9 Car Insurance Money Savers & Surprises
1. More insurers now penalize drivers caught texting while driving with an average $227, or 16 percent, premium hike. Compare that with a $315 penalty for running a red light (a 22 percent premium hike). The impact of texting while driving on premiums was next to nothing only a couple of years ago. James Lynch, vice president of research and education for the Insurance Information Institute, attributes the recent increase to more states now imposing penalties for distracted driving.
Save by avoiding a ticket and insurance penalty: Keep your phone out of reach while driving, and consider using an aftermarket Bluetooth hands-free system if you must field calls while behind the wheel.
2. It’s not easy—or cheaper—being green. Green cars, like the Toyota Prius and Nissan Leaf, cost more to insure than less green trucks and SUVs. The average annual premium for green cars was $1,654 vs. $1,579 for SUVs and $1,535 for trucks.
Save money while saving the planet by working your other premium cutters when you buy a green car. Bundle your car insurance with your renters, condo, or homeowners insurance, and raise the deductibles on your collision and comprehensive coverage.
3. How you pay affects your premium. When The Zebra study’s model driver paid his premium in full, instead of in monthly installments, he cut his annual price by 5 percent, or $67 per year. Paying an insurer in full is “an indicator of responsibility,” says Adam Lyons, founder and executive chairman of The Zebra.
Save by asking for this discount and making that payment up front. Then “pay” monthly installments to your own savings account, so you already have the money to pay in full next time your premium comes due.
4. Older teen drivers and girls cost less. No surprise that adding a teen to your car insurance policy boosts the premium. But the financial hit decreases as a boy matures from 16 ($3,022 average annual premium) to 19 ($2,339). Teen girls cost your premium less across the teenage years; they increased the family premium 59 to 106 percent, vs. the boys’ 78 to 130 percent.
Save by shopping around after you learn what your current insurer wants to charge for your new teen driver, because our own pricing study, which examined premiums by company name, found that some car insurers charged significantly less for a new teen driver than others.
5. Don’t bother with automatic monthly electronic payments. The study’s driver saved only 1.5 percent by agreeing to have his monthly premium payments automatically deducted from his checking account.
Save by avoiding possible other penalties that could be caused by automatic e-payments. Such “pull” payments give control of your checking account to the payee, which could result in costly overdraft penalties. “The juice isn’t worth the squeeze,” Tetreault says.