Auto Insurance Lingo - What is a Hazard?

There has got to be another way to reduce car expenses. The ideas of reducing your driving, car pooling, new spark plugs, using mass transit, and checking air in the tires, a new air filter, have all been done. Now what? Help! The price of fuel for a car is not something that you can change. The only choices are type of fuel and where the fuel is purchased. Insurance is an operating expense that is the next biggest item after fuel. Your insurance agent will not try to lower your premium because he/she is paid by commission on the premium paid. Here are (7) things to check on when you are doing a review on your auto policies.

1) Do you have all your cars, truck, rv, boat, and homeowners insurance with the same company? This could reduce premium up to 25 percent when combined.

2) If your car insurance collision deductible is $250.00 consider increasing to $500.00 and comprehensive from $100.00 to $250.00. Remove collision and just carry liability on a car that is ten years old or with a low resale value. This could reduce the premium from 15 percent to 25 percent.

3) Have you reviewed with your agent how many miles you drive a year and whether it is business or pleasure? In most cases if you can get under 10,000 miles a year and for pleasure (personal use)only you may be able to get a reduction of 5-10 percent.

4) Do all you can to eliminate damage to your car such as "fender- benders." Take a defensive driving course, put car in garage, and allow more time to go to your destination. Do not submit small claims. Changing the deductible needs to be accompanied by very low claims history to receive significant discounts. Claims equal premium increases. To be able to change auto insurance carriers, all persons that are insured need to be free of any moving violations such a speeding, seat belt, improper turns to name a few..for three years.

5) Keep you insurance agent informed of any marriages, retirements at age 65, B average+ good students, a high credit rating, the earning of a college degree, and a car with a burglar alarm system. These are all possible discount.

6) If you qualify, by not having any moving violations, or claims contact two other insurance carriers for a quote if you want to be sure that your present carrier is competitive. The benefit of reviewing your coverage is to keep your information current and premiums affordable.

7) The amount of premium you pay is dependent on claims history, rate of inflation, and the interest return the insurance company is earning on their cash reserves. Premium will increase but your control of claims history is the most important. Another benefit to you is now we have freed some money that should be added to savings. The savings from the deductibles being reduced will take about three years to cover the out of pocket cost of the increased deductible. Then, this amount is found money to add to savings.


More to come in the next Make Money Work newsletter.

To your financial success,

Martin Braddock