How We Cut Our Car Insurance By Half & Save $732/year

The surprise increase

A couple of months ago, we got an email from Liberty Mutual informing us that our annual car insurance premium had gone up 10% from $110 to $121/month.

I’ve read about the benefit of shopping for lower car insurance rates but didn’t think it was applicable to us for three reasons.

First, we have both our home and car insurance from the same company. I thought we were getting a good deal with that package.

Second, I am an inexperienced driver. Our car got full coverage, meaning we would be covered whether or not we’re at fault.

I just assumed that any cheaper plan would mean less coverage and probably was not worth it.

Third, I also don’t handle car-related expenses (Mr. FAF does), so I just thought it was normal and moved on with my life.

Related: The Top 5 Financial Mistakes In My 20s

Getting frustrated

Mr. FAF, however, was pretty upset about the increase.

He called the agent to explain that the car was depreciating, and that we didn’t have any accident or traffic violation last year.

He was hoping to negotiate a lower rate since we’ve stayed with the same company for 2.5 years.

However, the only response we got was that they couldn’t do anything about it. Basically, they thought that we were locked into this plan and should just accept the fact. It felt like a slap on the face.

We knew the agent was working in the company’s interest instead of ours, and she should be. But there’s one thing they got wrong about us (more like Mr. FAF in this case): we don’ want to be fooled or taken advantage of.

Related: Lending Money To Friends Can Ruin A Friendship. Here’s My Story. 

Action

Mr. FAF started researching the car insurance companies that are in his company’s network and found a Progressive plan that is only $60/mo or less than half of our original $121 monthly payment.

The difference between the two plan is that the new plan doesn’t offer full coverage. In other words, if our car gets into an accident and is totaled, the company won’t pay us the to get a new car of equivalent value if the accident is our fault.

This change in insurance policy worries me. I have been living car-free for years and rely on public transit for commuting. Mr. FAF has been encouraging (and pressuring) me to drive more often, which I do.

However, I only drive alone to a place within a mile or so from where we live. If it’s a long distance, I usually have Mr. FAF by my side to give instructions. But I believe Mr. FAF made that conscious choice for three reasons.

First, he has trained me to drive for almost a year since he moved to DC permanently. My driving skill has improved significantly although I still sometimes ignore exits on the highway and stop signs in local streets sometimes (unintentionally).

Second, our car, which we brought brand-new for $18,000 three years ago has depreciated significantly and is now worth only about $10,000 (an expensive lesson for buying cars).

Third, we just can’t accept the unapologetic and uncooperative attitude from the agent. She was extremely nice and responsive when trying to get us to buy her insurance plan but changed completely once the transaction was completed, which is understandable but also frustrating.

Related: Why Money Matters In A Relationship

Savings

Mr. FAF spent hours scouring for the best deal and found the Progressive plan.

Overall, we will be paying $720 instead of $1,452 a year (savings of $732/year). If you ask me, I definitely love the sound of saving more than $700/year on something we don’t even know if we’ll ever use.

Over the next five years, we will be able to save almost $4,000 on car insurance. Given the rapid depreciation of our car (currently worth $10,000), I think we can just save the money and get a new used car if it ever gets totaled through our own fault.

However, part of me is also worried about the liability that comes with the cheaper plan. If anything, it will motivate me to drive more carefully.

Life is full of surprises. Money can assuage our concern, but we shouldn’t use it as an excuse to not try hard to get better at something.

Related: 3 Things We Fail To Do To Save Money

The steps

Below are the steps you can take to lower your car insurance premium:

Step 1: Stop believing that your current insurance plan is the best and most reasonably priced on the market. Start thinking that there are ways you can save on your car insurance.

Stop 2: Contact the insurance agent to see if they can lower the monthly fee for you.

Step 3: Research the trusted car insurance network that you know whether it’s through your company, friends, colleagues, or extended family.

Step 4: Compare the coverage and choose the one that best suits your current needs. Your needs might have changed over the years due to factors such as car depreciation and improved driving skills.

