How to Chop Down Your Monthly Car Insurance Payments

By Andy Darwinson

Monthly car insurance payments are one of the larger items in many budgets - and often, they just keep getting bigger and bigger! You may have been eagerly anticipating your insurance rates to drop as your car reaches a certain age, only to have them keep right on climbing! It is frustrating, but fortunately there are some ways to lower your insurance costs, especially if you pay on a monthly basis.

Check online for insurance quotes to find better rates. You'll often save as much as 20 percent when you get competitive quotes. It doesn't take much to secure the quotes, often putting your information into one or two website rate finders gives you quotes from several different companies.

If you are one of those consumers whose car insurance is paid in the form of an annual payment, then you only have one chance per year to look at what other insurers are offering and to change your policy. However, if you make monthly payments then you have far more opportunities available to you. You can drop your policy within the policy year in most cases as long as you let your insurer know ahead of time. When you do this you should ask your agent if there is any sort of fee incurred by doing this; many insurers add something called a "short rate" which is a higher premium paid when you cancel before the policy year is up.

After telling your insurer that you would like to drop your policy, you have to coordinate the end date so that it will coincide with the start date of any new policy. Be sure you know how much notice your insurer needs and always notify them by mail and include your policy number as well as your name and address in this correspondence.

You can often find not only a lower premium, but also more coverage by comparison shopping for car insurance quotes. While it can be tempting to save on your costs by choosing a lower deductible, it is a better idea to go for higher liability limits. These are the limits on how much coverage you will have if you are sued after injuring someone in an accident, so you should not try to cut corners here.

You can set up your monthly car insurance payments to be taken directly out of your checking account. With monthly payments, this can actually save you a little bit of money, since many insurers charge you a fee for mailing premium notices to you.

If you already have automatic payments set up, you can still save on your monthly car insurance payments by switching to a different car insurance company. Just contact your insurer and ask them for a cancellation form, if one is needed. This form or a letter informing them of your cancellation should be sent to your insurer along with a note stating that you do not want any payments deducted automatically after your cancellation date. Make a copy of this letter and keep it for your records in case of a dispute or miscommunication.