Tip #13: How to negotiate your car insurance

This is Tip #13 of of the Save $1,000 in 30 Days Challenge. (See past tips.)

Today’s tips is to negotiate your car insurance. Most of us pick a rate once, then never go back again. But if you do, you can save hundreds of dollars each year.

First, check to see if you have the right amount of coverage. Nobody teaches us about this stuff, so when you bought car insurance, you may not have known which coverage options to choose.

Second, figure out what kind of coverage you currently have and how much you’re paying. Don’t be lazy — do this. If you don’t have your current info in front of you, how can you hope to save? Either call your car insurance company or use their website.

Third, it’s time to start shopping around. I prefer the phone because I can usually sweet-talk the rep into telling me about other deals that the websites don’t offer. Computers, however, seem to be immune to my charm.

I made it easy for you. Here are the phone numbers of the big insurers:

Geico: 1-800-861-8380

AAA: (866) 539-8033

Allstate: 866 704 9900

Progressive: 1-800-776-4737

21st Century Insurance: Don’t use this worthless insurance company. I used to use them, but they sent me multiple envelopes in the mail EVERY SINGLE WEEK until I finally canceled them. The rates were great, but the hassle wasn’t worth it.

Fourth, be an expert caller by asking these questions.

With each call, you should say, “AAA (or whoever) is offering to insure me for $XXX less” (silence). See what they do. (Note: Getting lower rates using this technique is much harder to do with car insurance companies than banks, so don’t expect very much from this.)

How much would I save if I insure my car and house with you?

What about renewal discounts? How long have I been a member with you? What can you offer me as a discount for long-term membership?

Can I save money by pre-paying my entire year up front?

Let’s check my car. I know other firms offer discounts for features like anti-lock breaks. What about you?

What kind of low-mileage discounts do you offer?

If I enrolled in a defensive-driving course, what kind of discount would you offer? Oh, really? Which courses qualify?

What about discounts for my employer? (Tell them the specific name of your employer?)

Some insurance companies offer discounts for low-risk occupations (engineers). What kind of competitive rates do you offer?

Am I paying for roadside assistance? What other additional “benefits” am I paying for? (If you already pay for AAA, you don’t need roadside assistance through your car insurance. Also, check your credit card: They may offer roadside assistance (but call them and ask how much it really costs if you have to use it – some of their offers for “roadside assistance” really mean “we will assist you by calling someone for you and then charging you out the ass”).

Can you walk me through the deductible changes I could make to save money? (Deductibles are what you pay before your insurance policy kicks in. By requesting higher deductibles, you can lower your costs substantially. For example, increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage cost by 15 to 30 percent. Going to a $1,000 deductible can save you more than 40%. Before choosing a higher deductible, be sure you have enough money set aside to pay it if you have a claim. More details here.

AAA, Costco, credit cards, large employers, associations (AARP, teachers’ union): Many of these offer discounts on car insurance. Log onto their website and browse to “perks.”

Read more ways to save on car insurance.

It seems like a lot of work, but the savings are substantial. I took screenshots of the different rates that different insurance companies were offering me:

Well, as you can tell, that slideshow is completely worthless since you can’t see anything — but the difference between the lowest quote (Geico, which I use) and the highest (Progressive) is $734 per year. That’s a lot for a few phone calls.

Don’t forget: Insurance is not a commodity. If you pick the cheapest provider to save $50/year and they end up not fulfilling your claim — which you could have reasonably known by searching out reviews for the company — it’s your fault. Pick a good company because it can be worth thousands of dollars.

As you’ve seen, “negotiating” your car insurance is mostly about keeping up with the changing rates and making sure you’re wringing every last benefit from your policy, so set a calendar reminder to do this once per year.

Try it out and let me know what you find in the comments.

