A client of mine named Chuck stopped into my office recently. He is married with a two year-old and a baby on the way. Both he and his wife work so they have two new cars to get them back and forth. They were paying roughly $2,950 for the year in insurance premiums with a $250 Broad Form collision deductible on each vehicle. Chuck was telling me that with the new baby coming, their expenses were rising and they needed to do something to save money on their insurance. After reviewing his policy with him, there were five things that he was able to do to save money. He ended up saving $1,050 a year and took his premium down to just under $1,900. You, too, can look into these five ways to save on your premium:
1. Switch from broad form to regular collision coverage
If you have broad form collision, you might want to consider switching to regular collision. Before you do, you must understand the difference between the two. With broad form collision, your deductible is waived if you are not at fault in an accident. With regular collision, you pay the deductible regardless of fault. Most insurance companies offer a discount if you opt for regular collision. There is also a way to be reimbursed for your deductible if you didn’t cause the accident. Michigan has a mini-tort law. Under this law, you can be reimbursed up to $1,000 from the other person’s insurance company if they were considered responsible for the accident. With this law, you have to know who hit you, and they have to have insurance. There is some risk with switching to regular collision, but with many companies the savings can be worth it.
2. Select a deductible you can afford
Most people want the lowest deductible possible but you should actually have the highest deductible you can possibly afford. For one thing, the higher your deductible, the lower your premium. Secondly, having a higher deductible can help you make more responsible claims. Insurance should not be used to pay for every loss that occurs, just the ones you cannot afford. Plus, the more claims you make, the higher your premium will rise. In this situation, higher is better. If you can afford to pay $1,000 when something major happens, then you will be better off and you will save as a result.
3. Join a group such as credit union, mature group.
If you’re not in a group and your insurance company offers a group discount, then join one. They can help you save up to 20%. If you are over 50, join a mature group such as AARP (or the conservative alternative AMAC). It may cost you about $17 to join a group but could help you save up to $200 a year.
Other groups that may also qualify for discounts include Credit Unions, Alumni Associations, Veteran clubs (American Legion, VFW, etc), Unions, Chambers of Commerce, or Fitness Clubs.
4. Start another policy
I know, nobody wants to buy another insurance policy but if you’re not getting a multi-policy discount on your auto policy then you are missing out on huge savings. If you own your home, chances are you have a mortgage that will require you to have insurance. If you do, make sure to purchase your home and auto insurance from the same company. If you don’t own your home, purchase a renters policy. This policy will cover your personal property, and is often very inexpensive, while still getting you that multi-policy discount. In most situations, the discount on your auto policy will cover the cost of the renters policy and then some. There may be other multi-policy discounts available for life and umbrella insurance from some carriers as well.
5. Pay in full – get a discount
If you can pay in full and the insurance company offers a discount for doing so, do it! Many companies offer a paid in full discount of up to 10%. This also avoids any service fees that a company charges for making payments. They can save you anywhere between $4 - $8 a payment. If you can’t pay in full for the year, ask your agent about a 6-month policy. Those usually offer a paid in full discount as well.
If you would like to submit your information and see what discount we can do for you, please click on the link below.
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by Matthew Perry, EW Smith Agent