4 Ways to Offset Auto Insurance Increases When Adding Children to Your Policy
David Bakke has a young son and lives in Atlanta, Georgia. He shares his insights related to money management and insurance on the blog, Money Crashers Finance.
Kids are expensive – no doubt about it. And just as they get older and you think you’ve made it through the expense avalanche, bam, they go on your car insurance policy. According to a recent study, adding just one teen driver will raise your premium by an average of 44%. But instead of cutting off your teenager, try these tips for adjusting your insurance to offset this increase.
1. Raise Your Credit Score
Most insurance providers factor in your credit history when quoting you a premium, so one way to balance out the impact of adding kids is to raise your credit score. Pull your credit report for free – everyone’s entitled to one annually from each of the three reporting agencies – and check it for errors. Believe it or not, mistakes do happen, and you could be paying more for something you didn’t do. Then start paying your monthly bills on time and reducing your credit card balances. This has a huge effect on your score and could very well impact your rates.
2. Shop the Competition
Instead of spending hours on the phone or online waiting for quotes, enlist the help of a professional to do the legwork for you. Independent insurance agents offer unbiased insight on where to get the best price. They’re indebted to no specific company, and their sole goal is to get you a good rate. It makes no difference if you get you’re insured by 10 different companies in 10 years, as long as you’re getting a fair deal and the agent and insurance company are legitimate.
3. Review Your Coverage
Once your car is paid off, you can look at dropping certain coverages to save some dough. Some will tell you to drop both comprehensive and collision if your car doesn’t have much value, but I would reconsider letting go of comprehensive auto insurance coverage, which covers potentially expensive damage to your car, such as fire, vandalism, theft, and forces of nature. The $10 a month you save on your payment today will seem very sad if a storm damages your car tomorrow.
As for collision, the collective wisdom is that if your car is seven years or older and your collision premium exceeds 10% of the car’s value, you should consider dropping it. Another option if you still owe on your car is to raise your deductibles. Just don’t do it without considering the risks. If you raise your deductible from $500 to $1,000, make sure you have an extra $500 tucked away somewhere so you don’t get burned in the event of an accident.
4. Stay in Touch With Your Agent
I’ve had the same insurance agent for 12 years. I actually meet up with her for lunch a few times a year, not so much because I love her company but because things change in people’s lives, and when they do, it can affect the rate you pay. A thorough conversation keeps us up to date. As you age, your premium gets lower. Getting married also has a positive effect. Have another baby? Yes, that could lower your rate as well. Even a switch in jobs that results in a shorter commute might reduce your premium. The point here is that communication is key, so keep your agent in the loop.
To see if you can save on your auto insurance and improve your driving habits, go to the Progressive website and request a free device called Snapshot. You install it on your car, and it monitors your driving habits for 30 days – including mileage driven, rapid accelerations, and the amount of sudden stops. If you’re a safe driver, Progressive might offer you a discount of up to 30%. Whether you take that policy or not, you gain insight into your driving style. Any or all of these moves could lower your rate and reduce the sting when your teen is ready to hit the road.
How else can you reduce your premium when you’re adding a teenager?