Brag to Your Insurer and Save $400

The Motley Fool's Fiscal Fitness Boot Camp is in session! Every weekday this month, we'll walk you through a fresh money-saving/money-making tip as we work toward finding $2,000 in savings you didn't know you had.

Last week, we honed our negotiation chops by talking our way into better deals on cable TV and credit card interest rates. Today's Fiscal Fitness task will be a breeze in comparison: Get ready to make a phone call that could shave as much as $500 off your car insurance premiums.

Scoring better rates on car insurance is simply a matter of asking the right questions and being willing to take on a bit of the insurer's risk.

Up your deductible and pocket $328
If your current deductible is anywhere south of $500, you're probably paying a premium for your coverage, according to the Insurance Information Institute.

Simply increasing your deductible from $200 to $500 could reduce the cost of collision and comprehensive coverage by 15% to 30%. How does that translate into actual dollars-and-cents savings? Well, with the average annual premium around $820, that one move could put $123 to $246 back in your pocket. Increase your deductible to $1,000, and we're talking 40% or more in savings on your premium, or $328-plus.

Remember, the higher your deductible, the more money you will pay out-of-pocket before your coverage will kick in. Still, given the hair-trigger temper of insurers these days -- dropping customers like last-minute prom dates at the first sign of trouble -- paying for small claims with the money you save on premiums is a prudent move. The cleaner your record, the better your rates.

If you already have a high deductible, don't click away just yet. There are plenty of other ways to cut the costs of insuring your automobiles.

Drive less and save!
High gas prices got a lot of people in the public-transportation habit. If you've stuck with it -- or for some other reason are driving less -- Mother Earth isn't the only one showing her appreciation.

According to a SmartMoney survey of major auto insurers, driving fewer than 7,500 miles annually can earn you discounts of 10% to 34% on your premium from insurers like State Farm and Progressive (NYSE: PGR  ) . Customers whose one-way commute clocks in at less than 10 miles may be eligible for an additional 5% discount at some insurers. Insurers require different levels of proof, ranging from a simple phone call letting them know you're spending less time behind the wheel to using an electronic mileage/speed diagnostic device.

Every little bit helps: A 10% discount means $82 off the average annual cost of coverage.

Brag to the sales rep for even more savings
As long as you're on the horn chatting up the insurance company rep, inquire about other potential discounts. The Insurance Information Institute has a checklist of discounts that can lower your insurance costs, including:

  • Insuring more than one car.
  • No accidents in three years.
  • No moving violations in three years.
  • Drivers over 50-55 years of age.
  • Taking a driver training course.
  • Taking a defensive driving course (see "More ways to save" below for details).
  • Having a car with an antitheft device.
  • Having a car with safety features such as air bags, antilock brakes or daytime running lights.
  • Being a student with good grades.
  • Combining your auto and homeowners coverage with the same company.
  • Having college students away from home.
  • Being a longtime customer.

The list may seem long, but the savings can stack up significantly. For example, combining your homeowners and auto coverage is often worth a 10% to 20% discount. Young drivers who are students acing their classes could get a 25% break. Parents who shipped Junior to college at least 100 miles away could cut their costs by as much as 40%. Given how much insurers like Allstate (NYSE: ALL  ) advertise these discounts, it's criminal not to take advantage.

More ways to save ...

  • Use your connections: Look closely and you may find extra discounts in places you wouldn't expect. Berkshire Hathaway's (NYSE: BRK-A  ) (NYSE: BRK-B  ) GEICO unit gives discounts to members of a number of organizations and associations -- including Berkshire shareholders. Alumni associations and other groups often negotiate better rates for members by delivering volume business. So inquire.

  • Go to driving school: Taking a defensive driving course can nab you a break on your car insurance premiums. For those 50 or older, the AARP's Driver Safety Online Course makes it easy to earn class credit. But be sure to first check with your insurance agent or customer service rep to find out if your insurer offers deals for schooled drivers (and if an online course is kosher with your state laws). A defensive driving course can result in an additional 10% discount.

  • Stop paying for out-of-date coverage: If it's been awhile since you reviewed your policy, do that now. Make sure you're not paying to insure a child who is no longer on your policy, or that you're not still paying for the value of your car when it was new. According to III.org, dropping collision and comprehensive coverage accounts for 40% or more of the cost of your premium. Since it covers only replacement value, consider dropping it if any claim payment would not amount to much more than your premiums minus your deductible.

  • Consider the car you drive: What car you own can have a big impact on insurance costs. Check out Insure.com's list of most- and least-expensive cars to insure based on average annual premiums. Drive a Nissan (OTC: NSANY.PK) GT-R? Prepare to shell out more than $2,500 to insure your ride. Sports cars from Ford (NYSE: F  ) and Toyota's (NYSE: TM  ) Lexus division also show up on the high-cost list. In contrast, zipping around town in a Hyundai Santa Fe will cost you just over $800 to cover -- around 67% less a year.

  • Comparison shop -- but carefully: Before you switch, consider the cost of losing any loyalty or good-driver discounts you've earned. Also be aware that getting a full-fledged quote for coverage may appear on your credit record and your insurance record. If you decide to shop around and want to compare the majors with some locals, go to the Independent Insurance Agents & Brokers of America website or InsWeb.com to find someone local to give you a quote. If you're serious about switching, first look into the insurer's consumer complaint record, which you can do at your state's department of insurance via the National Association of Insurance Commissioners website.

Tune in throughout the month for the latest installments of our Fiscal Fitness Boot Camp, as we stay on course to produce at least $2,000 of savings for you.

