Posted on:
03/16/2006 11:19 AM | How much do you pay for Car Insurance every year?
Eight hundred dollars a year? One thousand? Two
thousand?
Whatever the amount you're paying now, you can slash that
amount by more than 50% by simply following a few simple
strategies. if you're willing to spend 30 minutes, I'll
show you how to save up to $6,000 on your Car Insurance
over the next 10 years.
Okay, here we go. Grab your Car Insurance Declarations
page (the page in your Policy that details all the
coverages you're paying for) and follow along. Make sure
you take some notes. If you don't have your policy, or
can't find it, call your car insurance company and get one
- they'll send it to you pronto.
STRATEGY 1 - Make sure you're getting all applicable
discounts for your vehicles safety features, such as:
- Front, Side or Head Curtain Air Bags;
- Automatic Seat Belts;
- Anti-Theft Alarms or Tracking;
- ABS or Traction Control....and many more.
Think about the safety features you have....and write them
down.
STRATEGY 2 - Review & Change Deductibles For Comp &
Collision.
Most Car Insurance Policies have two deductibles - one for
"collision" (you hit someone or someone hits you) and one
for "Comprehensive" (all other damage or loss).
For both of these, have at least a $500 Deductible -
preferably a $1000 Deductible.
Here's why - If you are currently paying a $100 - $250
deductible, you'll save up to 40% per year on your monthly
premiums by moving it to $500. That means if you're
currently spending $1,000 a year on insurance, you're going
to get to keep $400 every year. If you jump to a $1,000
deductible, you could keep almost $600 extra a year in your
pocket.
I can hear some of you saying, "Wow, a $1,000 deductible.
That's a lot of money". Yes it is.
So is paying $1,000 a year with that $100
deductible....versus $400 a year with a $1000 deductible.
The odd's are in your favor - go with the $1000
deductible.
STRATEGY 3 - Review & Change Property Damage Liability.
Have you ever seen a $100,000 mailbox? Car Insurance
Companies must have. Here's why....
Property Damage is not damage done to an automobile but
rather "property" like a mailbox or a utility pole. So,
why in the world would you need $100,000 dollars of
coverage.
In most cases, almost 100% of all Property Damage Claims
can be taken care of with only $50,000 of coverage. So
take a look at your policy to find out what you're
currently paying for. And if you have little or no Net
Worth, drop your coverage even lower - to $25,000 or your
States minimum. You can find your States minimum by
reviewing this web page -
www.mynewcarpurchase.com/car-insurance-coverages.html.
Here's what to look for on your Policy - Many of the
Policies today will have your Liability Coverage's listed
like so - 50/100/100 - The first two numbers refer to
Bodily Injury Liability Coverage. The 1st number is the
dollar figure covered per person. The 2nd is the dollar
figure per accident.
The 3rd number is the "Property Damage Liability"....that's
what you need to change. What does yours say?
STRATEGY 4 - Review & Change Bodily Injury Liability.
Although Bodily Injury Liability Coverage is a must, almost
all of us end-up overpaying for the coverage we need. This
type of coverage specifically covers:
- Any and all occupants of an automobile, whether it's
yours or someone else's;
- Any and all occupants of another vehicle;
- And Pedestrians
Your only goal with this type of coverage is to have just
enough protection to protect what is yours....in other
words, your assets. And in order to protect your assets,
you need to figure out what your Net Worth is - here's a
good site for calculating your net worth -
www.kiplinger.com/personalfinance/tools/networth.html?
A great way to slash your premiums is to have no more in
Bodily Injury Liability than what your net worth is.
Here's a common example of the coverage most people have -
If your Net Worth is only $20,000 and you have $100,000 in
coverage, you're throwing money away.
And if you have little, or Negative Net Worth, just get the
required State Minimums. You'll need this info to get the
lowest car insurance rates. Again, you can get see your
state minumums by going here -
www.mynewcarpurchase.com/car-insurance-coverages.html.
