Hello everyone! Welcome to episode four of The Risk Rewarded.
Today I’m going to go over the best way to get the lowest, most accurate auto insurance rate.
Beforehand, you will need to prepare for a significant amount of time ahead of when you are due. You’ll want to ask for auto insurance quotes about two weeks out because companies have a discount for quoting into the future. Now this discount typically does bleed away over about four years, so your rate will naturally increase because it isn’t a permanent discount.
After that, you will want to disclose everyone who lives in your household. This way, when they do underwriting and they figure out that somebody else is living in your household, you don’t have a rate increase because you did not list them. Most companies require that you list everyone that is in a household. Sometimes they let you prove that they have their insurance with another carrier, or sometimes they require an exclusion form to be signed. Now, they will almost always figure out that somebody lives in your household, especially if they get any mail or if they have your address listed on their driver’s license. It will show up on many reports that insurance companies run, so it’s very difficult to try to hide a driver and it’s not advised.
Now, if you have a teenage driver in the household and they’re 18 and you’re like “Oh, I just want them to pay for their own insurance”, a majority of the time it is cheaper for them to be on your policy. So if you can work out a deal for them to pay their portion to you, that is the most efficient option from a pure dollar cost to save for insurance rates in general.
You will also want to try becoming very comfortable with paperless billing and documentation. That is a fairly significant discount on auto insurance policies, and it allows you to get everything up to date right away. Most states accept digital forms of identification for auto insurance, so this makes it convenient to pull up your ID cards if you have the company’s app on your phone.
You can also use their telemetric device, which will generally save you anywhere from 5% to 30% on your auto insurance, depending on your driving habits. It’s not recommended if you drive through stop-and-go traffic in the city as it’s very difficult to do well, or if you drive a lot of miles and you have uncontrolled starts and stops.
You also will want to consider carrying higher deductibles. At this point, I wouldn’t recommend anybody carry a $ 250 or lower deductible on auto insurance. You just end up paying more in six months than the amount that you would save in case of a claim. In general, try to avoid smaller claims like windshields, roadside assistance, and things of that nature. You should begin to feel comfortable just taking care of things on your own so you can make the claims you want to make in the future, because companies review your claim history. So if you have four or five small TOE claims, some carriers can deny offering you a quote altogether. So, in most situations, it would be better to pay the smaller claims out of pocket.
For windshields, I realized that some of them are starting to cost significantly more with electronics built in and the need to have them recalibrated. I personally had to replace a windshield recently. But I found that it’s cheaper to find somebody that specializes in glass. A lot of times you can get that for less than $300. After that, you find a dealership that only charges for the time that they spend recalibrating the windshield rather than the time that the car is there. In most cases, you can get your vehicle recalibrated for less than $200. By doing all of this, you can cover the overall cost for less than $500 when many other carriers like Safelite will charge over $1,000 to do all of it together. So in the case of glass panes, it’s better to do some research rather than just pay for convenience with somebody that drives out and does it all.
For roadside incidents, rather than depending on your insurance carrier to send somebody out, they will always reimburse you if you contact somebody else that’s closer to you. Most companies do not have a team of tow truck drivers, so they just use Google, Apple, or whatever search engine you’re using, and just look for somebody in the relative area that you are for towing.
In general, you will save a significant amount of time if you just contact a tow carrier directly. Now, there are membership programs like AAA that do have a network of tow drivers, but anytime that you’re in a very remote area, extended wait times is expected since you can’t expect there to be just a team of tow truck drivers in every location. It’s just not feasible for that to be profitable and it would cost an enormous amount of money.
Another thing that impacts rates in many states is credit score, but the reason isn’t exactly clear and it often confuses a lot of people. For some reason, the stats guys have linked poor credit to having a higher claim frequency. I guess they could theorize that they’re less likely to maintain their vehicles or they’re potentially more stressed throughout the day and cause more accidents as a result. So as with anything else, you want to monitor your credit and have it as good as possible, as that will save you money on nearly every aspect of life. After all, many companies have determined that credi dictates the cost on virtually everything for you at this point.
Companies are also starting to increase rates as you get into your 70s. They have more data behind drivers in that age group because people are driving longer and, in addition to my experience, older drivers drive consistently until they have two or three incidents. After that, they just stop. For insurance carriers, this means that there’s no way to recoup their premium at that point. So you will start to see, especially as you get into your 80s, that the rates will get closer to what somebody pays for a teenage driver, and that’s just due to claim history and not being able to recoup the premium after.
The other idea that you can utilize when shopping for auto insurance is to make sure you either bundle your home insurance or renter’s insurance with it. A majority of the time, that will save you money in the long run. I realized that sometimes you can get one policy slightly cheaper than another one. Unless it’s a significant difference, it’s not advisable in the long run. You will. have much more stability in your rates if you have both together. The only time that I would say this probably doesn’t apply is if you have an independent agent advising you otherwise, as they’ve checked those aspects for you.
Other aspects that will impact the quote that you receive on auto insurance:
Now, do not underreport your mileage. As if you say something like I only drive 3,000 miles per year, they may audit your mileage and ask for, um, service reports of when you’ve gotten your oil change and stuff like that to prove how many miles you drive. They will audit it and then just increase the rate from the quoted premium, especially if you’re still working.
I’m going to go back to the deductible briefly. What I would recommend most people look at from a deductible standpoint is around $1,000 at this point. You can carry $500 on comp, but for collision in general, the most bang for your buck for keeping stability on the premium would be $1,000. In most cases, that lowers your annual premium by $200 – $300 by going from $500 to $1,000. So in my opinion, it’sl worth saving that amount of money just in case you have a claim.
This brings us to a key point that some companies have a deductible savings bank or an accident forgiveness program that you actually pay for upfront. I do not recommend any of those programs as you’re paying to potentially save money for a future claim. It doesn’t really make that much sense because you can always take your own money and save it in an account. Honestly, that seems to be more advisable in my opinion.
Now, I know I did mention disclosing all drivers in the household and things of that nature. However, there are situations where this doesn’t necessarily make sense. As people get older, such as if somebody’s approximately over the age of 22 and they have their own vehicle while they live with you, it typically makes sense for everybody to carry their own insurance policy. That way, in case somebody has a claim or a ticket, you’re not all impacting each other. This is especially recommended if you took the advice from the previous episode on having a teenage driver open a credit card early on in their name to build a credit history, as that’s one of the biggest impacts for younger drivers on insurance rates.
And that will be the end of this episode that covers most of the discounts available and how to make sure that you’re getting an accurate auto insurance rate.
I will likely have other episodes in the future going over additional items in more detail, but I hope everybody has a great rest of the day. Thanks for tuning in. Make sure to like, subscribe, and comment. If you didn’t like it, also give me that feedback.