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  • Saving money on auto insurance

    Just how big have advertisements become in American culture?

    carBig enough that there are entire television shows dedicated to showcasing the best or funniest TV commercials of the year. That's not to even mention the Super Bowl, for which companies pay an estimated $4 million for a 30-second campaign.

    With television ads, full-page magazine promotions and Internet pop-ups, Americans are bombarded by endorsements from the moment they wake up to the time they fall asleep. Auto insurance ads are one of those common services making the advertising rounds, so don't get flustered if the options seem confusing. There's an auto insurance plan out there to suit everyone's needs.

    "More than a billion dollars are spent each year on auto insurance advertising, most of which urges consumers to switch their policies to another carrier," Mark McElroy, an executive vice president of an insurance business, told Forbes.

    Saving money on auto insurance
    The most important step to reduce the cost of your auto insurance plan is by figuring out exactly what you need. There are three different basic types of auto insurance policies. Each one offers a different set of coverage and cost based on what they provide. Here's some insight on each type of policy:

    1. Comprehensive insurance plan. It's all in the name, and yes, this plan is comprehensive for your coverage needs. If your vehicle were to be damaged in a flood or hurricane, it will likely be covered under this plan. Comprehensive insurance can also cover you against vandalism and theft, and some plans even safeguard car owners if they were to get into a wreck with an uninsured driver.  
    2. Collision policy. If you own this type of policy, your insurer will cover you if you get into an accident. However, it won't cover some of the situations covered under a comprehensive plan, such as vandalism.

      If you get into a wreck, you can go to a repair shop and your insurance will cover the cost above your deductible, which is the cost you are asked to cover before your insurance kicks in. It's important for policy holders to understand that a repair shop must be approved by their insurance agency. If it's not and you choose to go to a mechanic not approved by the insurer, there's a chance you'll be stuck with the costs.
    3. Liability insurance. This is the most basic type of policy and therefore typically the cheapest. The primary purpose of liability insurance is to pay for the other parties vehicle damage and medical expenses and to protect you from any potential lawsuits, in case you get into an accident. If you damage another person's vehicle while out on the road, your liability insurance policy will pay for their costs, though it won't cover the damage of your own vehicle. Liability plans are generally adequate for people on a budget who need auto insurance in order to drive.

    Different people, different prices
Don't be worried if your great aunt from South Dakota tells you how much cheaper her car insurance plan is than yours. Prices and rates differ from one state to the next, according to Amy Danise, Insure.com's editorial director.

    "In each state, auto insurance rates are a mix of many ingredients, most of which consumers can't control," Danise told Forbes. "Urban areas, traffic conditions, state insurance laws, competition among insurance companies, the percentage of uninsured drivers and natural disasters all swirl together to influence rates."

    One surefire way to keep your insurance premiums as low as possible is to be a good driver. Moving violations and prior accidents are red flags to insurance companies and will surely take a toll on your insurance rates.