How to Avoid Overpaying for Car Insurance
Expert tips to save money while maintaining the protection you need
It’s easy to put car insurance out of your mind, particularly if your bills are set to autopay. But experts advise reviewing your policy and reassessing your insurance needs every time you renew.
Doing so will help you avoid paying too much. Perhaps your car has aged into a lower value bracket. Maybe you are paying for coverage you no longer need, or don’t need as much of. Or maybe your rates have gone steadily up for no apparent reason, or possibly for reasons outside your control. Experts say that loyalty doesn’t always pay and that some insurers will charge more if you stick around simply because they assume you’re not sensitive to price and are unlikely to defect.
For more information about how to shop for car insurance, be sure to consult CR’s car insurance buying guide. If you want to save money, a good starting point is to familiarize yourself with what your policy covers, and what you actually need.
Glass Replacement
Coverage for a windshield or windows damaged in a crash is usually included in collision policies. Comprehensive policies will often pay to repair or replace glass damaged in noncollision incidents, such as storms, attempted theft, or a pebble from the roadway striking the windshield. Without that coverage, those types of repairs, which can be costly, are not covered. In most states, there is also an inexpensive add-on for full glass coverage that takes care of rock chips that turn into cracks—a common enough occurrence for highway drivers. If your car is equipped with Advanced Driver Assistance Systems (ADAS), make sure your auto glass policy will pay for the required sensor calibration, which makes the cost much higher than a conventional windshield replacement.
Gap Insurance
This is coverage you may want to skip. It’s designed to protect people who owe more on their loan than the car is worth, in case it’s totaled and collision insurance won’t cover the full value of the loan. But Douglas Heller, director of insurance for the Consumer Federation of America, says that most people never use this coverage and that it’s more of a moneymaker for insurance companies. “The people at most risk of having their outstanding loan exceed the value of their car are people who cannot get car loans at reasonable rates,” he says. “It is another way that the financial services sector punishes people for their poverty.”
Rental Car Reimbursement
This covers the cost of a rental car while your vehicle is being repaired. Rental car reimbursement is limited by dollar amount rather than time, so make sure you have enough insurance to cover at least a week or two in case the car needs a big repair. “The good news is that you can increase your coverage for only a little extra,” says Divya Sangam, an insurance spokesperson at the consumer financial information website ValuePenguin. She says the extra cost depends on how much coverage you want, and usually adds between $2 and $15 per month to your premium. She recommends calling a few rental agencies in your area to get an idea of what daily and weekly rates are so that you can determine the coverage limit that’s right for you.
Uninsured Motorist Coverage
This protects you from having to pay for damage to your car and injuries to yourself and your passengers caused by someone who is uninsured. Without this coverage, you may end up having to take the uninsured motorist to court to recoup anything you spend to repair your car and for medical treatment related to the crash. According to Heller, 1 of every 10 crashes involves a motorist who doesn’t have insurance. How much coverage do you need? Heller says it’s a good idea to have the dollar amount of your uninsured motorist coverage equal that of your liability coverage.
There are a few other ways you can save:
Raise your deductible. Raising your comprehensive and collision deductibles from $500 to $1,000 can shave 11 percent off your premium on average, says Heller at the CFA. Just make sure you can afford to pay the extra out-of-pocket cost if you’re unfortunate enough to get into a crash.
Look for discounts. Some insurers will give you a break on premiums if you bundle home, auto, and umbrella policies. You may also get a discount if you complete a safe-driving course (provided it’s not required by a traffic court), allow your insurer to track your safe driving habits, lower your annual mileage, or, if you have a teen on your policy, report his or her good academic average (typically a B or better).
Have a clean driving record and a good credit score. Both have an impact on the price of your insurance premium. For the best rates, you’ll need to have at least three years of having no driving infractions. In most states, the higher your credit score, the lower your rates will be.
Choose your car wisely. Premiums vary by model. When comparing models, ask your insurer for premium quotes on the ones you’re considering. Luxury and high-performance cars tend to cost more to insure than more mainstream models.
Assign the right driver to the right car. Ask your insurance agent who the principal driver should be for each car in your household. Basing those matchups on individuals’ driving records and car values might save you money. Pairing a lower-value car with the driver who commutes the longest distances, for instance, may cost you less than giving that driver the higher-value car. (Of course, this strategy may require some negotiation among family members, and you may want to assign a teen driver the safest car in your fleet.)
Editor’s Note: Another version of this article also appeared in the July 2022 issue of Consumer Reports magazine.
