We have discussed how cheaper car insurance can be acquired by the way that you drive, by shopping around and by focusing on the vehicle that you would like to insure. In this, the last blog post in this short series, we would like to focus on how attention to your specific needs could reduce your car insurance premium!
In the financial services industry the financial advisors are obliged to do a “financial needs analysis” before selling insurance products to clients. This requires them to gather from the client information about assets and liabilities, to calculate the financial needs of that client and only then to offer financial advice and products to meet those needs.
In the same way we need to approach car insurance cover. We need to establish exactly what our needs are and then align those needs to the insurance cover required at that specific point in time! Our basic need for financial protection might appear to remain the same, but our personal circumstances change and those changes could either increase or decrease our risk profile and our insurance premiums!
Most vehicle owners are aware of the decrease in value of their vehicles over time – and yet few of them communicate this to their broker or insurer. I have been called earlier this week by a broker informing me of the need to change the amount for which my vehicle is insured. It is however not only the vehicle value that changes, but also other personal circumstances such as age, distance travelled, risk area etc.
We would like to provide a few suggestions to consider – you might just be able to get cheaper car insurance by communication this with your insurer!
- Only carry the minimum amount of coverage you need – always remember that the higher the cover the higher the premium.
- Car insurance companies and brokers may try to sell you more coverage than you need to increase your premium.
- Let go off coverage you don’t need. Cut your coverage and you will see a drop in your insurance premium.
- Consider dropping collision and/or comprehensive coverage on older cars with a low market value. Such coverage often is not worth it because any claim you make probably won’t exceed the cost of the insurance and the deductible amount.
- Shop around as you get older – you also might be able to pay less if you’re older than 50 or 55 and/or retired; if you’ve had no accidents or moving violations or if you have been a customer for a number of years.
- Do not pay for extra and unnecessary roadside assistance – You may already have an adequate roadside plan through your life insurance, medical fund or credit card.
- Peg back the number of named drivers. The more you have on your car insurance policy, the more you’ll pay.
- Do you still have younger or inexperienced drivers on your insurance? – they might have left home and will only raise your car insurance premiums.
- What is the average travelling distance disclosed to your insurer? If you do not drive this distance any longer, you can inform your insurer, thus resulting in a possible reduction in your premium.
- Female drivers are regarded as “safer” drivers and less of a risk. Some insurers will offer cheaper car insurance premiums for female drivers – women are also better shoppers than men- remember to shop around for cheaper car insurance premiums!
- Have you changed your address and notified your insurance company? If you live in a rural community with little crime and traffic congestion, your insurance premium will generally be lower than if you live in an urban area where your car is more likely to be stolen, vandalized, or involved in an accident.
- Do you still have the same occupation as at the time when you purchased car insurance – you might now have a desk job, travel less and qualify for a cheaper insurance premium!
Do not expect your insurer to approach you with advice on reducing your car insurance premium. Be pro-active as your personal circumstances changes, review your policy thoroughly and inquire about withdrawing any unnecessary coverage. Reducing car insurance premiums do not happen by itself – you have to initiate change! Do research, ask questions and make informed decisions!