Who: Stephen Shepstone, 46, an insurance claims manager who lives in Athens, Georgia.
Why seeking savings: Shepstone is trying to keep his insurance rates as low as possible because two of his four kids will be driving soon, which means his insurance premium will rise.
How he saved: A few strategies have paid off. First, Shepstone shops around regularly for cheaper rates. When his previous insurer, Cotton States Insurance, bump up its premiums a few years ago, Shepstone and his insurance agent found lower rates through a regional insurer, Donegal Insurance, for Shepstone’s two cars and camper Shepstone has remained with Donegal because of its lower rates. He pays about $1,200 annually to insure two cars – a Lincoln Aviator and Mazda3 – as well as a camper. He receives a discount for having his homeowner’s insurance through Donegal as well.
About six months ago, Shepstone’s insurance agent compared his current rates from Donegal to companies such as Progressive and Nationwide. “No one could touch the rate with Donegal,” he says.
When disaster strikes: Shepstone had considered dropping his collision coverage, which pays for damage to your vehicle in the case of an accident, to save additional money. But having collision coverage, which is optional but which auto lenders typically require, came in handy this fall when Shepstone was in a car accident. His previous car, a 2006 Chevy Malibu that had 116,000 miles, was totaled. Shepstone says he was not at fault in the wreck.
While deciding what new car to buy, Shepstone considered the effect on his insurance rates. He realized that buying a new vehicle could cause his premium to rise more than buying an older model would, so he purchased a 2010 Mazda3. As a result, his rate went up by $40 every six months. “I buy used cars because rates are lower on a used car,” he says.
The tip: When people are looking for a used car, many of them buy one at the lot without giving it much consideration, Shepstone says. He suggests writing down the VIN (vehicle identification number) or asking the sales agent for the VIN. Then call your local insurance agent or insurance company before making a decision and starting negotiations to buy a vehicle. You can find out how much your insurance rate will increase or decrease before you buy it.
The expert says: J.D. Power and Associates’ 2012 U.S. Auto Insurance Study found that 63 percent of auto insurance customers saw their rates jump by $50 or more within the past year. In a news release announcing the findings, Jeremy Bowler, senior director of the insurance practice at J.D. Power, says those rate increases may prompt customers to shop around.
Although insurance costs don’t decline as a car ages, you might get a lower rate by buying a used car versus a brand-new one. Shepstone’s agent, Kevin Johnson with Johnson Insurance Services in Georgia, says a big reason for more affordable rates is the greater availability of car parts for older models. It can cost less to repair – and insure –an older vehicle because aftermarket parts may be more readily available than manufacturer-made replacement parts.