Total savings: $25 to $100 per month

Last thing to do
1. Check out the other tips in the Save $1,000 in 30 Days Challenge
2. Leave a comment on this post describing how much you’re saving with this tip and any unusual techniques you use to make this tip work.
3. Want to submit your own savings tip? Submit a money tip here. Most of the tips you guys submit are absolutely horrible, so if I use your tip, I’ll send you something cool.

Credit card perks you didn’t know about (part 2)

See Part 1 of credit card perks you don’t know about. Marketers know that it’s much more cost-effective to serve your existing customers rather than spending a ton of money to acquire new customers. Cost-effective, yes, but it’s sure sexier to spend money on Superbowl ads and stupid social-media spends. The same is true of our personal finances. You could spend 10 hours per month moving your money from one high-interest account to another to eek out an extra 0.5% interest, or you could just take advantage of what you already have. One way to start is with your credit cards. A lot of people ask me why I use my credit card for 95% of my spending. I do this for three reasons: Convenience (easily downloadable, trackable, categorizable), to build credit history, and huge consumer benefits. Yesterday I got this list of perks in the mail, and it included a few I didn’t even know about. These perks are standard on most cards, so call yours to find out what you have. See a bigger version I’ve copied the best ones below. Did you realize you got all (or most) of these perks with your credit card?

You have our dedicated concierge staff to assist you. The 24-hour personal concierge service will make your dinner reservations, purchase tickets to events, coordinate business arrangements worldwide and locate hard-to-find items. Your concierge can assist you with gift selections as well as other requests to simplify your life. Car rental insurance Provides up to $50,000 in secondary coverage against collision or theft when you reserve and charge your car rental to your card and decline the car rental company’s collision, loss/damage waiver insurance. Retail purchase protection Protects most purchases made on your card against theft, fire and accidental breakage of up to $500 for up to 90 days from the date of purchase. Price protection If you buy something with your card and then see it advertised in print for less within 60 days, you will receive a refund for the difference up to $250. (Excludes internet purchases and certain items.) $0 liability for unauthorized purchases, online or off Complete protection against the unauthorized use of account. Extended warranty Coverage duplicates the terms of the U.S. manufacturer or store warranties of one year or less up to a maximum of 12 months on most items you purchase and is limited to the lesser of the amount charged to your card or $10,000. Trip cancellation/trip interruption coverage If you are prevented from taking or continuing a trip you billed to your account, you are eligible to receive up to $1,500 in Trip cancellation/trip interruption coverage Lost luggage coverage You are eligible for up to $3,000 in lost luggage coverage for you and your dependents when you charge your entire common carrier fare to your Citi World MasterCard. This benefit covers permanently lost, stolen or damaged baggage or personal articles checked with a common carrier. Roadside assistance If your car breaks down, help is just a phone call away.

My take: If you’re already spending on your credit card, you might as well use as many perks as possible. And consider that with one use of the perks for roadside assistance or purchase protection or extended warranty, you save more than you would with stupid 0%-balance-transfer/bank-transfer games.

Links: Hilarious real-estate bubble seekers, investing yourself (not through a broker), clueless friends and asset allocationI Will Teach You To Be Rich

Down to the last two weeks of my book manuscript, so things are going to be a little quiet around here. For now, here are some interesting links I’ve been reading.

Amazon book comments on a book titled Are You Missing the Real Estate Boom?: The Boom Will Not Bust and Why Property Values Will Continue to Climb Through the End of the Decade - And How to Profit From Them. Sadly, this book was written by the former head economist of the National Association of Realtors. The 5-star reviews from 2005 are sad, hilarious, cheerleader-ish comments for the real-estate boom.

Story about someone who had to cut his brother off because he kept asking for money.

JLP shows how you can save TONS of money by investing yourself instead of paying a broker.

How women look for men who have their financial house in order. It is wildly misconstrued by clueless commenters who are determined to miss the point.

His friends insist that long-term investing is “boring” but then have improperly allocated portfolios. With good math examples. Remember, asset allocation is the most important part of your portfolio, not the individual investments you choose.

