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04.24.08 | The Best Auto Insurance Tip Ever

Posted in General Financial Information by Credit Card Guy

Want to be smart about how you approach auto insurance? Ever wonder about how to set your deductibles? Here is how I kept my insurance payments low by setting a high deductable and then only having to pay $150 of my deductable anyway. I recently crashed my 2007 Ducati GT1000 motorcycle last Friday on the way to work. I was taking a left hand turn and lost traction on a wet crosswalk the result of which landed me on my helmeted chin and my bike on its side. Other than a bruised ego I’m fine but the motorcycle needs $3,000 in repairs.

When I called my insurance company I asked them how much a $3,000 claim will impact my yearly premium. They said that it would raise my premium about $600 for the next five years. If you do the math, in essence I’ll be paying for the repairs myself over time on top of my regular insurance payments. So what are my payments for? Or better yet what were my 10 years of accident free payments for? Apparently only to have the slip of paper proving I have insurance. So while not every increase in premiums is going to mathematically work out perfectly like this, if you make a claim your premiums will go up and you will in essence start paying for the repairs yourself.

So how does this impact your auto insurance strategy? Since the payments you make all those accident free months don’t benefit you but rather your insurance companies own investment portfolio, you should keep them as low as possible. This means raising your deductibles as high as they can go. What if I get in an accident and I can’t afford to pay a $1,000 or $1,500 deductible you say? Sure you can afford and you can get the benefit of having your money work for you and not your insurance company.

Get an auto insurance quote with the minimum deductible and another with the maximum deductible. Figure out the difference and instead of giving it to the insurance company to have for their own investments, put it into a high yield savings account like the Orange Savings Account and let your money work for you and not them. (If you win a scholarship at www.ScholarshipPoints.com by entering the code: INSURANCE that will help keep cash in your savings account too.)

If you get into an accident it’s better to have a high deductible for which you’ve got a savings account set up. A high deductible means you’re going to end up claiming less because your claim is the total damage estimate minus your deductible. That means your insurance premium will go up less as well saving you even more money. Anyway you look at it making your deductibles as high as possible is the smart move. That is if you can be disciplined and save the difference between the two premium quotes.

Hopefully this saves some of you some money and encourages you to start saving more as a way to insure yourself. I also hope that you take it easy turning wet corners on crosswalks while riding a motorcycle or bicycle or razor scooter.

PS. To even make my point more exciting, my insurance adjuster just looked at my bike and since some of the damage is very minor and hardly noticeable he asked me if I would accept half the payment for a few items and in return the insurance company would lower the deductible I actually have to pay. For mt $1,000 deductible I am actually only going to pay $150 and live with a scrape on my kickstand and the bottom of my muffler which nobody can see so I saved lots of money by keeping my deductible high.

PPS. I should mention that if you buy and insure a nice new car today and smash it up tomorrow before you’ve had time to save the deductible you’re probably in trouble. This tip is a suggestion for those who can save. If you cant be responsible enough to save this might not make sense for you but if you are a saver this is the way to go!

Popularity: 45% [?]

143 Comments »

  1. agnes says

    Very insightful!

    April 28th, 2008 | #

  2. Vanessa says

    good article, but it’s not a topic i’m interested in.

    April 28th, 2008 | #

  3. Timothy Holzem says

    It was mostly good information that would be useful if someone didnt know how insurance premiums and rates go up after an accident. It also was a good source of information esspecially on how to save money by taking lesser claims and other money saving ways so that when that rainy day does come, you wont have massive debt in your lap.

    April 28th, 2008 | #

  4. Leighsah says

    Be careful about calling your insurance company. I don’t know about the rest of the country, but here in Florida, just calling your agent about a possible claim will ding your insurance history. Yes, just the call, not a claim.

    Also, a high-deductible policy is only good if you have the money to pay for the deductible.

    Insurance is also dependent on credit scores. If you have a spotty credit history with a low score, you will pay more for you auto and homeowners insurance in most places in the country. (Some places like California have made it illegal.)

    April 29th, 2008 | #

  5. taylor says

    Very interesting article. I may have to give it a shot. My insurance is sky high now!

    April 29th, 2008 | #

  6. donovan.Reed says

    I Like this Article

    April 29th, 2008 | #

  7. Gi'Tyra says

    Thanks for posting this because now I’m aware if the danger out there and know to call my insurance company today and tell them to switch my insurance from liablity to full coverage!!!!!

    April 29th, 2008 | #

  8. robinson says

    very intersting article. i may have to give this a try!

