Cheap car insurance and health coverage is something everybody needs, but saving money is something everybody needs even more; the problem is that these two often don’t go together. Fortunately, there are many tips and tricks you can take advantage of to get cheap car and health insurance. Even though they can be lifesaving, not many people use them properly.
Cheap Car Insurance
If you’re a young person, which typically means you’re under the age of 25, and have no previous driving record, things might be especially difficult for you. Insurance providers consider young drivers to be the riskiest clients, and so they typically charge them the most. Since you have no record, the company has know way of knowing how reckless of a driver you are, so they tend to charge higher amounts because of that.
A trick to get around this is to add your car to a more experienced driver’s insurance plan. If you add your car to your father’s family plan, insurance companies will be more willing to charge less if his driving record is good. You could then pay him the reduced amount off the books.
There is nothing illegal about this, as long as you make sure to inform the insurance company, to avoid any legal complications.
One important downside is that as long as you’re on a family plan, you’re not building your own driving record. In the future if you add a car to your own insurance plan, you’ll have zero driving experience as far as insurance providers are concerned.
Choose Your Car Insurance Plan
Now let’s discuss the different kinds of car insurance plans and which ones would be best for you. First, there’s full coverage, which covers everything from damage to others’ vehicles, damage to your own vehicle and even the cost of buying a new car. As you might expect, this is the most expensive kind of plan. Second, there are comprehensive plans, which cover all sorts of cases unless you need to buy a new car. Finally, the cheapest kind is liability-only plans, which only cover damage to others.
If you want to save up, the best combination would be a cheap car with a liability-only plan. The plan will cover damage done to others, and as for your vehicle, it will be cheaper just to replace it entirely with a new car. If you didn’t pay a lot for it in the first place, then this could be the best option for you. However, be careful not to pick a plan with a very low limit. Although they are cheaper, you could find yourself paying a lot more down the line.
For example, if you get into an accident and find yourself required to pay $250 thousand in damages but the insurance limit is $50 thousand, you will have to pay the remainder on your own. This scenario is not that far fetched since it’s easy to face a six-figure lawsuit after a car accident in the US.
To avoid this, don’t just settle for the minimum state limit. Get a cheap car and a liability-only plan with a limit that would cover the majority of expenses if you are in an accident. Similarly, it’s pointless to pay for comprehensive coverage on older and cheaper vehicles: you don’t need to pay hundreds or thousands of dollars annually just in case an old car gets damaged. Overall, keep in mind what each plan is meant for and choose accordingly.
Tips to Get the Cheapest Premium
Once you’ve decided which kind of plan you’d like to get, you should take into consideration these simple tips and tricks to get the cheapest premium you can:
- Always check if you qualify for discounts offered by your state. Some states offer discounts, for example, if you take certain driving lessons, you’re in a particular financial situation, or if your car is a certain age, so do your research.
- Add security items to your car if you can, such as a dash camera. Sometimes this can help lower insurance costs.
- Make sure to let your insurance provider knows if you don’t drive your car much. Insurers assume by default that you drive an average of 15,000 miles per year, which is what typically takes for people to commute to work five days a week. If you work from home or cycle to work, for instance, make sure this is reflected in your insurance plan. Also make sure that if you have a second car that you rarely use, that it’s registered as a “for-pleasure” vehicle.
- Try to find a safe place to park your car in, such as a private driveway and restrict the number of people who use it. Moreover, when you write down your job title as you fill out the application form, make it sound as fancy and respectable as you possible. Insurance costs are determined by a formula, and these factors are all fed into it.
- If you can, pay the entire annual amount up front. Companies often offer a discounted price for those paying up front. Additionally, a 12-month coverage plan is usually cheaper than a 6-month one.
Choose the Best Insurance Provider
With this advice in mind, the last step is to choose the best insurance provider for you. Since there are a lot, your best option is to talk with a local insurance agent. These are people who specialize in finding the best insurance plan for your financial situation. Insurance companies will be looking out for their own interests, not yours, so try talking to independent agents instead.
