By in Insurance, Tips | 12 comments

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.

cheap auto insurance

Save on car insurance with an old car.

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


  1. Where I live, uninsured motorist is a “must have.” It doesn’t cost nearly as much as people think and it really helps if someone uninsured is at fault. With an older car and good driving record, my insurance has really gone down over the years.

    Little House

    December 7, 2012

  2. Good tips! I shop around every few years. I found my current company through a friend. I also found another company that is very competitive with similar pricing. The internet is a great resource to help you find insurance quotes.


    December 7, 2012

  3. Good tips Barb! Especially with the deductible and the age of the car. We plan on running ours into the ground and have done a similar thing with having a portion of our E-Fund to go towards a possible accident. We have ours through USAA. They have great service and bundle it with our homeowner’s coverage.

    John S @ Frugal Rules

    December 7, 2012

  4. @Krantc and John, I’ve had the same car insurance company for decades and as our cars age the premiums get ridiculously low. It’s the one insurance premium I’m satisfied with. Now if only our homeowners, life, and umbrella policies would only drop as well!!!


    December 7, 2012

  5. We’ve got our home and auto insurance bundled together, but I’m thinking about changing to the insurance. My wife’s work has an insurance company that gives employees a discount. Plus if we do automatic payments from her check we’ll receive another discount.


    December 8, 2012

  6. @Justin, Actually, it sounds like you’ve got a good deal with your wife’s work. I’m a fan of seeking discounts whenever you can.


    December 8, 2012

  7. Auto Insurance can be a serious bother, but its and absolute necessity for anyone driving a car. Educate yourself and know the ins & outs.


    December 9, 2012

  8. @Worli- Everyone will get in a fender bender at one time or another. AS you stated, you better be insured when you do.


    December 9, 2012

  9. All of my questions are now answered. I was really concerned on where will I get the insurance because it is my first time.

    Isabel Hytten

    March 3, 2013

  10. This is something I tell my customers that are going to have young drivers…. Pick a car that doesnt require full coverage… Your child can drive what ever car you allow them to drive but they must be rated on something so go with something that wont break the bank.

    Mistie O

    March 8, 2013

  11. Thanks for sharing this article, its been a really interesting read. I’ve never dealt much with aurora auto wrecking before. I’ve got a salvage project going on that I’m really excited about. Thanks for sharing!


    March 26, 2013

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    Lake Rose

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