    April 29th, 2008 | #

  9. PAUL says

    I TOTALLY AGREE. KEEP THE DEDUCTABLESS AS HIGH AS POSSIBLE.

    April 29th, 2008 | #

  10. Leann says

    I think i will think about insurance in a different light for now on.

    April 29th, 2008 | #

  11. jessica says

    very interesting article….i like it

    April 29th, 2008 | #

  12. Jen says

    It’s always good to hear information about insurance in “common man” terms. It is so much more comrehensible than the actual insurance agent’s.

    April 29th, 2008 | #

  13. Stephanie Hernandez says

    I thought the article was interesting, but I like my insurance I have right now.

    April 29th, 2008 | #

  14. Keara says

    agree 100%

    April 29th, 2008 | #

  15. ms says

    this is very helpful and i will have to try this

    April 29th, 2008 | #

  16. lushomo says

    this is good stuff!

    April 29th, 2008 | #

  17. Stephanie says

    I like the article.

    April 29th, 2008 | #

  18. Stephanie says

    I liked this article . very interesting.

    April 29th, 2008 | #

  19. Lisa says

    interesting article

    April 29th, 2008 | #

  20. Linda says

    I will consider it.

    April 29th, 2008 | #

  21. Michelle says

    very very interesting article : )

    April 29th, 2008 | #

  22. Quynh says

    I don’t know much about America but in Vietnam, you shouldn’t trust insurance company. When they introduce the insurance to you, they have many offers but then after you buy it, they don’t keep their promise or don’t give you the offer as good as they say.

    April 29th, 2008 | #

  23. Nicole says

    Learned something new everyday!

    April 29th, 2008 | #

  24. Connor Reilly says

    Great information, I’ll keep it mind when I start paying for my car insurance.

    April 29th, 2008 | #

  25. charles says

    Thanks for the summerized research analysis;your work and time spent organizing this report just saved me money.:)

    April 29th, 2008 | #

  26. Elivia says

    not only is this very insightful, but i really makes you think about maybe having a smarter approach.

    April 29th, 2008 | #

  27. Jun says

    This is very helpful, since i got in an accident recently, my insurace company was able to pay for the rest of the damage on my car since the other person was not covered under full coverage.

    April 29th, 2008 | #

  28. terry says

    thanks for posting this where is this offered we live in florida

    April 29th, 2008 | #

  29. Harry says

    thanks

    April 29th, 2008 | #

  30. bryan pham says

    Very good idea, I have to change my deductible.

    April 29th, 2008 | #

  31. Brian says

    insightful, but the topic bored me.

    April 29th, 2008 | #

  32. jo says

    up with the deductibles!

    April 29th, 2008 | #

  33. Brian says

    very interesting article, completely insightful

    April 29th, 2008 | #

  34. Brian says

    Both interesting and insightful

    April 29th, 2008 | #

  35. Eva says

    Very insightful! I have never been told having a high deductible can be beneficial.

    April 29th, 2008 | #

  36. Erica says

    I agree.

    April 29th, 2008 | #

  37. Zink says

    this plan is sound. The trick is keeping the savings account flush by continuing to fund it with the monthly savings you make over the low or no deductible rate.

    April 30th, 2008 | #

  38. feilong says

    This is a great article that provides info about insurance.

    April 30th, 2008 | #

  39. Angela says

    Interesting article.

    April 30th, 2008 | #

  40. narayan dhakal says

    good information.april 30

    April 30th, 2008 | #

  41. Lety says

    wow!

    April 30th, 2008 | #

  42. Jordan says

    Thanks for the knowledge, for those of us who don’t like to learn from first hand experiences, I appreciate what you have taught here.

    April 30th, 2008 | #

  43. alexa says

    this is very helpful information that I very much needed

    April 30th, 2008 | #

  44. BAMLAKU says

    VERY INTERSTING ARTICLE

    April 30th, 2008 | #

  45. Bayina says

    trouble does never come alone :-(

    April 30th, 2008 | #

  46. Juliana says

    This is very informative, but not provided by the insurance company when you call them. THANKS

    April 30th, 2008 | #

  47. Jo says

    Wow

    April 30th, 2008 | #

  48. Nikki says

    This is helpful information. One year ago I was involved in a four car pile up. I was the last car so the blame was put on me, when the first two cars had already hit before my approach and the car in front of me slammed on brake to avoid hitting them and she still slid into them and I then slid into her. Anyway my insurance provider had to pay for all cars involved and including mine which was the worst. My insurance premium went up ofcourse. I had been paying for insurance for so long without any accidents or even tickets for that matter I felt it was wrong, so I switched insurance company’s, however I have always been told that I should keep my deductibles as low as possible.

