How to Lower Your Auto Insurance Costs
One of the most frequently asked questions when it comes to buying an auto insurance policy is how to save as much money as possible without skimping on adequate coverage. Fortunately, there are plenty of ways you can go about lowering you policy’s premium. From making sure you are not over-insuring your vehicle to adopting new driving habits, there are a number of steps you can take to drop your premiums. Check out our list below to make sure you’re not letting any of your hard-earned cash go to waste.
Don’t Stop At Your First Quote
Insurance is a business and because of this, there is an opportunity for you to save money as companies are constantly competing for clients. Even if you already have a policy, you can still compare your existing rate and coverage with other companies. But don’t just rely on this tactic to help you find good deals.
While it can be tempting to snatch up policy with the rock-bottom price, it’s important to remember not to shop on price alone, according to the Insurance Information Institute (III). The customer service and financial strength of an insurance company are just as important as the price of your policy. You can usually get additional information on this through your state’s Department of Insurance.
Safety (Equipment) First
No, this does not mean you have to wear a helmet while driving. Rather, this means that you should opt for all available safety options when it comes to buying a new vehicle. Vehicle safety is improving at an astonishing rate. While side curtain air bags were a pricey option available only on higher-end vehicles a decade ago, today, more and more manufacturers include them as standard equipment. Additionally, new advancements like lane detection devices, and parking aids like back parking assistance and backup cameras can also help you maximize your driving safety.
If you have purchased a new vehicle recently, make sure to go over any and all safety features equipped in your vehicle with your insurance agent or broker. They may add up to significant savings, according to Geico. Theft deterrent devices, such as car alarms and keyless start ignitions, can also add further savings.
Combine Your Policies
Beyond just insuring all of you and your family’s vehicles with one insurance company, pooling all of your other insurance policies together with the same company can help provide you with a significant price cut. Most companies offer several different types of coverage, from homeowner’s, to renter’s, to life insurance. For example, Allstate offers up to a 30% discount for members who add an auto insurance policy to other existing policies. Also, be sure to add any recreational vehicles as well, like boats, jet skis, motorcycles, or ATVs.
Safe Driving Saves You Money
Besides the fact that driving as safe as possible can help you avoid an accident, it can also help you save money. While a car accident can not only place you, and others involved, in harms way, it can also hurt your wallet. Having an accident, especially a serious one, can cause your insurance premium to sky-rocket. If your driving history shows a history of accidents and tickets, it tells insurance companies that they are likely to happen again in the future. Keeping a clean driving record intact ensures that you get the lowest rates possible.
Change Your Life, Change Your Policy
While all of us reach some several significant milestones in life, very few people realize that these moments can also bring some savings potential as well. Driving studies show that teenage drivers cause more accidents than any other demographic, according to the Insurance Institute for Highway Safety. Most drivers will see their rates drop once they surpass the ages of 21 and 25, as long as you have maintained a clean driving record.
Additionally, married couples are typically considered less risky to insure, so getting married (along with combining your policies) usually offers another savings opportunity. Even things like moving from a bustling metropolitan area to a sleepy suburb, or a career change that requires less time behind the wheel, can lead to some serious savings potential.
Choose a Higher Deductible
Safe drivers and drivers who spend little time behind the wheel should be comfortable raising their deductibles. A deducible is the amount you will pay your insurance company should you ever file a claim. According to the III, raising your deducible from $200 to $500 can reduce your collision and comprehensive coverage by 15 to 30%. Further increasing your deductible to $1,000 could yield up to 40%savings. However, you should make sure you can afford to pay a higher deductible should your vehicle sustain damages that require a claim.
Choose the Minimum Personal Injury Protection
While this may seem like a poor decision at first glance, many people already have reliable health, life, and disability insurance that will provide adequate coverage in the event they are injured in a car accident. Slashing your personal injury protection, in most cases to the state minimum, can reduce your premium costs and keep you from paying double for the similar protection.
Keep Your Finances on the Up and Up
By keeping your credit score as high as possible, you can actually lower your premiums, according to the III. Insurance companies view individuals with lower credit scores as a greater risk to insure. Additionally, if you are frequently late when paying your bill, insurance companies will tack on late fees, and may even cancel your policy if it happens too frequently. Additionally, if you are able to pay your premium in full, rather than over a six-month or year-long payment system, you can save even more money.
Lower Coverage Amounts for Older Cars
Unlike fine wines, cars don’t get better with age. In fact, they usually get substantially worse over time, dropping drastically in resale value and safety potential with each passing year. If you own a car that is getting a bit long in the tooth, check out the value of your vehicle on Kelly Blue Book. In most cases, your insurance company will pay you the suggested retail price of your vehicle in its current condition. If your collision coverage amounts are significantly higher than the value of your vehicle, you are essentially wasting your money.
Don’t Drive (As Much)
One of the most obvious way to save money on your auto policy can be the most difficult to achieve. One of the key factors that your insurance company looks at when determining the cost of your policy is the amount and type of driving you do, according to the III. A driver who faces a long commute along busy freeways each day will have significantly higher premiums compared to someone who does less driving on roads less traveled. Try reducing the number of miles you drive each year by carpooling or seeking other alternative modes of transportation whenever possible. Simply reducing the number of miles you drive over the course of a year can lead to significant savings.