Step 5: Discuss the change with your spouse/partner (if you have one) to see if they also think it’s reasonable.

Step 6: Switch to the new plan and save money!

Related: Should We Get A Second Car For This One Reason?

Conclusion

One important lesson I learned from this experience is that I should have gotten out of the inertia earlier. In other words, without doing any research, I just assumed that we had the best car insurance plan out there and let the agent lead the way.

If it weren’t for Mr. FAF, we would have stilled spent $1,452 instead of $720/year on car insurance. I want to save money whether it’s one cent or one dollar when I buy something. But there’s room for further saving for something we already bought – car insurance.

This incident made me reconsider all the plans that we currently have, including our home insurance. That will be our next big project to tackle to lower our monthly expenses.

Related:

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18 thoughts on “How We Cut Our Car Insurance By Half & Save $732/year”

  • Whoa — that’s a lot in savings! I need to call about mine…

    And, in your defense, driving in and around DC can be stressful for drivers of all experience levels! I’ll never forget going there as a family when I was about 11 and hitting Friday afternoon traffic — tensions were so high, I thought we were going to get in an accident/my parents were going to get a divorce right there in the car. Luckily neither happened!! 🙂

    • Wow I’m glad it ended well. Driving in DC is super stressful during rush hour. It’s particularly scary for me since I’m a newbie driver although I got my license 5 years ago (due to limited practice). >_<

  • We are in the process of moving from Illinois to Nevada. When I called to get our insurance set up out there the rate was going to double. I called around and for the exact same coverages, we were able to get a policy with Progressive for half the price. Previously we had been with Progressive for 16 years so we were confident going back with a better rate. It amazes me how much difference there can be in the insurance rates.

    • I know! We still have our home insurance with Liberty Mutual. I’m debating whether we should just switch to Progressive for that. Hmm…

  • Yes my hubby is the same. A rental Toyota should be max $20k to replace I suppose but the liability of hitting someone else is a lot scarier. We’re dealing with homeowners insurance right now and I’m not sure how it goes up 10% – 15% for us on homeowners insurance but I want to call in to ask because it’s unacceptable to do that year over year.

    • I contacted our agent about the homeowner insurance, and she never responded. Interesting how they changed their attitude after we have purchased their product *sigh*

  • Great move! I removed comprehensive coverage from our policy a few years ago. We didn’t really need it.
    However, I just increased my umbrella insurance coverage. I might not need it, but it helps my peace of mind. 🙂

  • I bundled my home and car insurance with Progressive, too. They are really nice and have great rates. If you decide to go paperless with their plans they usually knock off a little more.

    • We did look into their home insurance plan. However, the form asked us to fill in a bunch of info about the house we have no idea about. That’s why we kinda gave up at one point. I think we need to pick it up though. Thanks for the reminder! 🙂

  • Great decision! In the past ten years, I’ve switched car insurance provider three times. My own experience tells me that this is pretty much the only way to save with the same type of coverage. Every time I asked my existing insurance agent to give me a better rate they always tell me that their system automatically adjusts them to the best rate possible for their clients. Not true!

  • That is an awesome savings, great job! We did something similar with home insurance and saved quite a chunk of money and switching cable providers worked out really well too. It’s amazing that companies will give amazing deals to new customers and do nothing for their current ones.

  • That’s a very good rate for your car insurance. We were paying $80-85 a month with full coverage but Mother with Cents got into a car accident a few months ago and had to bring it into the shop. Around the time we got our car back it was time to for our six month renewal and our insurance rates increased. We are now paying close to $100 a month which is still pretty good. Around the next time we have to renew, I may look at other car insurance companies and see if they can offer lower rates than our current one.

  • Yeah, banking over $700 a year is no small feat. We used to have Geico but have since switched to root insurance and we are making we are saving just over $100 a month.

    For context though i did have some wrecks 2 plus years ago which made are rates pretty crappy. Cheers!

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