As Fool.com Fiscal Fitness Boot Camp instructor Dayana Yochim learned in 2004, the minutes after your car is stolen is NOT the time to familiarize yourself with your coverage. (Relive her pain via Dude, Where's My Car? Seriously.) The Fool owns shares of Berkshire Hathaway, which is a Motley Fool Inside Value selection. Berkshire Hathaway and Ford Motor are Motley Fool Stock Advisor picks. Dayana's current auto -- as well as the Fool's disclosure policy -- is protected by The Club.


Read/Post Comments (6) | Recommend This Article (10)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 14, 2010, at 4:35 PM, middlelittle wrote:

    One way we cut our insurance was to check out which person was rated on which car-or which driver the company believes is dirving which car. One of our cars is considered a sports car (I believe). Geico-our company for almost 19yrs-was saying that the most expensive driver was driving the most expensive car most of the time.

    Having 2 daughters getting their liscences within a year of each other I had to fight about this 2x in about 3 months.

    Every time I talk to them I tell them I am the only driver of that car, then make the joke, unless my husband signs the waiver of special permission (insert giggle here) but not far from the truth.

    The first time it saved us a little over $100 A MONTH!!!

    We only found out about this little scam they were pulling, from my husband's boss. So check it out,, you may be suprised at what you find. Then thank Laura.

  • Report this Comment On January 14, 2010, at 7:33 PM, bltlioness wrote:

    I agree laura omg, my mom went into an insurance agency and they kept quoting her a quote way up there, they refused to budge so she didnt go thru them but reason it was so high was they said because of her son living in the home a teenager, and her husband, funny thing is she kept saying she was the only one that drove they didnt care, the teen didnt have a license and her husband was legally blind, but they kept saying well they cant prove neither her son or husband will drive so they have to be included on the policy lol... yeah a blind man driving without a licence yeah i can imagine they would charge her an arm and leg.

  • Report this Comment On January 15, 2010, at 6:41 PM, basochor wrote:

    Hello and good afternoon-

    After reading both the artical as well as the comments- both have valid points, concerns, and ways of saving on your insurance programs- I say this due the fact that I am a licensed insurance agent in multiple states and own an insurance agency. While the artical does give out many good ideas, each state and company has their own discounts and variations. I have seen the first comment many times- this is not the doing of the agent, rather this is how the computers are set up to do- rate each driver on a vehicle- this is why it's so important to make sure that as drivers move out, they are removed from your policy. This rolls into the second comment, where an insurance company rates ALL licensed drivers- this is not only company regulated but also most states require this- with the exception of WI, all drivers should carry insurance, even if a person doesn't even own the car! It's called non-ower insurance. For a teenager to be rated on a vehicle is expensive, I understand, it will save them and you money in the long run. If the teen gets in an accident in any vehicle, they will go into a higher risk company or tier than they already were, when they do get their own car, their rates will be higher as well as all the youthful driver discounts that are available are rarely available after a ticket or accident, they have to be in place prior to these. In addition, when the child does get out on their own with their first vehicle, no matter their age, they will not have prior insurance which locks them into a higher rate. The chances of a teen or family member driving a vehicle in the household is staggeringly high, thus the reason insurance companies rate for all drivers.

    On the same note also, if a non listed driver drives a vehicle, a spouse, child, or person living at the same address get into an accident, within the fine print of policy, the insurance company can deny paying the claim as the insurance company had specifically asked if these people live in your household- if you sign off on them NOT living there, the claim will have a higher chance of being denied. Insurance companies get a bad wrap on denied claims- more times than not, its due the the insureds not disclosing the truth, like not listing teen drivers because the are afraid of higher rates... companies have been wising up more each year with complete household searches to find non rated drivers, you may receive a letter from your carrier asking about all state listed driver's licenses at your home address, it's like a sign of sheet- some people don't change their license info when they move, but the main purpose is to decrease insurance fraud, which is a multi billion dollar cost... unfortunately, we all knows who end up paying... hope this helps a little- remember: You're paying for insurance, make sure you have the correct amount of coverage- state minimums are rarely enough to cover the smallest of claims- this I can't stress enough- you get what you pay for!

  • Report this Comment On January 30, 2010, at 3:12 AM, BDRudolph wrote:

    TMF, I am not trying to advertise; it is what I just did and thought it could help those on this forum. You may of course remove this post if you believe it is in disagreement with your policy.

    -

    I just ran into

    2 Insure 4 less . com

    I gave basic information, vaguely personal about myself and my car. Apparently my info has been forwarded to about seven agencies, where they will give me an estimate via email and phone.

    I am only recommending this because of how easy it was, I DO NOT KNOW how effective it will be.

    I like the ability to type in my info once and throw the net into the abyss to see what happens.

    I will send updates here if that is permitted. Or should I do it on my personal page somehow?

    -BDR

  • Report this Comment On January 30, 2010, at 3:13 AM, BDRudolph wrote:

    TMF, I am not trying to advertise; it is what I just did and thought it could help those on this forum. You may of course remove this post if you believe it is in disagreement with your policy.

    -

    I just ran into

    2 Insure 4 less . com

    I gave basic information, vaguely personal about myself and my car. Apparently my info has been forwarded to about seven agencies, where they will give me an estimate via email and phone.

    I am only recommending this because of how easy it was, I DO NOT KNOW how effective it will be.

    I like the ability to type in my info once and throw the net into the abyss to see what happens.

    I will send updates here if that is permitted. Or should I do it on my personal page somehow?

    -BDR

  • Report this Comment On January 21, 2013, at 4:50 PM, tommyjohnson1956 wrote:

    This looks like a great deal. Do you happen to know of any good <a href="http://www.dawsoninsurance.com">illinois independent insurance agents</a>?

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