"Drivers who switch could save hundreds on their car insurance."
You've no doubt seen the ads, but it sounds too good to be true, right? Don't dismiss the claims too quickly. It turns out you can save big by switching, especially if it's been awhile since your last policy review.
"Rates change often, your circumstances change often, and many other factors are constantly in flux -- so make it a habit to compare rates at least every six to 12 months," says Joel Ohman, certified financial planner and founder of CarInsuranceComparison.com. "Anything that you can do from your recliner with a laptop in 15 minutes that has the potential for hundreds of dollars of savings is worth doing."
Not all drivers save by switching, but it is worth shopping around. Life circumstances change often -- and auto insurance offerings change, as well -- so you may qualify for new discounts. If you've made progress in raising your credit score, for example, ask your current provider to rerun your credit report. Better credit means better rates. If they're working from an old score, you're probably missing out on savings.
"Shop around, and get specific price quotes for your specific situation. Be sure that all available discounts are tallied up and included into your final rate so you can make a true apples-to-apples comparison," Ohman says.
To get the best rates:
--Get your score. Know your credit score, and shop accordingly.
"If you have a great credit score, all the big companies will give you a great rate. If not, then hit the small mom-and-pop stores first," says Richard Phillips, independent insurance agent in Allen, Texas. "When you have continuous coverage, you will get the 15 percent transfer discount the big companies give."
--Package your policies. Most companies offer significant savings for drivers who purchase multiple insurance policies.
"Always try to go with multi policy," Phillips says. "Most of the time the discounts are just too good."
Auto, motorcycle, boat and home or renters insurance typically qualify for package rates. Some companies even offer discounts for bundling auto and life insurance, says Charlie Schein, an independent insurance agent.
--Limit claims. When possible, limit the number of claims you file -- especially collision claims.
"Never file on collision insurance. Rates go up. Period," Phillips says.
Even the smaller claims can cost you, so consider the potential savings for paying out of pocket before you file. If you're looking at your third windshield replacement in a year, for example, it may be cheaper in the long run to pay for the glass rather than risk a rate hike.
"One at-fault accident may not hurt your rate, but multiple not-at-fault accidents or multiple glass claims will definitely affect your insurance score adversely," Schein explains.
--Take a class. If you haven't had a driver safety class since high school, it may be time for a review. Some companies offer discounts for drivers who take refresher courses, which are offered through AAA and AARP, Schein says.
--Get good grades. For teen drivers, higher GPAs mean lower rates, according to Schein. Many companies even offer good-student discounts to full-time college students up to age 24.
Also, be sure to mention your alma mater. Some providers offer reduced rates for drivers with degrees, while others offer discounts for alumni association members.
--Shop smart. While driver discounts can help keep costs down, not all insurance savings are smart. Don't sacrifice proper coverage just to save a few bucks.
Many states require a low minimum personal liability and personal damages, or PLPD, coverage, but that, like uninsured/underinsured motorist coverage, protects drivers and their financial assets in the event of an accident.
"Your liability protects you from being sued," Phillips explains. "The difference between the minimum and $100,000 of coverage is around $50 every six months. That's a lot more coverage. The same with uninsured motorist coverage. It's cheap. Take it -- as much as you can."
Keep the roadside assistance, as well. For a few extra bucks each month, you have access to emergency assistance like towing service, locksmithing and help with changing flat tires, often with no immediate out-of-pocket expense.
On the flip side, don't buy more insurance than you need. If you have adequate health insurance, for example, you may not need the additional medical coverage on your auto policy, Phillips says. Likewise, you may be able to skip the rental insurance if it's included in your collision coverage.