That Smith

We all know that people do a lot of stupid things. If you happen to watch TV commercials then you probably know that paying too much for car insurance doesn’t have to be one of them.

In my first post on financial discussions I talked about people buying things they really don’t need. Laura and I decided it wasn’t worth paying $45 a month for cable so we dropped the service to see how we would do without it. I have also been following the progress of an acquaintance who says she needs to stop buying stuff just because it’s on sale. She reported to me today that she hasn’t purchased any extraneous items since our last conversation, and is taking my advice and transferring her higher interest credit cards to a low interest American Express (I will talk more on the beauty of balance transfers later).

Another stupid thing I see a lot of people do is pay more than they have to for services they use. Usually this happens because they don’t take the time to shop around, or never go back and audit their expenses to see if there is the potential to save money.

As I mentioned on Tuesday, I discovered that I could get a discount on my internet by calling to “cancel” my account. While this may be a deceptive practice, canceling the cable and lowering my internet bill will save me $780 / year (an extra mortgage payment on a new house?). In addition to the $65 a month I have already started saving this week, earlier this summer I decided to shop around for car insurance to see if I could save more by getting a lower rate.

I found out that if you have a fairly decent credit score, a lot of times you can in fact get a better deal on insurance. I happen to have good credit because I place a higher importance on paying my bills on time than I do buying nice stuff or eating. There’s time for those things later.

In short, up until late June, Laura and I both had Liberty Mutual car insurance. Our cars are fairly old, and there is no reason to pay for full coverage when you won’t get that much back if you total your car, so we insured them for liability only which cost us $115 per month. We have a 1994 Honda Accord with 105,000 miles and a 1999 Chevy Cavalier with a salvage title and around 118,000 miles.

I typed our information on Progressive, Allstate, State Farm, and Geico’s websites to receive quotes and was amazed that almost all of them offered a lower rate (sorry Liberty Mutual). The Liberty Mutual staff was always excellent to deal with, probably because I have never had any tickets or claims, but Geico happened to save me 60% a month so I switched to them.

If you haven’t shopped around for car insurance recently then you probably should, and tell them I sent you (maybe I will get to be their new spokesman). A few family members and one of my co-workers that has a fairly unstable driving record have since researched quotes and each found that with a few tickets and full coverage they will still save money if they switch from who they are currently with.

If it turns out that you can’t get a lower rate, then at least there is no harm done.

Note: Geico has not paid me to praise their name, but any thanks or donations are welcome.

Photo: HolyHolySnappers