How much money do you think you will spend over the course of your lifetime on car insurance? Using the average amount of $1,587 that each American spends on auto insurance annually, we can calculate as follows:

• If we say on average that we begin paying for car insurance at age 20 and stop at age 80, it comes out to about $95,820 (60 times $1,587).

What if even as little as 10% of that could be saved? That would mean an extra $9,582 in your pocket!

Car insurance is mandatory. Fortunately, you can make car insurance savings a must as well. Following are some areas to consider when you are seeking ways to achieve insurance expense savings while retaining the best protection for your family and vehicles.

Discounts

You might be surprised to learn how many discounts are available on car insurance. Checking with your agent to make sure to take advantage of all that you are qualified for can save big dollars on your policy.

• Multi-Policy: If you have an auto, home, boat, or umbrella policy with the same insurance company, you could receive a multi-policy discount. It can add up to 20% off your total policy premium.
• Multi-Car: Depending on how many and the types of vehicles, you might be able to take advantage of a multi-car discount.
• Safe Driver: If you are a safe driver (meaning no tickets or accidents for the past three years or more), you might be eligible for a safe driver’s discount of up to 5% of your premium.
• Anti-Theft Devices: Using a car alarm system may save you a percentage on the comprehensive premium of your policy.
• Good Student: Good grades for your high school or college student may save you 15% or more on your car insurance. You will need it to offset the higher rates for younger drivers, especially males under the age of 25.
• Senior Citizen: Some companies offer a discount if you are over 65 and have established a good driving record.
• Insurance Friendly Occupations: Insurance companies tend to watch statistics very closely. If they see that workers in certain occupations tend to incur fewer losses, they may be inclined to offer a special rate for those professions. For example, if a member of your household who is on the policy is also a teacher, engineer or scientist, you may qualify for a discount.

These are not all of the discounts that are available. So, ask your agent to apply the savings that you are qualified for on your policy right away!

Deductibles

Deductibles are applied to collision and comprehensive coverages. Before the insurance will begin paying out the claim, you will have to pay the deductible. So, if you have a $250 deductible and the repair bill is $1,000, you will pay $250 and the insurance company will pay $750. A deductible can be anywhere from zero to over $2,000. It’s your choice.

The more of the risk you are willing to take on with an increased deductible, the less annual premium you will pay. The difference could be substantial. For example, going from a $500 to a $1,000 deductible could save you up to 30% on the collision (which usually comprises the highest premium component) and comprehensive portions of your policy.

Coverages

When it comes to coverages, there are two that are mandatory—bodily injury and property damage liability. In addition, if you have a brand new car with a loan on it, your finance company may require comprehensive and collision insurance. Other than that, everything else is optional.

For example, towing may cost you $10 per policy period. Do you really need it? Especially on a new car? Even for an older car, if you are in a wreck, the property damage coverage from the other driver will pay for your vehicle to be towed to a repair shop.

Also, how often do you feel you will have to rent a car because of a collision? If you are hit, the other insurance company will pay for a rental. Plus, many credit cards offer car rental discounts. Consider skipping the car rental coverage.

If your car is an older model and paid off, you might want to consider doing without collision and comprehensive. Look at how much the car might be worth and see if it is even fiscally sound to add those coverages on the policy.

Other Car Insurance Tips

• Limits: Although the dollar difference might not be great, think about the limits that you want to have on your policy. Instead of 100/300/100 limits for liability and collision, 50/100/50 limits might be less expensive. However, make sure you have enough limits to cover all of your assets.
• Credit Score: Many car insurance companies in states that allow it, are reviewing credit scores. They have found that individuals who are credit worthy tend to be better drivers. As a result, they may adjust the auto insurance rates accordingly.
• Professional Organizations: Being a member in an organization such as or AARP or a credit union may also qualify you for discounts on your auto policy.
• Employers: Sometimes employers will cut a deal with an insurance company to offer special group rates to their employees. Check with your Human Resources department to see if such a deal is available at your workplace.

Buying Homeowners Insurance

Shopping for homeowner insurance is one of those nagging home buying details that sometimes manages to slip through the cracks. It’s not unusual for insurance agents to receive last-minute frantic phone calls from title and/or escrow companies requesting a home insurance binder. To save yourself trouble, it’s a good idea to start shopping for a homeowner policy as soon as your purchase offer is accepted. Here are a few tips about buying homeowner insurance that are designed to save you time and money:

Determine Insurability

Your insurance agent needs extensive information from you to quote you the best rate for your policy. To determine insurability, an agent will ask:

• When was the home built?
• How old is the plumbing and electrical?
• What type of roof?
• What’s the square footage?
• How many claims have been filed over the past 5 years?
• Where is the home located?

If the home is located in a rural area without a nearby fire department or there is no fire hydrant on the street, some companies may refuse to insure it. In that case, you may have to inquire at a specialty or surplus-lines company, and this quote will take longer to obtain.

Deductibles

You can save money by having a higher deductible on your policy. Typically, insurance companies will start giving discounts at a 1% deductible and increase the discount as your deductible increases. Most companies offer deductibles up to 10%. Be careful, however, because many mortgage companies will not allow you to exceed a 1% deductible, so check with your lender before opting for a higher deductible.

How Much Insurance Do You Need?

Most agents use a cost estimator to figure cost replacement estimates. This will ensure that your home is insured for the correct amount. Insurance companies do not insure dirt. If you buy a home that includes a large lot, do not be astonished when you receive an insurance policy for a lot less than what you paid for the home. This is because you are buying coverage for the home and not the land.

In the past, replacement coverage was called Guaranteed Replacement Cost. There is no such coverage anymore. Today it is Replacement Cost Coverage, which means each insurance company designates a percentage of additional coverage on top of the insured amount. This is designed to protect the homeowner who has suffered a loss from having to pay additional construction costs to rebuild. It can cost more to build because of inflation or simply because material prices have increased. For example, if the dwelling coverage is insured for $300,000, and the company has 125% replacement cost coverage, the homeowner would receive an additional $75,000.

Policy Options

You have other choices on your home insurance policy that you can tailor. Liability coverage is a part of your homeowner’s insurance policy that is often overlooked. This protects the insured against claims arising from bodily injury and property damage to others. For example, if your five-year-old was playing with matches and set your neighbor’s house on fire, your liability coverage would pay for this damage. You might have to move out of the neighborhood, but your insurance policy would pay your neighbor.

It is common to see $300,000 in coverage for liability, but the cost to raise it to $500,000 is about $20 more a year. You can have up to one-million coverage on most policies. Over that, you need an excess liability policy or “umbrella” policy. Umbrella policies give you an additional $1,000,000 liability coverage for a $300 to $500 premium.

Available Discounts

Make sure that you are getting all of the credits for which you are eligible. If you have an alarm system that reports to a central station (a company such as Brinks or ADT), in some cases, you can get up to a 10% discount. If you are over 50 and care to admit it, you may be eligible for a discount. Companies have different names for age preference policies, from senior discount to mature policyholder discount.

The most common discount is the multi-policy discount. This will save you money on your home and auto insurance. By combining the two policies with the same company, you are given a certain percentage discount on both.

Review Your Policies

Call your agent and review your homeowner policy at least every three years. Needs change, markets change and coverages change. You should stay up-to-date on your insurance because you never know when you will need to rely on it.