Whether it’s an annoying duck with a one-word vocabulary, or a refined gecko, or a personified mayhem, you’ve undoubtedly been bombarded by commercials from company after company trying to get you to switch auto insurance carriers.
Have you shopped around for this lately? Some of those commercials are totally correct: You might be overpaying.
And can I be the person in your corner who not only finds ways for you to save money on taxes but also finds ways to save on car insurance? Because, well … I’m particularly inclined towards ALL money-saving activities for my Chicago friends.
It’s time to put my powers to greater use and in your corner.
Before we get into that, just a quick reminder about Advance Child Tax Credit Payments. These will be rolling out to American families soon, so the IRS has created an online tool to either help you either get these payments or opt-out.
The IRS will use information from your 2020 tax return to automatically enroll you in these payments if you are eligible, but depending on changes to your tax situation for 2021, you may wish to opt-out. Feel free to give us a call to discuss the best option for you.
Now, let’s talk about ways to save on car insurance…
Ways Chicago Car Owners Can *Actually* Save On Car Insurance
“Do not let what you cannot do interfere with what you can do.” – John Wooden
For the majority of people, car insurance is simply another required annoyance in their lives. You buy a policy, hope that nothing exciting happens, and quietly pay your premiums year after year. Rarely do we evaluate the costs or coverages of our auto policies. Sound familiar Chicago drivers?
But, once something exciting does happen, you quickly learn how good your insurance company really is and how good your coverages are.
After filing a claim, you may discover that your insurance carrier isn’t so great at the claim handling process. Or, you may learn that your coverages are inadequate, and nobody ever bothered to mention this to you. No matter what the reason, it should come as no surprise that over 50% of car owners in America (and that includes car owners in Cook County) change insurance companies within one year of filing a claim for more than $3,000.
Whether you’re currently shopping for a new auto insurance carrier, or simply want to evaluate your current coverage, it’s important to understand how auto insurance works, and how to make it work for you.
Understanding Your Existing Coverage
One of the ways to save on car insurance is to understand that there are numerous variables when it comes to insurance. Your location, your car’s make and model, your annual income, your age, your driving record, and a host of other variables, which all play a role in the actual cost of your policy. Some of these you can control to one extent or another, others you can’t. And some factors may not even be relevant to your situation.
So, your first step should be to review your current coverages. Go pull out your declarations page from your current policy. This is the page that lists the specific types of coverage you have, and what the premium is for each type. Here are some common coverages that you may see on your policy and what they mean, in simplified terms:
Bodily injury liability: Pays for another person’s injuries if you’re at fault.
Property damage liability: Pays for damage to somebody else’s property that you cause while driving.
Collision: Pays for damage to your vehicle in an accident, such as if you hit a tree.
Comprehensive: Pays for damage to your vehicle when you’re not driving, such as if a tree hits you.
Medical payments coverage (MPC): Helps pay for medical care to you and your passengers injured in an accident.
Personal injury protection (PIP): Helps pay for other expenses incurred because of your injuries, such as long-term physical therapy, legal fees, and lost wages.
Uninsured and underinsured motorist coverage: Pays medical expenses and vehicle repairs when somebody with inadequate insurance hits you.
Uninsured motorist property damage (UMPD): Covers property damage caused by another driver that hits you when they don’t have insurance.
Gap insurance: Pays off your car loan if your vehicle is totaled and it’s worth less than what comp or collision will pay.
By knowing what each type of coverage actually provides you with, you’ll start to understand what you actually need to have. The level of coverage that you need, especially for liability coverages, is very important to consider. In general, the more assets you have, the higher your liability coverages should be.
Apples to Apples Comparisons
By determining what coverages you need and what your current policy provides, you can now begin to research prices, another of the ways to save on car insurance. Big insurance companies like Geico and Progressive have digitized the shopping process and made it deceptively simple, but that simplicity comes at a price – you, as the consumer, need to be very clear on what a policy purchased online gives you — and what it doesn’t.
For example, in the traditional insurance sales model, you purchase a policy from a Cook County agent and when you have a claim, you simply call them and let them handle it. That may or may not be the process in a policy you bought online.
Is there a Chicago representative you’ll deal with? Are you going to have to upload forms online and deal with automated phone trees or people on the other side of the country?
Where do you go if you have a problem with the repair work after an accident? Who handles any potential legal challenges as a result of a wreck that was your fault?
Not all online insurance companies have these challenges, but some do. When you begin to compare prices and services, it’s important to also consider what the claims process is going to be like, how much time you’re going to have to put into the process yourself, and how much hassle you’re going to have to put up with from the insurance company. You may want to consider online reviews of insurance companies, such as the rankings provided by Consumer Reports and other consumer advocacy groups.
Once you’ve received some quotes from other companies, and evaluated customer service and claims handling matters, take these quotes back to your current insurance carrier and ask them to requote your current policy with the same coverage levels.
Many insurance carriers will offer you some sort of loyalty discount for keeping your policy with them. This doesn’t mean that it will be lower cost than a competitor, however. Some insurance companies just have overall higher rates than others or different types of discounts on top of loyalty rates.
Seek Out Other Discounts
While you’re doing this research and comparison shopping, another of the ways to save on car insurance and get some added value from all your insurance policies is to ask for a quote on other types of insurance you have, too. Many car insurance companies also offer a variety of property and casualty insurance coverage – renters’ policies, homeowners’ policies, boat and RV coverage, etc.
Bundling multiple policies with one company can result in lower total premiums for all the insurances you carry. This can not only save you money, but it can also make things simpler if you ever have an incident that requires making claims on multiple policies, such as from a windstorm that damages both your Chicago home and your car.
Lastly, be sure to ask your insurance company about discounts for other things. For example, many insurance companies now offer good driving discounts in exchange for letting them track your driving habits via a phone app or a device that plugs into your car. If you don’t drive very much, you may also be eligible for low mileage discounts. If you’re a veteran, a member of certain organizations, have a certain level of education, or work in certain professions, you may also be eligible for discounts. You never know unless you ask.
It’s definitely worth shopping around when it comes to ways to save on car insurance, but it’s also incredibly important to make sure you have the right coverage for your situation. Choosing coverage based solely on price is often not the best policy!
For a personal finance review that includes items such as determining proper levels of auto insurance coverage for you and your family, let’s get together and do some planning:
To getting things done,