Tips : How to negotiate your car insurance

This is Tip for the Save $1,000 in 30 Days Challenge. (See past tips.)

Today’s tips is to negotiate your car insurance. Most of us pick a rate once, then never go back again. But if you do, you can save hundreds of dollars each year.

First, check to see if you have the right amount of coverage. Nobody teaches us about this stuff, so when you bought car insurance, you may not have known which coverage options to choose.

Second, figure out what kind of coverage you currently have and how much you’re paying. Don’t be lazy — do this. If you don’t have your current info in front of you, how can you hope to save? Either call your car insurance company or use their website.

Third, it’s time to start shopping around. I prefer the phone because I can usually sweet-talk the rep into telling me about other deals that the websites don’t offer. Computers, however, seem to be immune to my charm.

Fourth, be an expert caller by asking these questions.

With each call, you should say, “AAA (or whoever) is offering to insure me for $XXX less” (silence). See what they do. (Note: Getting lower rates using this technique is much harder to do with car insurance companies than banks, so don’t expect very much from this.)

How much would I save if I insure my car and house with you?

What about renewal discounts? How long have I been a member with you? What can you offer me as a discount for long-term membership?

Can I save money by pre-paying my entire year up front?

Let’s check my car. I know other firms offer discounts for features like anti-lock breaks. What about you?

What kind of low-mileage discounts do you offer?

If I enrolled in a defensive-driving course, what kind of discount would you offer? Oh, really? Which courses qualify?

What about discounts for my employer? (Tell them the specific name of your employer?)

Some insurance companies offer discounts for low-risk occupations (engineers). What kind of competitive rates do you offer?

Am I paying for roadside assistance? What other additional “benefits” am I paying for? (If you already pay for AAA, you don’t need roadside assistance through your car insurance. Also, check your credit card: They may offer roadside assistance (but call them and ask how much it really costs if you have to use it – some of their offers for “roadside assistance” really mean “we will assist you by calling someone for you and then charging you out the ass”).

Can you walk me through the deductible changes I could make to save money? (Deductibles are what you pay before your insurance policy kicks in. By requesting higher deductibles, you can lower your costs substantially. For example, increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage cost by 15 to 30 percent. Going to a $1,000 deductible can save you more than 40%. Before choosing a higher deductible, be sure you have enough money set aside to pay it if you have a claim.

AAA, Costco, credit cards, large employers, associations (AARP, teachers’ union): Many of these offer discounts on car insurance. Log onto their website and browse to “perks.”

Don’t forget: Insurance is not a commodity. If you pick the cheapest provider to save $50/year and they end up not fulfilling your claim — which you could have reasonably known by searching out reviews for the company — it’s your fault. Pick a good company because it can be worth thousands of dollars.

As you’ve seen, “negotiating” your car insurance is mostly about keeping up with the changing rates and making sure you’re wringing every last benefit from your policy, so set a calendar reminder to do this once per year.

Try it out and let me know what you find in the comments.

Total savings: $25 to $100 per month

Last thing to do
1. Check out the other tips in the Save $1,000 in 30 Days Challenge
2. Leave a comment on this post describing how much you’re saving with this tip and any unusual techniques you use to make this tip work.
3. Want to submit your own savings tip? Submit a money tip here. Most of the tips you guys submit are absolutely horrible, so if I use your tip, I’ll send you something cool.