A couple of weeks ago, I wrote about periodically doing an insurance rate comparison to save money. However, if you shop around for the best rate, and then pay a premium surcharge in order to make a monthly payment, you are losing out on some of your rate savings.

There are several things that you can do to avoid the premium surcharge (which can be as high as $4.00+ each month).

• Pay the entire balance due up front
• Ask your insurer if you can get the monthly surcharge waived if you have the premium automatically deducted from your checking account each month (I know that Liberty Mutual offers this).

Ever since we got married, my husband and I have always paid our auto insurance premium in full. Once you’ve gathered the money the first time, you simply pay yourself each month into your savings account so that you have the money when the full premium bill comes due.

How do you accumulate the money the first time, though?

• If you’re getting a sizable tax refund, you can save this money for your next premium bill. We actually use our tax refund each year to pay for our auto insurance. Throughout the year, I keep track in a spreadsheet of what our expected tax refund will be each year. If the refund is expected to be less than our annual premium, then I will save the additional money needed each month. Please Note: In my opinion, it is better to get a higher paycheck each month than give the government an interest-free loan throughout the year, but when my husband receives a bonus, a large chunk is pulled out for taxes. We shouldn’t have that “problem” this year…since we’ll probably not get a bonus.

• Each month when you pay the insurance bill, allocate a little bit extra to your savings account to try to save up for the full premium when the annual bill is due.

• Save any “extra” money that you can find throughout the year towards your next 6-month premium bill. Some ideas include getting a money change jar, selling items on ebay or Craigslist, do online surveys, etc.

How do you avoid paying fees on your insurance premiums? How have you saved up enough money to pay the semi/annual insurance premium in full? For more money saving ideas, visit BeingFrugal.net.

Photo courtesy of asterisco at stock.xchng.

Every so often (usually when my insurance rate goes up about $50 or more for a 6-month period), I’ll compare my auto (and homeowners) insurance rate to that of other companies to see if I’m getting the best deal. How do I do it?

• Go directly to the insurer’s website to get a quote (or call an agent). It’s best to have your current policy information so that you get a quote on the exact same collision and comprehensive coverage that you currently have (so you can compare apples to apples). Some of these sites include Allstate, State Farm, Liberty Mutual, Farmer’s Insurance, Progressive, and Geico.

• Earn UPromise money and get a Liberty Mutual quote. If you call 1-888-717-5644 and mention Upromise, you will get $5.00 in your UPromise account (whether you switch or not). You can also earn $2.00 in Upromise money by requesting an auto quote from Insurance.com through Upromise. Sign into your account, click on Earn Rewards, then Auto, and scroll through the Auto Partners until you find Insurance.com. If you’re not a UPromise member, click here to sign up (it’s free) or for more info, click here.
  

• Shop through a website that gives rates for several insurance companies like Insure.com or Netquote.
  

Other general tips for reducing insurance costs:

• Consider increasing your deductible amount. You want to make sure that you have money to cover the deductible in your emergency savings fund.
• Ask about any membership or alumni discounts. For example, I have a discount through Liberty Mutual through my university.
• Consider covering your auto and home under the same company to get multiple policy discounts. For example, my homeowner’s insurance is higher with Liberty than with my previous company, but I switched, because the total package was less expensive with both auto and home.
• Pay for your entire premium in one payment. If you make monthly payments, you are usually charged a service fee each month. Although it’s only a couple of dollars, those couple of dollars add up fast. Instead, set money aside each month, so that you have the money ready when your premium is due.

How do you save money on auto and homeowner’s/renter’s insurance? For more ideas that work for others, visit Rocks in my Dryer.

Photo courtesy of clix at stock.xchng.