The saying, “you don’t get something for nothing,” is popular because it’s true – even when it comes to your car insurance. If you want to save some money on your coverage, you might have to make a few small sacrifices along the way. We’ve compiled a list of five trade-offs that could save you money on your insurance, so read on to find out what you’re willing to give up for a little more money in your bank account.
Trade a higher deductible for a lower premium.
If you’re not familiar with the terms, “premium” refers to the monthly payments you make to secure your policy, and “deductible” refers to the amount of money you agree to pay if you were to make a claim. Many insurers offer lower premium payments if you agree to pay a higher deductible, since the added money you’ll be putting towards your claim lowers the risk they’re assuming by insuring you. One personal finance expert calculates that if you were to make a claim once every five years, you could save $1,750 on your insurance premium over that timespan – even with the higher deductible.
Trade smaller monthly payments for a larger annual payment
Smaller monthly payments might seem easier in the short-term, but paying your entire premium in one large lump sum at the beginning of your term could save you up to 9 percent off your total costs. As an added bonus, you’ll never have to worry about missing a monthly payment. If you don’t have the money ready for your annual payment this year, start planning now for your next term. This could mean saving money from your tax refund or annual bonus, or just putting a little extra in a savings account with every paycheque.
Trade your collision coverage for savings on your payments.
One easy way to save money on your car insurance is to drop unnecessary coverage. Of course, it’s important to have a policy to protect you in the event of a disaster, so only drop coverage if it makes sense. For example, if you’re driving an old car, you might be paying more for collision coverage over the course of a year than you would receive in return if you were to get in an accident and need to replace your car. If you do drop your collision coverage, make sure that the money you would be paying towards it goes in the bank, so you’ll be prepared to buy a new car if necessary.
Trade your driving data for the chance to receive a discount.
Some insurers are offering a new kind of insurance plan that trades your driving data for a potentially lower premium. In a Usage-Based Insurance plan, drivers install a telematics device in their car to track their driving behaviour, such as acceleration, braking, speed and distance driven. This information is then shared with their insurer, in return for a small break on their premium. The real savings come when it’s time for renewal. If a driver’s data supports that they were safe behind the wheel, they could receive up to 30 percent off their premium.
Trade your current provider for an even better policy with someone new.
Change is rarely easy – unless it can save you money. When it comes to your insurance provider, don’t renew your current policy until you’ve compared similar quotes with other companies. Different insurance providers will offer different plans and prices, even for the same driver and vehicle. In addition, insurers change their rates regularly, meaning your policy might no longer be the best price available. You can easily compare quotes online, making this a quick and painless process. If you are able to find a better deal, it’s time to trade-in your current provider for a new and better policy. If not, you can renew your contract knowing that it’s the best available option.
At the end of the day, it’s up to you what sacrifices are worth the savings. If you’re not sure how to proceed, call up your insurer and chat about ways you can save on your coverage. And remember, it doesn’t cost a thing to compare quotes and potentially find a better policy at a more affordable price!