Understanding The Importance Of Motorcycle Insurance

2 Easy Ways To Decrease Your Auto Insurance Premiums

by Raymond Gibson

If you are like most people, you might grimace when you shell out the cash for your monthly car insurance payment. On average, Americans spend $1,510 per year, or about $125.83 per month on car insurance alone. Unfortunately, you might be spending more than you need to. Here are two easy ways to decrease your auto insurance premiums, so that you can do something more fun with your money.

1: Increase Your Deductible

If you ever get into a car accident, you will be asked to pay a deductible, which is a set cost that you cover before your insurance kicks in. Because you never know when you will be involved in an accident, most people shop for a policy with the lowest deductible possible. Although this lower deductible might make it easier on your checkbook if you are ever involved in a wreck, chances are that it will cost you a lot more in the long run.

Typically, the lower the deductible, the higher the monthly premiums will be. In fact, research has shown that most people can lower their monthly premiums by as much as 9% by increasing their deductible from $500 to $1,000. If you really want to save some cash, consider raising your deductible to $2,000, which could save you as much as 16%.

To put those numbers into perspective, if you normally spend $150 a month on car insurance, raising your deductible to $1,000 could make your payment  $136.50, while a $2,000 deductible would make your payment $126.00. If you go a few years without an accident, that savings could really add up. If you are worried about not being able to afford a higher deductible, set aside an emergency fund just for your car. Save the total amount of your deductible, so that you have it ready in case anything happens. If you don't need it during the year, you might be able to do something else with the cash.

2: Inspect Your Coverage

When you initially signed up for insurance, you probably looked for a policy with all of the bells and whistles. However, your insurance needs can change over time, and you might end up paying for coverage that you won't use.

Talk with your insurance agent to see an itemized list detailing your auto insurance policy. Consider your need for the following add-ons, which you may or may not be paying for:

  • Comprehensive Vs. Liability Only: You might feel differently about fixing up your brand new SUV than you do about repairing that old junker that you drive to the dump occasionally. Unfortunately, if you don't double-check your coverage, you might be paying for full comprehensive coverage on that old beat-up truck. If you have a car that you don't necessarily want to repair, consider switching it over to liability coverage only, so that you can save some money.
  • Roadside Assistance: How likely are you to end up stranded in the middle of the road with nobody to call? Although roadside assistance coverage might be important for people who travel far away from home regularly, you might not need it if you only use your car to drive to church once a week. Think about how frequently you are far away from home, and who could help you if you got stuck. If you have family members close, you might not need to pay the extra money for roadside assistance.
  • Rental Cars: Some policies offer rental car coverage that can help you if you are involved in an accident. However, if you have more than one car, you might never use this coverage, even though you will pay for it every month.

As you go through your auto insurance policy, think carefully about your potential risks and liabilities. Remember that you can always add coverage back later, when you aren't in as much of a financial bind.

  Saving money on car insurance might free up your monthly budget, so that you can put some cash towards your other needs.