1. Take the Bus or Ride Your Bike to WorkIf you drive more than 3 miles to work right now, you’ll probably save 20 percent off your car insurance bill if you quit commuting to and from work. If taking the bus or riding a bike aren’t practical where you live, consider carpooling. Many insurance companies offer good discounts on car insurance if you carpool.
If you’re the driver of the carpool, be careful. It’s okay for your passengers to chip in on your gasoline and other expenses, but don’t charge for the ride or your car insurance may be null and void.
2. Buy Cars Favored byCrash-Test Dummies. Every year, the Insurance Institute for Highway Safety conducts crash tests of new cars. There is a strong correlation between how well vehicles score on crash tests and how much they cost to insure — the better their scores, the lower their insurance costs. Buying a safe vehicle not only protects you and your passengers but also helps keep your insurance costs down — and that’s a hard combination to beat! You can find crash-test results for both new and used cars at www.iihs.org
3. Choose Higher DeductiblesLarge lawsuits, without enough insurance, can ruin you financially, so you don’t want to try to save money by cutting your coverage. That said, the physical-damage coverage on cars typically costs 40 percent of the total insurance bill. If you just raise your collision deductible to $1,000 and raise your comprehensive deductible to $500, you can save 10 percent to 15 percent on your entire insurance bill without decreasing your major-loss coverage in any way.
4. Sell All Your Lead ShoesDon’t speed. Obey traffic laws. Drive defensively. In other words, keep your driving record clear of tickets and accidents.
Most insurance companies give people with clear driving records a gooddriver discount of 20 percent to 25 percent. One at-fault accident or two moving violations will generally cause you to lose the discount for three
years. How you choose to drive has a huge impact on how much you pay for insurance.
5. Put Your Teenage Driver Up for AdoptionParents always want to know how to minimize their insurance costs when they’re adding a teenage driver to their insurance. Here’s my crude rule of thumb I use with my own clients:
6. Don’t Drink and DriveI hope you’re obeying this law because you care about your own safety and the safety of those around you. But if you want a financial reason for always having a designated driver, note that a driving-under-the-influence (DUI) ticket leads to an automatic cancellation of your car insurance. Then, for about three years, your rates with a higher-risk insurance company (a company that specializes in insuring high-risk drivers) will be about three times greater than they were before your DUI; and for another two years, they’ll be about twice what they were before your DUI. In other words, the price you’ll pay for driving drunk (if you’re lucky and don’t hurt yourself or anyone else), will be five years of incredibly expensive car insurance.
7 Maintain a High Credit ScoreIn the past few years, insurance companies have begun offering large discounts of up to 40 percent for people with great credit scores. Statisticians apparently have found a strong correlation between a person’s credit rating and the probability of that person having accidents: The higher the rating, the fewer the accidents.
8. Insure Your Cars and Homewith the Same Company. This strategy benefits you in two ways:
✓ It reduces the chance of gaps in coverage.
✓ You can usually save 10 percent to 20 percent on both policies, which
usually means a few hundred dollars a year extra in your pocket. Many insurance companies also give you additional discounts if you have your umbrella policy with them, too.
9. Don’t Duplicate Your Health InsuranceDon’t buy any more insurance than your state requires for reimbursement of medical bills in a car accident.
10. Don’t Submit Small Claimsfor Property Damage
You don’t want to automatically file claims for small property damage that you cause — whether it be to your car or to the other guy’s car. Before you file a claim, talk to your agent about what kind of impact this claim will have on your rates. Do you have other tickets or accidents? If so, this additional claim might seriously jack up your premiums. An at-fault claim usually raises your rates about 20 percent for three years.