As a prior insurance agent, I was always quick to look for ways to reduce my client’s costs. As I learned more about my field I uncovered a few surprises that you may not have heard about (and your agent may not even know). I recommend that you do your own research by talking with your carrier’s underwriting agent.
First, one that you likely already know about is the potential savings when bundling with property insurance and multiple vehicles. Not only should you research the multi-vehicle discount, but consider bundling in the home insurance too. Most carriers offer both home and auto insurance and will discount the auto premium a few percentage points if you insure both home and auto with them. However; you should consider a few things when making this decision. (1) Make sure that the discount is really an overall cost savings to you. If you can save more by using different carriers then there is no financial advantage to combining. A 5% savings on your auto policy is not a benefit if the carrier is charging 10% more than the competition. (2) If an auto or home insurance agent or carrier’s reputation is not acceptable in your neighbourhood, then the potential for heartache may not justify the savings.
The second way that you might save is based on the usage if you have multiple vehicles insured. Check with your carrier if one or more vehicles stay at home frequently or are a very short commute to work / school. Several carriers offer a discounted rate for vehicles that are driven fewer than 10K miles each year. This is especially true of “pleasure” vehicles which are not used for daily driving.
Our third potential discount applies to motorcycles. Many years ago my “big name” insurance company quoted me an outlandish rate for just liability coverage when I purchased a used motorcycle. Their premium quote was equal to the value of the motorcycle each year. I was shocked and called the company to explain that I was not seeking full coverage, but only liability coverage for this inexpensive motorcycle. I learned that they had not made an error, but they admitted that they quote extreme premiums because they don’t want to insure motorcycles. I sought another insurance carrier and insured the motorcycle for less than 10% of their quote.
Another consideration is the amount of the deductible. It is true that a higher deductible will save some money, but it is a diminishing return. You should consider this carefully based on what amount you can absorb if you must pay this deductible following an accident. With many carriers there is not much savings when increasing the deductible beyond $500.
Last on our list is a hidden gem. Years ago I lived in Houston, TX. Full Coverage auto insurance in large cities definitely costs hundreds more per year in premiums as compared to what I have paid in a small town or rural community. I was reading my policy and stumbled upon the Medical coverage section under full coverage. This particular section contains a clause to cover your personal medical costs – not that of others. It is important to understand that the section referred to does not provide coverage for damage to other’s property or bodily injury (Liability), but covers your own bodily injury in an accident which as provided by Full Coverage insurance. This personal health insurance is only applicable if no one else is liable. (An example would be if you slid on ice and had an accident as a result.) The issue is that this is secondary insurance and not the primary health insurance. If you already have health insurance through your employer or other means; then the secondary insurance provided by your auto policy is untapped unless your primary insurance runs out of coverage money. Even then you must first be aware of this insurance to order to engage the carrier. Most of us do not even know that this coverage is buried in the auto policy we pay. When I discovered this clause I called my underwriter to clarify. What I learned from the underwriter was that I could waive this coverage and reduce my premium by $80 annually. (By the way… the underwriter admitted that she waived this coverage herself.) This must be a personal decision. I urge you to call your underwriter and thoroughly discuss your options and implications before making your decision. If you do not live in a high premium area then the dollar amount of this savings is not as great… perhaps 5% of the premium.
Finally, do yourself a favor and call your carrier even if you are totally happy with your coverage. You will likely find that they can reduce your cost simply because you asked. This is a competitive market and all the carriers want to keep a good customer. To keep you happy they will likely have some promotion or gimmick to offer you that will save you money. One thing is sure… you won’t get any discounts unless you ask.