Here's what to look for when trying to figure out how much
coverage you have now. As I said before, most Policies
today have your Liability Coverage's listed like so -
50/100/100 - The first two numbers (whatever they might be)
refer to Bodily Injury Liability Coverage. In this example,
there is $50,000 in coverage per person and $100,000 per
accident.
What does your Policy say? Are you paying more than your
net worth? If so, change it.
STRATEGY 5 - Review & Change Uninsured/Underinsured
Motorist Coverage.
The Uninsured/Underinsured Motorist Coverage is a fantastic
deal for the Car Insurance Companies....and a lousy one for
you. This premium alone can increase your auto insurance
by a couple hundred dollars a year.
Most folks think that uninsured/underinsured coverage is
there to get your car repaired if it is hit by someone
without insurance....or someone with lousy insurance.
Wrong.
Any damage done to your car is already covered - by the
premium you're already paying for Collision.
First things first....check your policy if your paying for
uninsured/underinsured coverage now. If you are, then
check here -
www.mynewcarpurchase.com/car-insurance-coverages.html - to
see what requirements your State has.
If it's not required by your State, cancel it.
If the State you live in does require
Uninsured/Underinsured Coverage, make sure you have the
absolute minimum required. These minimums are not
advertised, change every couple of years and are very
difficult to find. So, here's how you handle this.
Do a Google Search for your State Department of Insurance,
go to the "Contact Us" page, find a phone number and call
and ask what the Minimums are.
Don't try looking for it. Finding the minimums listed is
almost impossible on most State Web Sites - they've buried
it so deep you'll never find it. Just call your State
Department of Insurance.
I know it's a bit of a hassle to get the info yourself.
Yet relying on the Insurance Companies to give you the
correct information isn't very wise.
STRATEGY 6 - Review, Change or Cancel No Fault & PIP
(Personal Injury Protection)
No-Fault Coverage, and it's Twin - PIP - started out as
great idea's. Your Premiums were actually going to be
lowered. Then the State Politicians got involved (at the
urging of Insurance Lobbyists, of course) and mucked it up.
You see, No-Fault insurance Coverage was originally
intended to have each individual's losses....covered by
their own Car Insurance Company - no matter who was at
fault.
Today, in many States, Car Insurance Companies are making a
ton of money on No-Fault because the Insurance Companies
convinced the State Law Makers to make "modifications."
Today, because of the these changes, Car Insurance
Companies have actually used the No-Fault Laws to reduce
payments on a claim made by a customer....instead of
reducing Car Insurance Premiums as it was supposed to do.
So, premiums keep going up-and-up and Insurance Companies
end up paying less for claims - Someone's getting rich on
that deal....and it's not you.
And to make matters worse, some States (with really, really
talented Insurance Lobbyist's) also require an additional
premium be paid on top of the No-Fault premium. This
beauty is called Personal Injury Protection (PIP).
PIP is a "wide" blanket" of Coverage and can provide
Collision Coverage, Hospitalization, Social Security
Disability, Workers Comp, Personal Disability Insurance &
Life Insurance you have. The problem with PIP and what it
covers is....
You Already Have Most, If Not All, Of These Coverage's
Anyway - You're Paying TWICE!
So, you need to do a couple of things:
Check here -
www.mynewcarpurchase.com/car-insurance-coverages.html - to
see if No-Fault Insurance and/or PIP Is Required in your
State;
Then - Check your Policy. If it's Not Required by your
State to have No-Fault/PIP Coverage and it's on your Policy
- cancel it. If No-Fault/PIP Is Required by your
State....take the absolute Minimum.
Here's a tip: If you must have No-Fault/PIP, ask for and
get a Deductible from your car insurance company.
STRATEGY 7 - Cancel Medical Coverage.
Medical Coverage, on most Car Insurance Policies, is a
promise to pay "reasonable" medical expenses for anyone who
is riding in your car should you have an accident...as well
as anyone in your car should it get hit by someone else.
Cancel It....you don't need it.