    April 30th, 2008 | #

  49. Josh says

    very interesting

    April 30th, 2008 | #

  50. DineshaNeal says

    very helpful
    will use

    April 30th, 2008 | #

  51. Heather says

    good advice

    April 30th, 2008 | #

  52. Credit Card Guy says

    I should reiterate that this advice is only for you if it makes sense for you. If you are scared about having to pay a high deductible because you are not a good saver then by all means leave your deductibles low. In an ideal world however one should simply save their extra money and use it only if they get into an accident rather than giving it to the insurance company and never seeing it again.

    April 30th, 2008 | #

  53. Amanda says

    Good article. Thanks.

    April 30th, 2008 | #

  54. school mom says

    Cool information!

    April 30th, 2008 | #

  55. Sarah says

    I knew this…good to have the confirmation.

    April 30th, 2008 | #

  56. Shane says

    not bad

    April 30th, 2008 | #

  57. AFA says

    very informative, thanks

    April 30th, 2008 | #

  58. Devin says

    It good for someone who didnt have the extra cash for repairs

    April 30th, 2008 | #

  59. Brandi says

    Excellente! I liked it!

    April 30th, 2008 | #

  60. Kaci says

    helpful

    April 30th, 2008 | #

  61. Patricia says

    Awsome advice.

    April 30th, 2008 | #

  62. DeAnn says

    Insightful, but nothing i needed to know.

    April 30th, 2008 | #

  63. Abigail says

    INformative but a topic not of interest to me

    April 30th, 2008 | #

  64. Amanda Hape says

    Thanks for the information!!!

    April 30th, 2008 | #

  65. Fawn says

    Thanks

    April 30th, 2008 | #

  66. Joyce says

    Interesting

    April 30th, 2008 | #

  67. Larry says

    If people were careful drivers in the first place, they would not need insurance.!! Good article though.

    April 30th, 2008 | #

  68. brittaney says

    cool

    April 30th, 2008 | #

  69. Kelsie says

    Nice

    April 30th, 2008 | #

  70. BOTHOMAS says

    It sounds good if you have enough to save to do it.

    April 30th, 2008 | #

  71. Georgie says

    Interesting

    April 30th, 2008 | #

  72. andreina says

    thanks for making the article and informing ppl of this.

    April 30th, 2008 | #

  73. heather says

    Im glad i dont have a motorcycle…

    April 30th, 2008 | #

  74. Alma says

    Good seggestions

    April 30th, 2008 | #

  75. Lori says

    very interesting and informative, thanks for such info
    Lori

    May 1st, 2008 | #

  76. Justin says

    sad to see a ducatti smashed. interesting though.

    May 1st, 2008 | #

  77. Omede Ugbeta says

    Very good Information. But you dont blame the insutance company. The entire living is for those who can think. Remember yo said for those who can save. So for those who cannot save, the insurance outfit will have to be making there own earnings from them. But in all,it is a good write up because it will enlighten those who can save on their own.
    Regards.

    May 1st, 2008 | #

  78. Summer says

    I do not drive nor do I own a car, however, I hope to change that, and when I do this blog will prove to be very helpful.

    May 1st, 2008 | #

  79. Kate says

    Interesting, doesn’t really have to do with me though.

    May 1st, 2008 | #

  80. christina says

    hmm…

    May 1st, 2008 | #

  81. Karen says

    We used to have a motorcycle - glad we don’t have one anymore.

    May 1st, 2008 | #

  82. janay says

    this is good stuff

    May 1st, 2008 | #

  83. monica says

    i would say very enlightening

    May 1st, 2008 | #

  84. Thi says

    very informative. great details

    May 1st, 2008 | #

  85. Allison says

    Insurance companies drive me crazy!

    May 1st, 2008 | #

  86. Brenda says

    That is very good tip. I will start it tomorrow.

    May 1st, 2008 | #

  87. Credit Card Guy says

    Please check out my new addition. Not only did I set my deductible high and save money, I only had to pay $150 of it in the end.

    May 2nd, 2008 | #

  88. ka says

    Helpful information for those who do not have auto insurance.

    May 2nd, 2008 | #

  89. Autumn Piller says

    Cute editorial makes sense and it’s creative. I agree that I just saved alot of money on my car insurance.

    May 2nd, 2008 | #

  90. Tasia Landon says

    Great!

    May 3rd, 2008 | #

  91. Holly says

    very good, I like this alot.