To get started, look for the website of an insurance agent and usually there’ll be a form to fill out or a number to call to contact them. A trick to save time is to write up an email that includes all the relevant information they need, including your car information and financial status, and send it to multiple agencies at the same time.
Agents will be motivated to reply to you with the best offer they have so they can get a commission from the relevant insurer. They can also offer you valuable advice regarding what discounts you qualify for.
The best part is that the commission is all the payment they get, so you don’t need to pay them any additional fees. Alternatively, you could use an online comparison website since each insurance company posts the details of its various insurance plans on its website. Rather than visiting each company’s website, you can save time and energy by using websites that provide all the different plans side by side. Most sites will also do the calculations to help you compare plans as well.
However, contacting a local insurance agent is still a much better option. Most comparison websites can leak your information to outsiders who may want to use it to spam you with all sorts of ads, so it’s best to avoid them.
Saving on Health Insurance
If you’re generally healthy, or if you can’t afford good health insurance plans, you’re better off with a cheap, high-deductible plan and Health Savings Account (HSA).
To illustrate the rational behind this, here is a hypothetical example. Suppose that you stick with an average coverage plan and pay $600 per month, with a deductible of $6000 and an out-of-pocket maximum of $10,000.
Now, there are basically three kinds of medical bills. The first type is bills for regular health checkups; these are covered by almost all insurance plans, even cheap ones, so set them aside for now because they don’t show the difference between cheap and average health plans.
The second is bills for relatively small medical treatments, costing from $5,000 to $30,000 for example. The third and final scenario is major medical treatments, which can cost hundreds of thousands or even millions of dollars.
With an average health plan, you will pay $5000 for a $5000 bill, and $10,000 for a $15,000 bill. But what if you had a cheap plan with a $15,000 deductible and $20,000 out-of-pocket maximum, for which you pay only $200 per month.
You would, in that case, pay $5,000 for the first bill and $15,000 for the second.
This means the cheap plan will cost you $5,000 more than the average one, at least in this instance. But in the long run, you would still save $4,800 each year by sticking with the cheap plan because it costs $400 less each month compared to the average plan. In fact, if you put the $400 you’re saving each month into an HSA, which is tax-free and offers a lot of benefits and discounts, you would pay less than $15,000 on the second bill.
The general lesson here is that for both regular check ups and huge medical treatments, it doesn’t matter whether you have a cheap or an average plan. Regular checkups are covered by both, and huge bills won’t be covered by either.
As for average-priced medical bills, in most cases the difference isn’t big enough to justify going with an average plan rather than saving thousands of dollars with a cheaper one. So the best option is to put the money you save from using a cheap plan into your HSA.
Negotiate with Healthcare Providers
Another valuable trick is to always negotiate with healthcare providers to bring down the amount you’re required to pay for any kind of treatment. Insurance companies already negotiate with healthcare providers to bring the price down for you. Because of this, there’s a common but mistaken belief that insured people cannot negotiate further.
Actually, its possible to negotiate with many hospitals. If you find yourself having to pay a bigger amount of money that you’re comfortable with, even with insurance, call up your hospital and inform them that you cannot pay. Many will try to reach an agreement with you and let you off with a much smaller amount.
The reason for this is two-fold. First: there are no strict constraints on how much hospitals should charge a patient. As a result, they typically charge very high amounts, expecting insurance companies to negotiate anyway. Even after negotiation, there is some leeway which you can take advantage of if you talk directly to the hospital.
Second: if you cannot pay, it would cost hospitals a lot of money, time, and effort to try to force you to pay by legal means. Alternatively, they could sell your debt to a collection agency which typically purchases the debt at a major discount causing the hospital to lose money any ways. If you indicate that you will pay immediately if they lower the fees, then they may be much more willing to negotiate.
This, of course, applies even more commonly to people without insurance. If you don’t have insurance, be sure to make that clear to your healthcare providers. People with an HSA should do that as well, since they’re technically paying in cash, without insurance.
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