Why is that you say? Well, Medical Coverage as part of
your Car Insurance Policy, is a duplicate of your own:
- Medical Plan;
- Any Life Insurance Coverage you might have, as well as;
- The Liability Sections of almost every Car Insurance
Policy written in the U.S.
Think of it this way....Do you have a
Health/Medical/Hospitalization Plan thru work or an
Association you belong to?
Then why are you paying premiums for
Medical/Hospitalization Coverage on your Car Insurance
Policy?
Here's what's going to happen when you tell the Car
Insurance Company or Agent that you "Don't want the
Hospitalization/Medical Coverage" - you're going to hear
very slick "scare tactics" to "help" change your mind.
The Insurance Company employee will say "Well, if you're in
an accident, and it's your fault, who's going to cover the
Medical Bills for any injured passengers in your car"?
Here's your answer - Your family is already covered by your
Health/Hospitalization Plan. If anybody else is in the car
and they're injured - they're covered by your Bodily Injury
Liability coverage (see Strategy 4) that you're already
paying for....and their own Health/Hospitalization Plan.
So go ahead - save some more money and get rid of this
coverage.
STRATEGY 8 - Cancel Death, Dismemberment & Loss of Sight.
Do you have any of these Coverage's on your existing Car
Insurance Policy? If so - cancel them.
And if you're a first time car insurance buyer or, just
looking at getting several car insurance quotes - Don't let
anyone talk you into them!
Why?
Because they're an absolute waste of money. Most of these
optional coverage's are simply "glorified" Life Insurance
Policies with ridiculous provisions and horribly overpriced
premiums. If you need Life Insurance, make it a separate
Insurance Policy.
STRATEGY 9 - Cancel The Extras
Do you have "Roadside Assistance" or "Rental Car
Reimbursement" on your Policy? If so - cancel them.
And again, if you're a first time Insurance buyer or
getting a few car insurance quotes, don't bother with these
coverage's.
Why? Because they're way overpriced, are rarely ever used,
and limit what you can and cannot do.
For instance, some Rental Car Reimbursement" coverage is
almost $100 a year for each vehicle on your policy. So if
you have two cars, you'll spend almost $2,000 on rental car
coverage in the next 10 years - and likely never even use
it.
And "Roadside Assistance"? The Piece-of-Mind it offers
gets trampled by the premiums the Car Insurance Companies
want for this coverage. Roadside assistance is a good
idea. But use AAA for a cheaper solution.
STRATEGY 10 - Terminate Comprehensive & Collision Coverage
On Older Cars.
If you have an older car - by that I mean one that's worth
less than$2000 wholesale (The Amount a Car Dealer would
give you if you were Trading it in) cancel any
Comprehensive and Collision Coverage you have or decline
that option when getting a car insurance quote.
Here's why - If an 8 year-old car and a brand new car have
identical damage, the cost to repair both will be identical
as well, even though the 8 year-old car is worth
next-to-nothing.
You see, the cost of a Bumper and a Fender are the same -
whether it's for a brand new car....or one that is 8
years-old. That's why your premiums don't go down as the
value of the car goes down - your payments remain almost
the same, year-after-year-after-year.
BUT, the bottom drops-out of what you'll be able to collect
on that older car. For instance, if your car is "totaled",
your Insurance Company will only pay you the Wholesale
value of your car.
So, let's say your Car is worth $1000, but the total damage
is more than $4000, the Insurance Company is only going to
give you a check for $1000....minus your deductible, of
course.
So you might end up getting $500 back. Sounds like a lousy
deal....but that's how it works.
So, the rule-of-thumb is this - cancel your Comp &
Collision Coverage when your vehicles value is less than
$2000....or you'll be throwing your money away.
Okay - you've jotted down some notes and are ready to make
some changes to your Car Insurance Policy. So pick up the
phone and start slashing your premiums.
Enjoy the experience!
Tom O'Leary
Publisher - MyNewCarPurchase.com |
