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Hit the Brakes on Car Insurance Costs

When's the last time you checked your oil? What about your car insurance costs?

If it's been a while, you may be due for an insurance tune-up. In fact, a few simple adjustments can cut your yearly premium by as much as half. That's $450 back in your pocket, if you pay $900 annually to insure your ride. Here's how:

1. Up that deductible: If your current deductible is $250 or $500, raise it to $1,000. Simply doing that could save you 15% or more on your premium. And if you're worried about having to foot the bill for claims of less than $1,000, well, read on. You might want to do so anyway.

2. Pay for that claim with your own dough: The paradox of insurance is that you're paying for a product you hope you never have to use. To add to the absurdity, even when you have reason to make a claim, you're punished for doing so. If your deductible is $500 and you make a claim for $550, you'll get a check for $50 and a ding that'll linger for five years on your C.L.U.E. report (Comprehensive Loss Underwriting Exchange), which insurers check to determine premiums. (You can pull your C.L.U.E. report for free once a year at choicetrust.com.)

3. Start bragging to score some discounts: You may be eligible for a discount based on your age (turning 25 or even 55), your affiliations (federal employees, military members, and members of professional groups often score discounts), your ride (the type of car you drive, or the anti-theft devices it contains), and how much business you do with the company (having multiple policies with a single insurer). Give your insurer a call to determine your eligibility for rate cuts, and ask for a list of things that might score you a price break.

4. Drive like a grandma: Seriously. One or two moving violations, and some insurers hike your rate (up to 20%) and slap you with a per-ticket surcharge. Even using your coverage's roadside assistance feature -- for a tow, jump-start, or help getting keys you locked in the car -- can drive up your premiums and affect your eligibility for future coverage.

Finally, if you do gas up and go, make sure not to overpay for crude (which can seriously cut into your tchotchke budget). Avoid stations just off the freeway, gassing up on weekends, and pumps in pricey neighborhoods. Check out GasBuddy.com to find filling stations with the lowest per-gallon price.

For more Foolishness:

Dayana Yochim power-walks to and from the office each day, saving her money on gas and the number of carbon credits she needs to buy. The Fool's disclosure policy won't drive you up the wall.


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  • Report this Comment On July 14, 2009, at 1:01 PM, MoiraL wrote:

    Great tips! A final suggestion is compare car insurance rates every 2-3 years, just to make sure you're not missing an opportunity to save. Online comparison sites make it fast and easy to get quotes from several companies. And, if you shop and switch more than 7 days prior to your renewal date, many companies will even offer you an early shopping discount.

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