drop collision, you do assume some risk. If you cancel it, you won’t be covered for damage to your car if you’re at fault. You also won’t be covered for damage to your car if you hit something, such as a pole.

One general rule of thumb to guide your decision is to carry collision insurance if your car is worth 10 times more than the insurance premium. If your premium costs $1,000 a year and your car is worth at least $10,000, you’d be wise to carry it. But if your car is worth $5,000 and you’re paying a premium of $1,000 a year, you might want to consider eliminating it.

That rule of thumb only applies though if you’re a good driver. If you’re not, stick with collision coverage!

#6. Quote Insurance After Big Life Changes

Life is full of changes. And after every major change in our lives, it’s time to reevaluate things like wills, investments, and even auto insurance.

Things, like adding a teenage driver, improving your credit score, getting married or divorced, and moving, are all reasons to reevaluate your insurance needs. Adding a teenage driver, for instance, can be expensive. It serves you well to shop around to see what’s out there, so you’re not taking the first deal you’re offered.

#7. Increase Your Credit Score

If you’ve improved your credit score in the past year, it could pay off to shop around for your car insurance. Many people don’t know some insurance companies give lower rates to people with great credit scores.

Whether it’s fair or not, people with high credit ratings will pay less for their auto insurance.

To see what you can do to improve yours, check out Credit Karma. In just a minute, you can sign up online and learn what your credit score is. Then you can use the tips that will frequently be emailed to you to improve your score.

The Ways To Wealth’s Car Insurance Reviews

R.J. Weiss
R.J. Weiss is the founder and editor of The Ways To Wealth, a Certified Financial Planner™, husband and father of three. He's spent the last 10+ years writing about personal finance and has been featured in Forbes, Bloomberg, MSN Money, and other publications.

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