Here are more smart auto insurance tips that can potentially reduce your premiums without sacrificing necessary vehicle coverage.
Why is my premium going up?
Experiencing an increase in your car insurance premium can be confusing and infuriating. You might be asking yourself what caused the increase? Have I had any accidents or violations in the previous policy period? Did I make a claim? If not, then why would my rates increase? You might be thinking that your rates should be going down as having a clean record and an aging vehicle would lead to a decrease. While that may be true in theory, market forces and economic trends such as inflationary pressures, an uptick in accident rates and resulting lawsuits, and rising repair expenses across the industry can outweigh the expected decrease. These aspects of the premium are beyond your control, yet still greatly impact how much you pay. So, what can you do to mitigate this increase? We want to share some knowledge about what limits and selections you could take to make sure your policy remains the most cost-effective for you.
How much should your deductible be?
Do you consider yourself a safe driver? The typical motorist only files a singular claim in a decade. Every time you file a claim, you are liable to pay your deductible. Setting a higher deductible will result in lower insurance costs but will increase your out-of-pocket costs for your repairs. This is the classic piece of advice that has been given to folks for years. Even so, it does still stand the test of time and remains sound advice. As always you must consider if the deductible amount is something you can afford at the time of the accident. Keep in mind if you do decide to increase your deductible and you suffer damages less than that amount, you will be responsible for fixing those damages yourself. On newer vehicles, even the smallest amount of damage can cost well over your deductible amount, therefore it is advised to set it at an appropriate amount on a per vehicle basis, especially if you have multiple vehicles of varying values.
Can removing collision and comprehensive coverage save money?
If you find yourself paying a large premium for an older vehicle, removing collision and comprehensive coverage is another major step you can take to help lower total costs. These coverage limits can be assigned on a per vehicle basis, but it is not recommended to remove these on newer vehicles. The rule of thumb is if your 6-month policy premium for the vehicle is higher than 10% the total value of the car, you can begin to consider removing collision coverage on the vehicle. This would make you directly responsible for any repairs that would arise from any accident with another vehicle. The next step would be to also remove comprehensive coverage. While not recommended, choosing to remove comprehensive coverage will make you responsible for damages that occur to your vehicle when there is contact with anything other than another vehicle. Comprehensive coverage is useful when it comes to non-collision repairs such as windshield repairs. Removing comprehensive insurance and collision insurance will significantly lower your policy premiums while keeping you legally protected on the road.
What are the right coverage limits to consider for liability insurance?
Highlighting the importance of car insurance, the single most critical component for a policyholder is the Bodily Injury and Property Damage Coverage limit. This coverage is what keeps you legally safe on the road from any damage you may cause to others. The minimum limits differ from state to state, however typically the minimum limits are considered underinsuring yourself. So how much liability coverage do you require? Liability in Michigan begins at $50,000 per person/$100,000 per accident and $10,000 for property damage. This is more commonly abbreviated to 50/100/10. As stated, although legally acceptable, these limits provide the bare minimum financial protection following an accident determined to be at-fault. Our recommendation would be to have a liability policy of at least 100/300/100 or $100,000 per person/$300,000 per accident and $100,000 for property damage. The example we will give here will assume there is an accident that causes 3 people in the other vehicle to have $40,000 worth of medical bills each. Under the minimum policy, your carrier will pay out $33,333.33 per person or $100,000 for the entire accident, leaving the insured liable for the remaining $20,000 in medical expenses incurred to others. Under the 100/300/100 policy, your carrier would pay the entire amount of $120,000 for the accident. If you require more than 100/300/100, liability limits on typical Auto policies can go all the way up to 500/500/100. Furthermore, if you do require even more liability coverage, you can look to obtain an umbrella policy for an additional limit of liability over your home and vehicles. Choosing a suitable level of liability can be difficult but should be one of the first considerations for policyholders.
What about Personal Injury Protection?
What about injuries you suffer in an auto accident? Personal Injury Protection (PIP) Coverage exists to make sure that you, your spouse, and any resident relatives are covered for any necessary medical care up to the limit chosen. By default, this limit is set to unlimited coverage per person for each accident. You can choose to elect to reduce this to $500,000 per person or $250,000 per person. All insurance carriers will require authorization from the insured stating that they are aware they are on a policy that provides a less than unlimited amount of medical expense coverage. If you have Medicare (Parts A and B), or other qualifying private health insurance, you can elect to remove PIP altogether from your auto policy. Some things to consider are how much the deductible amount would be on your qualified private health care plan and what services or expenses are not covered. For younger drivers, PIP Medical Expense ends up being the largest contributor to the overall premium. While PIP is tempting to remove all together from an auto policy, having PIP and your private health care plan working in tandem will allow you to cover all your bases.
Good Driver Discounts & Data Privacy
Good driving habits should be rewarded. Driver monitoring has become more and more common among insurance carriers as tracking technologies have been implemented on a grander scale. In the past, this technology existed as a device that you would insert into the diagnostic port of a vehicle. Today, carriers have moved to using associated apps on smartphones to monitor your driving habits. There is a large potential for savings, however it is very important to ask your carrier if there are any negative driving behavior patterns that could increase your rate. Another major concern is privacy and data collection. It is important to know what the carrier will do with the information they collect and whether it will be shared or sold to anyone else. This program is not for every single driver. A great example would be a driver who sees themselves driving at night-time to and from work. This is because night driving is considered higher risk, and you would not want to see your premium be adversely affected by your regular driving patterns.
Multi-Policy Discounts
As insurance carriers have diversified their product offerings, their favorite customers are the clients who have multiple lines of insurance with them. This gave the rise to a multi-policy discount that usually provides the single largest discount to your overall premium. Most often, car insurance is bundled with a homeowner’s or renter’s policy. This is one of the most important things to consider when choosing a carrier. Home and Auto insurance policies are never a one-size-fits-all policy, and it is important to see how both policies are rated before going through a specific carrier. Some things to consider are the length of the policy terms and the estimated expected increase at the renewal date. In short: Yes, bundling is very much worthwhile and should be carefully evaluated when choosing either your Home and/or Auto insurance policies.
How do I select the right insurance for my needs?
Regularly comparing quotes from different providers and asking about available discounts can help you find cheap car insurance coverage options that meet your needs. While not a requirement, the benefits of going through an agent or brokerage allows for increased peace of mind that you have the right policy to meet your needs. An agent can compare coverage between multiple insurance companies and can even recommend companies that you would not consider. We recommend that you have your agent run quotes for you every renewal period, and to make sure that you are neither underinsured nor overinsured. This way you will know whether it is time for a switch or if your current rate remains your best. An agent can also help you communicate with your carriers and explain your limits and guide you to any additional coverage you may require. Recently we have been working with an elderly client who was looking to reduce their premium. On their application we noticed that she was reporting that her estimated annual miles for her vehicle was over 12,000 miles. After clarifying with the client, we corrected this to a more accurate amount of less than 4,000 miles a year, thereby qualifying her for a low mileage discount bringing the premium down to a much more favorable amount.
At NBP our agents look out for your best interest. Having an NBP agent by your side, handling all your coverage and knowing your situation can be a great benefit. If you want to explore your options to find the best fit for you, contact us at hello@nbplans.com or schedule an appointment (https://calendly.com/nbp-agents).
For over 30 years, NBP has been dedicated to the well-being of clients and the success of agents by always striving to do the right thing and caring for everyone as if they were family. We have offered the best national and local carriers offering top-notch, affordable healthcare coverage for individuals, families and groups, including supplemental Medicare plans.
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