This pandemic has significantly changed our lives and the routines we have been accustomed to.  The changes have been drastic and sudden.  One of the major changes is that people are driving less than they were a few months ago.  No more daily commutes, no more traffic jams, less fuel (and more savings)…you get the picture. With these changes, there are plenty of opportunities to also save on your insurance costs.  This article will discuss 3 ways to save money on your auto insurance plan today. Hopefully you can take advantage of some (or all) of the ways to save.

Over the last month or so, we have published many articles about the impact Coronavirus is having on the stock markets.  We’ve published various stock watch lists (April Watch Lists – Lanny’s here and Bert’s here), stock screen articles, and identified industries that will perform well during the pandemic.

Read: Dividend Aristocrats with Low Debt

Read: Industries Built for the Coronavirus and Dividend Investors

Read: Top 5 Foundation Dividend Stocks – Updated as of March

Sure, finding the right stocks in this pandemic is extremely important. But playing defense with your expenses is just as, if not more, important than ever. So today, I wanted to focus on an expense that EVERYONE has.  For many, outside of your housing, car, and childcare payments, the topic of this article is one of the largest line items on your personal income.  Today, I am going to discuss a few different ways to help you save on your auto insurance costs!

This isn’t a foreign topic on our blog; we have written about it many times over the years!  Why?  Because we think constantly monitoring your insurance expense to ensure you have the right plan for the right price is a HUGE component of your financial success.  So let’s dive in!

Read: Our Financial Freedom Products – 12 Ways to Earn More or Save Less (not including insurance costs)

Method #1: Adjust Your Expected Annual Mileage

This was an idea that came to us on Twitter (Thanks Capturando Dividendos).  I must admit, this was not something that crossed my mind.  However, it is an opportunity to save some extra money.

Each car insurance plan assumes certain thresholds of miles driven during the year when calculating your premium. The more you drive, the greater the chance there is of an accident (and future claim) occurring.  Your insurance provider factors in your estimated annual miles driven when calculating your premium and will adjust your premium accordingly.  More miles results in a higher premium (and vice versa).

However, now that most states have issued “Stay at Home” orders, the roads are a lot clearer.  Personally, my office is shut down and I am required to work from home each day.  Now, my daily commute is from my bedroom to my kitchen (for coffee) to my office, rather than from my house to my office.  Honestly, I have driven my car only two or three times per week since the “Stay at Home” order has been issued. It has been amazing.

For now and the foreseeable future, until things change, the miles I am expecting to drive annually have been reduced significantly.  If your situation is similar to mine, and you are driving significantly less, you may be considered a low mileage driver by your insurance company and eligible for a reduced premium.

To help demonstrate this, I included the chart below from The Zebra, . It shows the impact that different annual mileage categories have on your annual premium:

Now, $61 annually may not seem like a lot of dollars. But man, in this current economic environment, every dollar now matters more than ever.  This is a very easy change to make, if it is relevant to your current situation and your anticipated mileage truly has decreased.

READ: Every Dollar Counts on Your Journey to FInancial Freedom

Method #2: Review Your Current Coverages for “Over Coverages”

Insurance coverages are very helpful and serve a critical role in your personal financial situation.  With that being said, each company’s auto insurance policies are different and can include different coverages and coverage levels. There are many coverages in your plan that are common and expected in all insurance plans across all companies.  Think of some of the most important items in your plan: deductible, premium, liability coverage, comprehensive coverage, collision, and so on.

But you may want to check your auto insurance coverages closely.  There are plenty of other items in there that may not be deemed critical.  This could include rental car coverage, mechanical breakdown, vanishing deductible, etc.  In the case of vanishing deductible, often times, you are paying a higher premium today to reduce your deductible in the event of a future claim. Sure, that is a nice feature, but is it necessary?  For me, I answered no and removed that feature, and cost, from my plan.

In addition to reviewing all of your coverages, it is just as important to make sure you are comfortable with the deductibles and coverage levels for each in your plan, since each item adds costs to your insurance plan.  Is a $250 deductible necessary for collision? Or can your financial situation allow you to increase your deductible to $500 or $1,000 and help you save on the monthly insurance premium.

A few years ago, I personally made this switch. I reviewed the balance of my emergency fund and realized that I was comfortable with increasing my deductibles.  After many years of carrying a low deductible and paying a higher monthly insurance cost, I increased my deductible to from $250 to $1,000.  This has saved me at least $75 annually on my auto insurance plan alone.

Each decision is dependent on your financial situation and what you are ultimately comfortable with, as there is a financial trade-off. The point I am trying to make is that you should pour through each line item in your current insurance plan and see if it is A. Necessary and B. Is it the Right Level of Coverage.  There are some potential savings to be had by spending the time, performing the research, and potentially making a change.

Read: Dave Ramsey’s – How Much Car Insurance Do I Really Need?

Method #3: Receive a New Auto Insurance Quote

Last, but definitely not least, the no-brainer option here.  Methods #1 and #2 in this article dealt with options within your insurance company.  But what if there is an insurance provider that can currently offer you a better premium for your current insurance coverages.  Personally, I shop my insurance every 6-12 months.  I haven’t changed insurance providers in ages.  But that doesn’t mean that I don’t shop my coverages regularly.  As a matter of fact, shopping my insurance regularly allows me to gain comfort in the fact that I have a very fair price on my current coverages.   The reason I say that you can save today with this method is because it has become so darn easy to receive an insurance quote!

This also isn’t the first time we have mentioned this as a way to save on our website, and it certainly won’t be the last.  We wrote about 5 Ways to Save $500 last year.  In that article, Lanny discussed how he and his wife saved over $700 by switching their insurance to Allstate.  If anything, you owe it to yourself to shop your insurance and see if you can save today.

Read – Time to Negotiate Home & Auto Insurance

Conclusion

I’ll say this. It can’t hurt to spend 30 minutes and see if any of the three methods can help you save today.  By evaluating your insurance coverages, you may have the chance to right size your coverage, still make sure you are properly covered and protected, and potentially save money on insurance along the way!  Of course, I’ll make sure to emphasize this again: Each change needs to be evaluated to ensure that it is the appropriate change for YOUR financial situation, as each person’s financial situation is unique.

Please share what changes you have made recently to your insurance coverages! Have you “trimmed the fat” in your insurance plan in the past?  If so, what were some of the coverages you dropped or coverage thresholds you have changed?  I would love to read them all and see if they can help me save money too 🙂

Bert