It’s that time of year when my car insurance renews. Funny that car insurance ads have become sort of running stories. There is Flo from Progressive and the Gecko from Geico. I don’t take my insurance cues from TV, but clients have asked me what they can do to manage car insurance costs so I’ve put together a few thoughts.
First, there are the myths. I always heard that red cars, especially red sports cars, are more expensive to insure. The idea is that people who buy red sports cars are more likely to speed and end up using insurance. Turns out this is a myth. The sports car may be more expensive to insure because of the cost of the engine or other factors in fixing it but the color has nothing to do with the insurance company’s calculation. How do these things get started?
So if the color of the car doesn’t affect insurance rates, what does? And what can we do to keep rates as low as possible? As part of our ongoing Savings Series, here are my top five tips:
1) Be a good driver
It goes without saying that if you have a good driving record, insurance companies are more interested in selling you insurance and giving you a break on the price.
2) Shop your policy around
This takes a time commitment every few years but it’s usually worth it. Companies compete for your business. If you don’t look around at competitors every few years, you may be paying more than you need to. Also, consider bundling car and home insurance. Some companies give you a discount for doing both.
3) Raise your deductible if you have a good emergency fund
The insurance company will charge you less if you have a larger deductible – the amount you pay before the insurance coverage kicks in. If you have a good emergency fund (3 – 6 months of living expenses), you can manage a larger deductible and over time, save money by paying a lower amount for insurance coverage.
4) Keep a good credit score
Many insurance companies look at your credit score as an indication of the risk you pose as a driver. Keep your credit score high and you’ll likely see lower insurance rates.
5) Drop certain coverages
If you have an older car that is paid off, consider dropping Comprehensive and Collision coverage. The idea here is that your car is old enough it isn’t worth fixing if something big happens to it. Comprehensive covers your car if it is damaged by outside forces such as a tree or someone stealing it. Collision covers your car if it hits something. You still need to cover damage to others and yourself but your own car doesn’t need to be covered for replacement anymore. If, however, you love your old car and want to get whatever is available if something happens to it, go ahead and insure it. Just know that you might not get enough to put it back in the condition you had it.
Happy Driving
P.S. If you have questions about this article or other questions you would like answered, please contact us at info@symphonyfinancial.net. We might even include your questions in a future article so everyone can learn the answers.
Kristin Rodriguez