How I Cut My Car Insurance Premium by $2,680

Shop around

While your insurer might be raising rates this year, others could be holding steady or even lowering them. That’s because each insurance company uses its own formula when determining premiums, says Diana Moinot, founder of Moinot Insurance Group in Houston. What could be a strike against you with one insurer might not weigh as heavily in another’s calculations. “That can lead to hundreds of dollars in savings a year,” she says.

My husband and I have used an independent insurance broker for more than a decade to do comparison shopping for us. Brokers work for their clients, not for any particular insurer. They obtain and review quotes and policies from multiple companies. Most don’t charge customers a fee because they get paid a commission from the policies they sell, says Erika Tortorici, owner of Optimum Insurance Solutions, an independent brokerage in the Boston area.

If you prefer a do-it-yourself approach, you can get quotes from multiple insurance companies at once by comparing rates using marketplace sites such as Insure.com, NerdWallet or Policygenius. The process takes less than 10 minutes, Longero says. Make sure you have the Vehicle Identification Number (VIN) and driver’s licenses for all the drivers in your household you want to insure before you begin.

Compare apples to apples

But price isn’t the only thing to look at when soliciting insurance quotes. Check that the coverage matches what you currently have, “so you’re not giving up essential protection to save a few dollars,” Moinot says. Our independent broker did this for us when comparing quotes from other insurers.

If you’re getting quotes on your own, use your insurance plan’s declarations page (“dec page”) to do a side-by-side assessment of your current policy with the new ones you’re considering. Be sure to check the following:

• Coverages. Do you only have basic liability coverage, or do you also have personal injury protection, uninsured and underinsured motorist coverage, collision insurance and comprehensive coverage?
• Coverage limits. The limit for collision and comprehensive coverage is typically the cash value of your car. Liability coverage limits are expressed as three numbers, such as 100/300/100. In that example, the insurer will pay up to $100,000 for bodily injury per person, $300,000 for bodily injury per accident and $100,000 for property damage per accident. That’s the minimum coverage Moinot recommends, but she suggests upping those caps as you age. “I usually recommend the 250/500/100 liability limits for most [insured drivers] over 45 years old to protect their assets,” she says.
• Deductibles. This is the amount you pay out of pocket before collision, comprehensive, personal injury protection or uninsured/underinsured motorist coverage kicks in. Most drivers opt for $500 deductibles, according to Kelley Blue Book, but choosing higher amounts can reduce your premium. Moinot recommends obtaining a verified quote, which is more accurate because it uses your motor vehicle report and claims history to calculate your premium. Otherwise, the quote you receive could be lower than the rate on your final bill. 

If you use an online comparison tool that doesn’t require you to enter any personal details, you’re getting an estimate — not a verified quote.

Maximize discounts

When comparing auto insurance quotes, make sure all the discounts you qualify for are being factored into the rates you’re offered. Your current policy’s declarations page will show what discounts you’re receiving.  

Discount options and amounts can vary from insurer to insurer, so there are opportunities to save money by switching. For example, if you have young drivers on your policy, as my husband and I do, one company might give a bigger discount than another if your children have good grades or are away at college without a vehicle.