How to save money on car insurance

No, it’s not to spend 15 minutes on the phone with Geico, although maybe that would save you money! Although fun fact: my parents have been with their car insurance company for ages. A few years ago just for fun my dad decided to call Geico to see if they could save him anything and the guy who answered was like “uh your rates are amazing. No, we can’t beat that.” So maybe calling won’t save you money after all! Anyway, my parents gifted me my mom’s old car about a year ago and I’m now on my third car insurance policy. I’ve learned a bit along the way about how to save money in that department and I thought I’d share, even if this information may be pretty straightforward and obvious to people.

When I officially moved to my current apartment after college, I guess it triggered something on my parents’ car insurance that removed me from their policy since I was no longer in their household. None of us knew that happened: when I knew I’d be getting my car, I called their company to tell them to take me off my parents’ account and put me on my own policy, and it was an unpleasant surprise to hear I wasn’t there. This meant for the sake of insurance that I unfortunately was a previously-uninsured/new driver despite having gotten my license at 16 and my insurance was going to be pretty expensive until I got the first 6 months under my belt and could change that status.

My parents’ company quoted me for a year of this initial insurance, but I shopped around to make sure I was getting the best deal. I found something else cheaper, in addition to the fact that it was only a 6-month policy. Despite the fact that my car is a 2006 Corolla and had 138k miles on it when I got it, I was still paying something like $105 a month for the first six months. Granted, insurance is more expensive in DC, but that still seems steep for a car that’s maybe worth $5,000. There was nothing I could do about that, though. Just had to grit my teeth and wait until I could shop around again in 6 months for a cheaper policy as a currently insured driver.

November rolled around and it was finally time for a new car insurance policy. Honestly the whole process is a major pain in the ass, but it’s worth taking the time to comparison shop. I think I got quotes from 6 different companies, and found one that was $79 a month for the next 6 months. Ah, sweet savings! If I’d been smart I would’ve put that extra $25 a month toward my savings or my Vanguard account, but alas, I was only starting to explore the world of personal finance and that good idea did not occur to me. Learn from my mistakes and pay yourself the difference if you manage to reduce a monthly bill!

I also learned that your company will automatically enroll you in another 6-month policy. Comparison shop and then cancel that before it takes effect since it’s usually the same price as your previous one (and I didn’t feel like getting on the phone when there were cheaper options at other companies). However, it almost goes without saying, but make sure you buy a new policy and then cancel your unwanted new policy if you do switch companies to make sure you’re maintaining continuous coverage.

Taking care of car insurance again was on my to-do list before the Azores trip since my old policy would’ve run out right after I got back. I did the usual comparison shopping of many companies (and the back-and-forth changing coverage limits one at a time to see what it would do to the price for each quote) and then decided on a whim to see what the company I used to have car insurance with as my parents’ dependent would cost. Turns out it was one of the cheaper quotes, and was for a year policy. I’m going to admit that that was attractive because I’m lazy and like I mentioned before all this comparison shopping is a necessary pain in the ass.

When I called them I got a pleasant surprise: I got a $60 discount from what they’d quoted online because I actually have renter’s insurance through them (side note: if you’re a renter, get insurance. It’s dirt cheap: I have a policy for something like $10,000 that costs me a grand total of $100 a year. Worth it in case my building floods, etc). I got this insurance three years ago when I moved here and didn’t bother to comparison shop because $100 a year is so low. Well, this laziness paid off for me here. My renter’s insurance renews in June so it’ll be interesting to see if I get a tiny discount there for now having car insurance with them. I also asked if there was a discount for paying up front instead of paying each month, and the lady said I’d save an extra $60 if I went with that option. All told, a year of insurance cost me $977 last month after $120 in discounts. That works out to be something like $3 more expensive per month, but I’m fine with that considering I raised my coverage.

When I called my previous company to cancel the auto-renewal they asked me the annoying questions about why I was leaving that I always feel like I have to answer truthfully (I know I don’t have to, but I feel rude blowing them off. That’s a comment on society’s expectation that women be polite and nice but I definitely digress). In the course of that conversation I revealed that I’d raised my coverage amounts and gotten a cheaper price with my new company and lo and behold the lady managed to find a policy for my new, higher amounts for the same price I’d just paid for. This was a moot point because I’d already purchased my year of car insurance and was absolutely going to cancel, but it was an interesting interaction. It might be worth getting a quote from another company (either for higher coverage or for the same coverage at a lower price) and threatening to leave your current company because of that to see what they offer you to stay. We’ll see how this works for me in a year.

I’m not going to go into a discussion here about which levels of coverage you should get. I will say that the mandated levels in your state are probably laughably low especially given the price of health care, so it’s a good idea to purchase coverage at a higher level than you’re required to. But this is also a personal choice of how much risk you’re willing to take. I’ve been reading about this a bit over the last few months and decided to raise my limits this time around just because I felt more comfortable with that. I’m also not a good person to lecture anyone on this—I do still have both collision and comprehensive coverage on my car even though it’s probably a waste of money. My car is parked on the street, which raises the possibility that someone will break in or that hail from a thunderstorm will damage it. My lovely car already has many dents on the hood from a branch falling on it at home, so I’m not talking cosmetic damage here—I really don’t care about that. The comprehensive insurance is for something like a window breaking or a tree falling on my car.

I don’t really believe in assuming the worst, though, so mostly the reason I still have full coverage for that all is because I sadly can’t afford to self-insure. One day I will be able to do that (especially again, because my car is 11 years old and has 150,000 miles on it. Self-insurance shouldn’t be that hard since I’m not driving a new, expensive car!) but it does not make sense for me at the moment. If something does happen to my car I’m likely not to replace it anytime soon: it’s nice for occasional driving like hiking and Costco, but I don’t actually need it and the only reason I can afford it is because I don’t have a car payment. Any future car I get would need to be super cheap in order for me to decide it’s worth paying for gas and insurance and repairs again. So in this case the comprehensive is so I might get a bit of a payout in case something disastrous does happen to my car (I hope not!). And then I’ll probably forgo this ridiculous luxury for a while and save money.

I mentioned in my April spending report that I used some of my savings/tax return money to pay for my insurance. Because my previous two policies had been 6-month policies, I was expecting the same and was ready to pay for that, but the year’s worth of insurance was a surprise. I could’ve forgone the extra $60 of savings and signed up to be auto-billed every month so that I didn’t have to cover the extra from my savings. I would’ve done that because car insurance certainly doesn’t count as an emergency or a reason to use savings.

However, I got a travel credit card in March-I’ve been meaning to get a card that’s not cash back for a while and the Azores trip was a good excuse for this. I kind of balked at the amount I’d have to spend in the first three months in order to get the sign-up bonus, so to be quite honest, I made a calculated decision to put a year of car insurance on my card to help me get there. Immediately after I paid this off with the tax money and savings since exorbitant credit card interest rates would absolutely negate the $60 pay-at-once discount. I was able to do this because I have more than $1,000 in savings; I DO NOT advocate doing something like this in order to get a credit card sign up bonus if you can’t actually afford it (I may feel kinda broke right now and need to build up my savings, but I could afford it). Again, this is not what money in your savings account should be used for. Now that I owe $0 each month for the next 11 months for car insurance, I will absolutely be transferring that money back to my savings account every month.

So, tl;dr: shop around for car insurance quotes. It’s sometimes astounding how much they vary. Bundling policies will get you a discount, and likely paying up front will do so as well.