Insurance is a sucker’s game. The only way to win is to buy as little of it as you can to avoid major losses and self-insure for the little things.
The following are 15 tricks that you, a Smart Riskologist, can use to slash your car insurance premiums along with your need to complain about how expensive cars are.
How many are you smart enough to put into action?
1. Drive a shitty car.
You cannot be a Smart Riskologist if you drive a brand new car. This is not my frugal opinion; it’s a fact. Put any group 10 economists in a room together, and they’ll disagree on pretty much everything except that buying a new car is a dumb consumer move.
I don’t care who you are, there is no way to make owning a brand new car pan out financially. This is especially true when it comes to lowering your insurance bill.
Owning a fancy new car will also land you the most expensive insurance policy to cover it, even if you have a liability-only policy.
To understand why, just think like an insurance agent would. What would you charge a friend if they asked you to pay for any damage they do to their brand new Corvette? Now, what if they were driving a nicely maintained Toyota Camry that’s a few years old?
Which car is more likely to be driven responsibly, resulting in a lower risk of accident?
2. Own your car! (Like, actually own it)
If you lease your car, you’re already paying too much for insurance (and everything else associated with driving).
Why? Because when you don’t own your car, you don’t get to set the rules about what type of insurance you’ll buy—the person or company who owns it does. And businesses that allow other people to drive their cars are notoriously conservative.
Wouldn’t you be? Would you let your friend borrow your brand new car for 5 years without getting an insurance policy that would replace it if they crashed?
If you lease your car, no leasing agent is going to let you drive their car around without a guarantee that if you crash, they won’t have to pay anything to replace it. You’ll be required to have comprehensive insurance which is, in every instance, a giant waste of money.
If you’re thinking, “Aha, I’m so smart! I skipped the lease and got a loan to buy my car!” you’ve still been had. If you have a loan, you still don’t own your ride! The bank does, and they’ll be setting the rules for your insurance policy until you pay them back every last dollar you owe on it (which is, of course, more than the car was ever worth).
If you want to set the rules for what type of insurance policy you take out on your car and get the lowest rate, buy it outright. If you can’t afford to buy your car with cash, you can’t afford to drive. Keep toning that sexy body on your bike for now.
3. Never purchase comprehensive insurance.
There are two types of car insurance: Liability only and comprehensive. One covers damage you to do other cars, property and people. The other covers, well, everything else. The only thing you need to remember to drastically lower your insurance cost is this: NEVER buy comprehensive insurance.
Comprehensive insurance is for suckers who can’t afford their cars. Since you’re a Smart Riskologist, you bought a nice, reliable ride with a small portion of your available cash, and now you’re free to purchase whatever insurance policy you like.
And damn it, the policy you like is going to be a simple, no frills liability only one that’s a fraction of the cost of comprehensive, you handsome and intelligent insurance shopper, you.
4. Choose the minimum coverages and select the highest deductible possible.
Repeat after me: “I cannot beat the insurance company. They will always win in the end. The only way to level the playing field is to pay as little as possible for the coverage I’m required to have.”
Good job. You now understand the most basic rule of insurance. Never forget it.
So many people are reamed by their insurance company every year because they don’t understand simple math. As a Smart Riskologist, you must vow to never allow yourself to be one of them!
When you purchase your auto policy, buy the minimum coverage your state allows, and check that your health insurance covers auto accidents (usually it will).
“But what if I hurt somebody else?” you ask.
Great question, fellow Riskologist. The answer is:
Even the minimum liability insurance coverage will cover the most likely injuries to another person.
“But what if the worst possible thing ever happens, and I seriously injure a million people!?”
Fear not, fellow Riskologist. Could this happen? Yes. Will it? Probably not! Properly playing the insurance game means planning for the most likely scenarios. Statistics are your friend! To lower you risk even further, stop driving to places you can walk or bike to, lazy bones!
5. Drive less often/lower your annual mileage.
In addition to the car you drive and the insurance you purchase, there are some simple things you can do that make insurance agents actually want to throw cash at you like you’re their favorite stripper. Driving less is one of these things.
An insurance underwriter is concerned with just one question: how likely are you to cause a wreck and cost them a lot of money?
One of the biggest factors they’re going to consider is how much you actually drive. When you’re not in your car, you’re not a risk to your insurance company.
My insurance policy is based on the lowest tier of miles traveled each year—less than 5,000—and I save a boatload of money for it. This is because your odds of being in a wreck increase linearly as you drive more miles. So, cutting the amount of miles you drive by 50% equally lowers your risk of an accident by 50%. Less exposure = less risk.
Get a job closer to home!
Stop driving to the convenience store down the street!
Go for a walk instead of a drive!
Anything you can do to lower the miles you travel each year will lower your auto insurance risk and, therefore, your premium.
You might even look into auto policies that only charge you when you’re actually driving. I looked into MetroMile but, at the time of this writing, they weren’t competitive for me compared to a standard policy.