See all my links on my del.icio.us feed and twitter.com/ramit.

The I Will Teach You To Be Rich series on women and personal finance beginsI Will Teach You To Be Rich

Today, I’m launching a short series on women and personal finance as announced here. Why? Part of it is wanting to balance out the ratio of male and female readers. Part of it is anecdotal, with my female friends seeming to pay just as little attention to money as my male friends.

You’ll notice in the comments of my last post that certain commenters were worried about this being a hit job on women. Please, give me a break. That’s exactly why I asked for real women to interview about their money habits. While not scientific, this is hardly about berating women for poor money management. If that were the case, I’d rather berate women and men. Why limit it?

But let’s also keep it real. Too many people tiptoe around the gender issue when it comes to money, pretending that men and women are the same. I prefer to live in a world of what is rather than what should be. The whole idea of men and women being the same is ridiculous — we’re not. We earn different amounts, we worry about different things, we have different attitudes towards money, and we buy different things. So before we begin, I thought we’d just list all the stereotypes about women and money out there so we can dispense with them once and for all. To get these, I asked female iwillteachyoutoberich readers what society thinks of women and money.

Stereotypes about women and money from female iwillteachyoutoberich readers

“Women buy clothes, purses, and makeup”

“Women are flighty and not conscientious about their money”

“Women actually handle their money just as well as men. They just don’t make a big deal out of it.”

“Women just don’t care about money.”

“Women are more generous with their time than men. Men prefer to write a check, but women will donate their time.”

“Women just want a rich guy to take care of them.”

“Financial media is geared towards men. For example, I read Kiplinger’s Magazine and it seems like there’s a guy in the suit on the cover.”

Some of these are patently absurd, like the idea that “women don’t care about money.” Talk to any woman and you’ll see that’s not true. But let’s not be so quick to dismiss all of these stereotypes. I guarantee that there are going to be commenters who flame this post, saying “RAMIT, YOU’RE SO STUPID/INCONSIDERATE/IGNORANT FOR LISTING THOSE STEREOTYPES. DON’T YOU KNOW THEY SET WOMEN BACK 50 YEARS?!?#*%#*@!*#?”

Sorry, but I’d prefer to address these head-on instead of pretending the stereotypes don’t exist. So here’s what I’ve learned from my interviews so far:

Women are intimately concerned with money. Not just the self-selected ones who responded to my post, either, but even their friends. It’s just that many choose to ignore their concerns for another day. Sort of like men.

Emotion and money seems to be inextricably tied together for the women I spoke to, much more so than for men.

There are few good role models for women and money when it comes to sensible banking, budgeting, investing, and saving. I read Oprah, I read Cosmo, I read a bunch of women’s magazines. The pieces of advice are trite and patronizing. “Put aside $10 for a rainy day!” The women I spoke to commented time after time that there are few accessible comprehensive places for women to learn about money. Also, parents don’t seem to instill the idea of financial education into daughters. Almost every woman I spoke to mentioned that she had had to learn about money on her own, a daunting task.

With that said, all the information anyone needs to get started is available online for free. It’s too easy to say “nobody taught me what to do.” The personal-responsibility zealots have a point: We do need to step up and learn this stuff on our own, and it’s easier now than ever before.

I hope you can see that I’m trying to be fair about what I’ve learned so far. But I’m not an expert on women and money: I started researching this about a week ago, I spoke to a few women, and I read a few books/magazines. If you think I’ve stepped over the line or you have data to contradict me, please leave a comment.

But I want to use this to start a dialogue about why I have so few women readers on iwillteachyoutoberich.com (and why few of my female friends talk about money).

Please tell your female friends about this series on iwillteachyoutoberich. If you can do one favor for me, please ask your female friends to come and comment on the series. This should be less about me and more about the comments of real women who can tell us what’s on their mind.

Coming up: interviews with female iwillteachyoutoberich readers, female entrepreneurs, and anything interesting that readers submit.