As people who buy car insurance, we want stability, as we do with most things in life. Opening your insurance renewal and seeing the increased price brings you down.
Even more frustrating is when you pull out the old policy and compare it side by side with the new one, but you can’t find any real difference in coverage to explain why the new one is more expensive. Why is the number going up?
It’s likely because of the hidden costs of car insurance. In this article, you know some things that can affect the price of your auto insurance, and since you can’t always avoid them, it will also help you plan for them.
This article will also talk about ways you can save money to make up for some of these price hikes.
Payment Fees On Monthly Basis
When it is about insurance, the mode you choose to pay for it holds equal importance as to what coverages you pay for.
You are choosing the most expensive way to pay for insurance when you choose to pay the insurance premiums as monthly installments. Why? Because it costs money to handle these payments, your insurance company will charge you an “installment fee” to cover these costs.
Because insurance companies prefer to hold on to your money, they’ll offer you a discount for paying in full upfront.
So, if you opt to pay premiums quarterly (four times a year) or semi-annually (2 times in a year), you tend to probably save money. And if you choose yearly payment, which is the “pay-in-full” option, it turns out to be more suitable!
Paper Payment Fees
If you look forward to paying your insurance bill by sending a cheque via mail, or if you intend to get the paper billing statements, you might need to pay more. The insurance company has to pay for postage and all that paperwork, and they’ll often try to pass those costs on to you.
So, you get a break on some of those extra surcharges and fees if you don’t use paper, pay your premiums online, and set up automatic payments. Also, you’ll save some trees and avoid being late on payments. Win-win!
Rental Car Reimbursement Coverage
Depending on the damage, a bad car accident could keep your car in the shop for a few weeks. That makes me wonder how you’ll get around while your mechanic works on Old Betsy.
Rental car reimbursement coverage is an optional coverage that gets you paid for a car on rent or public transportation in the event that your car needs some repairs after an accident.
Sometimes, adding this coverage to your monthly premiums costs as little as $2, which might seem like a good deal. But it could sometimes cost more than $175 a year.
Honestly, you might not require this protection. If you already have an emergency fund or access to a second car, you may be able to get a loan.
Coverage for Roadside Service in an Emergency
An emergency roadside assistance plan might come in handy when you’re stopped on the side of a highway with a flat tire. It’s additional coverage that can be a part of your car insurance policy if you want. It helps pay for things like getting a flat tire fixed by someone or when someone takes your car to a mechanic for repairs.
Like rental car reimbursement coverage, emergency roadside coverage doesn’t cost much. But if you already have roadside assistance from a service group, this is just additional coverage that you can think of leaving out.
What you need to know about your car insurance quote: You wish to have “full coverage,” which includes liability, comprehensive, and collision coverage. Thereafter, you can see if you are willing to keep any other kind of coverage. But the truth is that you might be able to handle the more minor risks yourself if you have a fully funded emergency fund.
Not sure? It is advisable to get in touch with an insurance sales agent to determine which coverages are required and which ones aren’t essential.
Here’s another add-on that is often sold with life insurance. The accidental death rider gives you extra coverage if you die in an accident that wasn’t natural.
For instance, you might buy a $500,000 life insurance policy with a $500,000 accidental death rider. The original $500,000 death benefit will go to your loved ones if you die of a heart attack. But if you lose your life in a car accident, the receiver would get the double amount or a total of $1 million.
Just because you died in an accident doesn’t mean your family needs twice as much. Stay away from these tricks that could raise your premiums by hundreds of dollars a year. A life insurance policy that pays out 10–12 times a year’s wage will suffice.
You’re probably right if you think that hidden insurance costs are trying to rip you off. It is, however, advisable to take out some time to understand your insurance coverage and ask your agent if you wish to bring in some changes to the policy that can help you save a considerable amount on your premiums.