    May 3rd, 2008 | #

  92. KDub says

    I agree, a higher deductable means lower payments thus leading to less money the insurnance company can make off of you. Higher payments makes the shareholders really happyl

    May 4th, 2008 | #

  93. Sherri says

    Good information

    May 4th, 2008 | #

  94. KAY says

    thanks. best tip. ask friends and shop around.. but nice store though

    May 4th, 2008 | #

  95. Amy says

    Thanks for the helpful tips on auto insurance!

    May 5th, 2008 | #

  96. jg says

    very good

    May 5th, 2008 | #

  97. kamari says

    i thought this was a very informational articvle and this could help a lot of people out and purchising auto insurance

    May 5th, 2008 | #

  98. stacey says

    ride a bike.

    May 5th, 2008 | #

  99. stacey says

    buy a bike.

    May 5th, 2008 | #

  100. Amanda says

    This was alright… I dont deal with insurane at all right now though.

    May 5th, 2008 | #

  101. Sara says

    new cars are expensive all the way around.

    May 6th, 2008 | #

  102. Da says

    agree

    May 6th, 2008 | #

  103. Elizabeth says

    Cool

    May 6th, 2008 | #

  104. Ted says

    I would say that the information is insightful…but I would look around some more to see if this supports it.

    May 6th, 2008 | #

  105. Jeanie says

    Good article with great points.

    May 6th, 2008 | #

  106. Deb says

    Very cool info

    May 6th, 2008 | #

  107. CORTNEY says

    THANK FOR THE INSIGHT

    May 6th, 2008 | #

  108. Carol Alexander says

    good information

    May 6th, 2008 | #

  109. Jen says

    Interesting…

    May 6th, 2008 | #

  110. Robin says

    I can dig it

    May 6th, 2008 | #

  111. Gustavo says

    Very helpful article. I strongly agree with it!

    May 6th, 2008 | #

  112. James says

    umm man that kinda stinks that you crashed your car

    and i def know that i need to save my money

    May 6th, 2008 | #

  113. Cherish says

    I totally agree.

    May 6th, 2008 | #

  114. Sarah says

    Great info

    May 6th, 2008 | #

  115. saleta says

    agree!! kudos

    May 6th, 2008 | #

  116. Crystal says

    I liked that

    May 6th, 2008 | #

  117. Kayla says

    cool

    May 7th, 2008 | #

  118. Kayla says

    that was neet

    May 7th, 2008 | #

  119. Barbara says

    Cool

    May 7th, 2008 | #

  120. Savannah says

    Good information. I had to learn the hard way. I had gotten into a fender bender and I have full coverage insurance, my insurance went up and I paid for it out of my own pocket. I don’t understand why because I wasn’t at fault.

    May 7th, 2008 | #

  121. Kara says

    Very informative. Since I new to credit this was very interesting info for me to be aware of. Thanks!

    May 7th, 2008 | #

  122. Stephen says

    Great Info! Thanks.

    May 7th, 2008 | #

  123. Maria says

    Good information about inusrance premiums!

    May 7th, 2008 | #

  124. Tanesha says

    that was really interesting

    May 7th, 2008 | #

  125. Maranda says

    Very informative.

    May 7th, 2008 | #

  126. Jeremy says

    Very helpful.

    May 7th, 2008 | #

  127. carmen says

    awesome!

    May 7th, 2008 | #

  128. john says

    Verrrry! interesting

    May 7th, 2008 | #

  129. paige says

    interesting but long

    May 7th, 2008 | #

  130. ije says

    thanx for the advice, i’ll save it for later…getting my license soon.

    May 7th, 2008 | #

  131. Raymond Cruz says

    interesting information

    May 7th, 2008 | #

  132. Raymond Cruz says

    so in reality the insurance company is there for the love of the money and not as an in case option.

    May 7th, 2008 | #

  133. Erika Ball says

    cooleo

    May 7th, 2008 | #

  134. John says

    Good Article

    May 7th, 2008 | #

  135. simon says

    INTERESTING IT IS!

    May 8th, 2008 | #

  136. Carl says

    very good and informational article

    May 8th, 2008 | #

  137. Virginia says

    Good article. Very helpful info.

    May 8th, 2008 | #

  138. amanda moore says

    very interesting thank you

    May 8th, 2008 | #

  139. amanda moore says

    thankyou.

    May 8th, 2008 | #

  140. Marina says

    very informative! We can always benefit from others’ experience.

    May 8th, 2008 | #

  141. Yolanda says

    Yes, I agree. I have a high deductible.

    May 9th, 2008 | #

  142. shannon says

    haha smart one…never would of thought of it..

    May 9th, 2008 | #

  143. sybill says

    nice

    May 9th, 2008 | #

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