AUTO INSURANCE 101
Everything You Wanted to Know About Auto Insurance, But Were Afraid to Ask
My parents loved luxury cars; Cadillacs and Mercedes. Although they indulged in these extravagances, they paid cash for their gently used luxury cars. They rode around in style for a bargain price. Meticulous about maintenance, they kept their cars forever which kept their transportation costs rock bottom. Mom and dad spent less on transportation than many Ford owners while indulging in their penchant for high end cars.
Since they rarely bought new cars, in spite of their luxury wheels, their auto insurance premiums were cheap.
One product that may decline in price over time, is auto insurance. Keep your cars long enough (and don’t have an accident) and your insurance costs will decline.
Secrets to Keeping Insurance Costs Low
Older Cars Cost Less to Insure
The number one method to reduce insurance costs as well as transportation costs is to hang on to your cars awhile. Actually, I think folks are getting the message. According to a recent LA Times article, the average age of cars on the road today is 10.8 years.
So, keep your car for awhile. Now, for more auto insurance information and strategies.
When I became an adult, the world of insurance was a mystery to me. They had their own language, a crazy pricing structure, and each state had different insurance laws. Over the years, I’ve learned the ins and outs of controlling car insurance costs.
Ask for Discounts and Bundle Policies
To make hunting easy, search for a car insurance quote online. In your follow up phone call with the insurance company, always ask for car insurance rate discounts. There are organizational discounts, good student discounts, good driver discounts, and driving course discounts. Sometimes a company will lower your auto insurance if you bundle your renters or homeowners insurance as well. Always ask for a discount, you may be surprised at how much you save.
Save up for a Large Deductible
The higher your deductible, the lower your insurance costs. We have $1,000 deductible which means that we pay the first $1,000 on any insurance claim. That might sound like a lot of money, but think about it. If you haven’t had an accident in years, wouldn’t you rather save money each year on your premiums? Save up in an emergency fund, so that if you have to pay the deductible you have the funds, but in the meantime, your premiums stay low every year with a high deductible on your policy.
What is this %!&?# Insurance Language?
I was baffled by “insurance terms”. It took awhile to understand what the strange words such as “premium” and “insured” meant. Is premium a prize for purchasing insurance? It sounds nice doesn’t it? To simplify the jargon, here’s a glossary of insurance words:
Insurance: Financial reimbursement when disaster strikes. Buy auto insurance and after a car wreck you get money from the insurance company to repair the damage.
Insurer: That’s the insurance company.
Insured: That’s you, the individual covered by the insurance policy.
Policy: The name of the insurance agreement or contract between you and the insurance company. You are the policy holder if you buy the insurance.
Premium: The amount the insurance company charges to purchase the insurance policy. It’s a bill, not a prize.
Bodily injury liability: This part of your policy pays for the injuries you cause someone else. This type of coverage is usually required.
Collision: The coverage under this section pays for your damages, whether you get in an accident with another or run into a tree. (If you’re in an accident with another vehicle the insurance company will try to get the other party to pay for your damage).
Comprehensive: Any non-accident related damage is covered under this section. If a kid hits your car with a rock, the comprehensive portion (after deductible) covers the costs.
That wasn’t too bad was it?
Where do I Get the Insurance?
Shop around. There are lots of automobile insurance companies. Spend a few minutes searching for a quote online, make a few phone calls, and find the best auto insurance fit for you.
Happy car insurance shopping.
Did I miss any tips? How do you snare low car insurance rates?
image credit; google images_plentywood