The 3 Rules That Can Save You Money on Your Auto Policy

Three simple rules can have a far-reaching effect on your lifetime coverage and premium costs. Keep reading if you want to save money.


Rule 1: Insure for the same event as few times as possible.

Rule 2: Insure for the broadest possible event.

Rule 3: Keep your coverage consistent.

See How Much You Could Save: Save $300-400 or more with discount rates from all major auto insurance carriers, as well as local companies. It takes just one minute. Enter your zip code to start: Enter Zip Code Below   Are you insured?     Yes     No

Rule 1: Insure for the same event as few times as possible.

This rule is most frequently broken by insuring for the same event under different "types" of insurance. A very common example is carrying medical payments coverage on an auto policy and at the same time carrying a health plan that covers emergency treatment.

When you have both these coverages, you're essentially insured for the same event, (being injured in a car accident,) twice over. The money spent on the double coverage probably could have been spent on an area less well-covered.

(Okay, our example here has a couple of flaws, and we'd better point them out before you say "But, what about . . .?")

Medical payments insurance covers you and your family for injuries caused in an auto accident, but it also usually covers the cost of your injuries as a pedestrian struck by a vehicle, and the cost of medical expenses of non-family injured while passengers in your vehicle.

But, a good health plan should already cover you if you're struck as a pedestrian, and as for those non-family passengers, let them fend for themselves. No, not really! But be realistic. If you're insuring the car that you use only for your solo commute, you probably don't need to worry about the immediate medical treatment of non-family passengers.

This isn't the only coverage people commonly "double up" on. Sometime it happens in the same policy! If you're carrying collision and comprehensive insurance on your auto, you probably don't need uninsured and underinsured motorist property damage as well. The collision will cover damage caused to your car by an uninsured driver, and if you're worried about a motorist hitting your house (another event covered by the UMPD policy), you're probably better off with a homeowner's insurance anyway (because of Rule 2, up next).

What it boils down to is this: always pay close attention to exactly what coverage you're buying. If you've got it somewhere else (even on the same policy), don't "double up". Put that premium dollar somewhere it'll do you some good!

Rule 2: Insure for the broadest possible event.

This rule is a little more subtle than the first, because it's not always easy to tell when you're breaking it. You can figure out pretty quickly if you've got "double coverage". It's a little harder to tell if you've got the broadest policy possible.

We'll take a simple example. If you want to insure your house against destruction, you'd rather have, all else being equal, a policy that protected you whether your house was destroyed by flood, fire, hurricane, or tornado, rather than one that covered you for hurricane loss only (especially true if you live in, say, Indiana!)

Simple point, but it applies everywhere. Let's take our favorite policy, medical payments. This policy helps cover your medical expenses should you be sent to the hospital from a car wreck. What about anything else that sends you to the hospital? You're essentially saying "I want to protect myself should a car send me to the hospital, but not if a dangerous infection does".

You'd be a lot better off putting the money you'd spend on the medical payments portion of the auto policy toward a real medical plan - one that covers you for a result (the hospital trip) no matter what caused it.

This rule is a little more vague than the other two, and it probably won't come up that often when you're looking at auto insurance alone.

But it's a very valuable thing to keep in mind, especially when you're insuring yourself with many different types of policies.


Next: Rule 3: Keep your coverage consistent.

Want to learn even more?

Take our quick auto insurance course, and learn the step-by-step to get the most out of your auto insurance policy for the least amount money.

Just ten easy lessons - start today