Introduction
Auto insurance is necessary, but that does not necessarily mean you must pay too much for it. Most drivers assume high rates are inevitable, but there are many strategies available to reduce your auto insurance premiums without giving up the protection you require. This guide will take you through intelligent steps to reduce your auto insurance premiums while being thoroughly covered.
Why Auto Insurance Premiums Vary
Insurance providers determine premiums based on a combination of personal and car-related criteria. These range from your driving record, age, and where you live, to credit history, car model, and even mileage. The key is to know what affects your price so you can start solving the puzzle of where you can cut costs.
1 Shop Around for Better Rates
One of the easiest steps to reduce your premium is comparing quotes from a few different insurance companies. There are different rating formulas used by each company, so you may find drastically varying prices for essentially the same policy.
Obtain at least three quotes
Look at price as well as limits of coverage and deductibles
Research customer service and claims adjusting reviews
Loyalty is not always the best policy. If you can get a better bargain elsewhere, it may be worth switching.
2 Bundle Policies for Discounts
Several insurers provide discounts if you bundle several policies, such as auto and home insurance. Bundling can result in significant savings — up to 20 percent. Check with your current insurer to see if they have bundling discounts or look around to see which companies do.
3 Increase Your Deductible
Your deductible is what you pay upfront before your insurance company pays. Increasing your deductible to 1000 or higher from 500 can lower your monthly premium considerably.
But ensure you can afford the increased deductible in the event of a claim. It is a compromise between reduced monthly payments and increased out-of-pocket costs after an accident.
4 Take Advantage of Discounts
Most insurance providers provide a variety of discounts. Some are self-explanatory, but others may take some prodding. Typical discounts are
Safe driver discount for having an accident-free driving record
Good student discount for teen drivers who maintain good grades
Low mileage discount for driving fewer miles than the average yearly miles
Anti-theft device discount for vehicles equipped with security systems
Defensive driving course discount for taking an approved safety course
Multi-car discount for insuring two or more vehicles with the same insurer
Always request your insurer to check which discounts you are eligible for — you may be surprised at how many there are.
5 Enhance Your Credit Score
In most states, insurance companies base your premium on your credit score. A better score indicates that you are financially stable, which insurers tend to link with safer driving habits.
Improve your credit score by
Paying bills timely
Maintaining low credit card balances
Eschewing new credit inquiries
Monitoring your credit report for inaccuracies regularly
Even a tiny boost in your credit score will result in evident savings on your premium.
6 Drive Carefully and Maintain an Unblemished Record
The fewer traffic stops and accidents, the less premium you’ll be charged. The majority of companies provide a good driver discount for safe driving habits after several consecutive years.
Additionally, some companies offer usage-based programs that track your driving habits through an app or device installed in your car. Safe driving behaviors — like smooth braking, steady speeds, and avoiding nighttime driving — could earn you even more savings.
7 Reevaluate Your Coverage Needs
If you own an older vehicle with low market value, it may not be worth paying for comprehensive and collision coverage. For instance, if your vehicle is worth 2000 but you are paying 600 a year for full coverage, you might consider dropping that coverage.
Liability coverage remains vital — and is required by law in most states — but skipping unnecessary coverage on an older car can save money. Just ensure you are not uncomfortable paying out-of-pocket repair or replacement bills if necessary.
8 Pay Your Premium in Full
Most insurers give a discount if you pay your premium in full for the whole six-month or yearly period, as opposed to monthly payments. You’ll save money on processing fees, and in some cases, you might even qualify for a lower rate.
If paying the full amount is not possible, inquire about auto-pay — a few companies will give you a discount for setting up automatic payments.
9 Choose a Car That Costs Less to Insure
If you are in the market for a new car, consider insurance prices. Usually, vehicles with good safety ratings, cheap repairs, and fewer thefts have less expensive premiums.
Sports cars, luxury cars, and cars with pricey components tend to be more expensive to insure. When you purchase, also find out how much it will be to insure the car.
10 Review Your Policy Annually
Your insurance rates and needs may shift over time. Check your policy at least once a year — or following significant life events such as moving, marriage, or the purchase of a new vehicle — to ensure you are not paying for coverage you no longer require.
Common Mistakes to Avoid When Trying to Lower Your Premium
Where you save money on insurance, but don’t worry about essential coverage. Don’t make these costly errors
Bargaining with liability coverage The state minimum will not be adequate to cover the full cost if you are at fault in an accident.
Deleting uninsured motorist coverage This coverage shields you from drivers who aren’t insured themselves.
Forgetting customer service reputation A low cost is not better if the carrier is slow in paying claims or a hassle in the process.
Allowing your coverage to lapse Even a brief lapse can result in increased rates when you purchase a new policy.
Conclusion
Reducing your automobile insurance premium isn’t about trading off the level of coverage that you require. By comparing companies, utilizing available discounts, checking your credit history, and regularly reviewing your policy, you can save money and still be totally covered. Through some effort and planning, you can ensure you are not spending more than necessary for peace of mind on the road.