In this new “economic norm,” many consumers are looking for ways to save money where they can. Everyone has to have auto insurance, but there are ways you can save on the premium. Some could be instant savings, some of these suggestions will take a little time.

First, lets briefly discuss what not to eliminate. Do not reduce your liability limits. At no time should you be covered for less than you comfortably can afford. Liability protects you and your assets, this is not where you want to cut expenses. You are required to carry uninsured motorist (covering YOU in the event you are involved in an accident and the other person is legally liable and has no insurance,) but underinsured motorist is optional. This protection will give you coverage if someone does not have enough insurance to cover your phyiscal damages or injuries when they are legally liable. Remember, this covers YOU. It typically is not an expensive coverage to have on your policy and should be purchased.

Now lets look at ways to reduce the cost of auto insurance. Keep in mind that all companies price their coverage differently, but for the most part, they all use similar key elements in creating their pricing structure that has to be approved by the state insurance department.

Those suggestions that can make an immediate impact on your rate-

1-Check for all discounts. Often a company will allow discounts and you may not be getting credit for them. Call your agent and ask about all the discounts they offer and see if you qualify for any of them. Among some of the ones offered could be; safe driver discount, defensive driving discount, good grades by a student driver in the household, multi policy discount (having your home, condo or renters policy with the same company,) multi car discount (having more than one vehicle on the policy,) retired discount,  new vehicle discount and ABS brakes (or other saftey features on your vehicle.)  It is important to know that not all companies offer the same discounts or at the same discounted rate, but it does make sense to call your agent and discuss which ones they do offer and you qualify for on your policy.

2-Increase your deductible- Increasing your deductible can give you immediate savings. By taking on more risk yourself (the money you will pay out of pocket in the event you are legally liable for an accident and your vehicle is damaged) the more you will save on the premium. Many companies will offer programs where they reward you by decreasing your deductible (your out of pocket expenses) if you go a certain time period without an accident. So, if you are good driver, you may choose to increase the deductible and save on your monthly premium.  Just be ready to shell out a little more money if you do end up in an accident. We do not plan accidents, they happen, but you can be prepared by having the deductible tucked away in savings.

3- Purchase your new policy future effective- By purchasing your policy in advance of the termination date of your current policy, you could save some money up front. This sounds confusing, but some insurance companies reward you by discounting the premium by buying the policy well in advance of your current policy running out. Example- Say your policy runs out next month on the 1st.  Go to the new insurance company now, write up the policy, make it future effective for the 1st of the month. There is no double coverage, and you get the discount for signing up early. Many insurance companies reward those who plan out their purchase instead of instantly needing the coverage “the day of.”

4-Prior insurance and do not let it lapse- The other tip that plays along with number 3 above is to never let your policy lapse.  Having a gap in coverage could cost you the next time you go purchase insurance.  Some insurance companies give you a discount or a better rate for having a current policy in force. If you have a lapse in coverage, currently do not have insurance on your vehicle or no policy at all, an insurance company sees you as a higher risk. Higher risk drivers will likely get a higher premium.

Now lets discuss the suggestions that may take some time.

5-Clean up your credit.- Most insurance companies have continued to put a great emphasis on your credit score to give you a rate that is set by the company and approved by the state insurance department. According to statistics, insured drivers with good credit have less claims than drivers with poor credit. Therefore, reviewing your credit report, seeing what is on it, cleaning it up, may take some time, but in the long run this could save you some big bucks on your insurance rate. Credit is becoming a larger factor in the insurance rating system and consumers need to be more aware and conscience of their credit.  This is where two consumers almost identical in demographics with identical cars can call the same insurance company and get two totally different rates. With differing credit scores, everyone’s rate is going to vary slightly according to their credit.

6-Improve your driving record.- Probably the one thing many of you did not want to hear, but your driving record plays a big role in your rate. Accidents are big whammies against you, speeding tickets as well. Not to mention your big offenses like DUI and reckless driving. The next time you are speeding through town, punching the gas at a yellow light, or texting while driving your car, think twice. Your rates could be going up as much as $100 a month or more! Some companies use a 3 year standard as they evaluate your driving record and some use other terms such as 5 years. Regardless, your driving record directly affects the rate you pay. The best way to keep your auto insurance rates low is to be a safe driver and keep your record clean as a whistle.

Auto insurance is not rocket science, but it does take a little understanding in order to make wise purchasing decisions. The most important suggestion is to know your agent. If you have a personal agent that knows you and your families situation, you are more likely to get a tailored policy versus a generic auto insurance policy.  The ease of buying on the internet is nice, but typically, buying insurance on the internet is not cheaper than buying insurance directly from a neighborhood agent. Having an agent that you know, trust and can sit down face to face with makes a big difference not just with price, but with peace of mind. Almost all insurance companies have internet markets, but their rates are usually no different than if you went to their local office around the corner.  Have that face to face meeting with your agent and discuss your auto policy in detail. Know what coverage you need and know what discounts you deserve.

Philip L. Bradley is the CEO The East Cooper Insurance Agency in Charleston, SC. He is licensed in SC for Property and Casualty, Life and Health insurance. He is also a Personal Financial Representative.

www.insuranceofcharleston.com

Please consult your personal insurance agent, financial adviser and legal adviser before making any decisions regarding your personal financial or insurance situation.