By Matthew Perry-EW Smith Agency Agent/Partner
A client of named Dave stopped into my office recently. He is married with a two year-old and a baby on the way. Both he and his wife work so they have two new cars to get them back and forth. They were paying roughly $2,950 for the year in insurance premiums with a $250 Broad Form collision deductible on each vehicle. Dave was telling me that with the new baby coming, their expenses were rising and they needed to do something to save money on their insurance. He thought that his best option was to lower his unlimited personal injury protection (PIP) benefits. After reviewing his policy with him, there were five things that we were able to do to save money and KEEP UNLIMITED PIP. He ended up saving $1,050 a year and took his premium down to just under $1,900. You, too, can look into these five ways to save on your premium:
1. Switch from broad form to regular collision coverage
If you have broad form collision, you might want to consider switching to regular collision. Before you do, you must understand the difference between the two. With broad form collision, your deductible is waived if you are not at fault in an accident. With regular collision, you pay the deductible regardless of fault. Most companies will offer a discount if you opt to pay out-of-pocket in some form in all situations. There is also a way to be reimbursed for your deductible if you didn’t cause the accident. Michigan has a mini-tort law. Under this law, you can be reimbursed up to $1,000 from the other person’s insurance company if they were considered responsible for the accident. With this law, you have to know who hit you, and they have to have insurance. There is some risk with switching to regular collision, but with many companies the savings can be worth it. In Dave's case, the savings was the price of the $250 deductible!!
2. Select a deductible you can afford
Most people want the lowest deductible possible but you should actually have the highest deductible you can possibly afford. For one thing, the higher your deductible, the lower your premium. Secondly, having a higher deductible can help you make more responsible claims. Insurance should not be used to pay for every loss that occurs, just the ones you cannot afford. Plus, the more claims you make, the higher your premium will rise. In this situation, higher is better. If you can afford to pay $1,000 when something major happens, then you will be better off and you will save as a result. With Dave and his family, the saving added up over a period of a few years to cover the deductible if something either happened.
3. Join a group such as credit union, mature group.
If you’re not in a group and your insurance company offers a group discount, then join one. They can help you save up to 20% and that percentage all depends on the group. If you are over 50, join a mature group such as AARP or AMAC. It may cost you about $17 to join a group but could help you save up quite a bit year. Dave was an alumni of Wayne State, which helped reduce his cost.
Other group that may also qualify for discounts include Credit Unions, Alumni Associations, Veteran clubs (American Legion, VFW, etc), Unions, Chambers of Commerce, or Fitness Clubs.
4. Start another policy
I know, nobody wants to buy another insurance policy but if you’re not getting a multi-policy discount on your auto policy then you are missing out on huge savings. If you own your home, chances are you have a mortgage that will require you to have insurance. If you do, make sure to purchase your home and auto insurance from the same company. If you don’t own your home, make sure you purchase a renters policy. This policy will cover your personal property, and is often very inexpensive, while still getting you that multi-policy discount. In most situations, the discount on your auto policy will cover the cost of the renters policy and then some. There are other multi-policy discounts available for life and umbrella insurance from the same carrier as well. Dave had his home insurance with another carrier. By starting home insurance with the same carrier as his auto, not only did he save on auto, but on the home as well!!
5. Pay in full – get a discount
If you can pay in full and the insurance company offers a discount for doing so, do it! Many companies offer a paid in full discount of up to 10%. This also avoids any service fees that a company charges for making payments. They can save you anywhere between $4 - $8 a payment. Dave was able to pay in full with his credit card and then use the points toward his next vacation.
If you are having a hard time making ends meet, then don't hesitate make these changes. If you are like Dave and want to save some money for your growing family, we'd be happy to help. Just give us a call.