Auto insurance taking a bite? Tame the rate beast

Auto insurance taking a bite? Tame the rate beast

Have you ever looked at your car insurance bill and felt overwhelmed?

This past summer I got to that point. I have two teenage drivers, and when my younger child transitioned from student to full-fledged driver, our bill skyrocketed. So saving money became more than an academic exercise. 

For those looking to cut auto insurance costs, here are a few avenues to explore:

  • Update discounts. Defensive driving and good student discounts are just two of the many ways you may be able to save. At USAA.com, there’s a button to click to highlight a number of potential savings and discounts. Make sure you’re getting every cost reduction for which you’re eligible.
  • Increase deductibles. The higher the deductible you choose, the lower the premium. But remember that the deductible is what you could be required to pay if something goes amiss. Make sure you have at least that amount set aside in savings before using this strategy. 
  • Drop coverage. Lenders typically require comprehensive and collision coverage, but if you own an older vehicle outright you may be able to save by dropping this coverage (not your liability coverage). Still, this could leave you in a bind if your car is seriously damaged or totaled, perhaps in an accident or by severe weather. Again, make sure the liability coverage (bodily injury, property damage, etc.) is aligned to protect your financial assets; this is an area where you don’t want to come up short.
  • Save with multiple products. Insurance is a business, and insurers want yours. That’s why many provide discounts for additional products or lines of coverage. More coverage in one place could mean savings. 
  • Manage credit responsibly. Some insurance companies use credit-based insurance scores to forecast claims, and that can affect your rates. So add a potentially lower insurance bill to the many reasons to maintain good credit. 
  • Automatic payment. Set up an automatic draft from a checking account or a recurring payment, and you could save a few dollars. An added bonus: you won’t forget to pay and incur a late penalty. I did this when I was retracing my steps for this article, and it reduced our premium about $50 every six months.
  • Drive safely. A good driving record is going to help with auto insurance rates. If you’ve got young drivers in your house, consider programs to teach them habits that will keep them safe and keep down insurance costs over the long haul.

There are a lot of potential cost-cutters, but USAA has made it very easy to explore savings options. I spent a few minutes dialing in to discuss a few of our changes, but the end result was several hundred dollars in savings. Visit USAA.com and click on “Auto Insurance” to get started.  

 

J.J. Montanaro is a certified financial planner with USAA, The American Legion’s preferred provider of financial services. Submit questions for him online.