Lower Auto Insurance: Tips And Tricks

Auto insurance costs are on the rise, but there are several ways to reduce the financial burden. One of the most effective ways to keep costs down is to have a good driving record. Safe drivers are less likely to be involved in accidents and incur expensive speeding tickets or violation costs. Maintaining a good credit score is also beneficial, as it demonstrates responsible decision-making. Increasing your deductible can also lower costs, but it's important to ensure you have enough savings to cover the higher deductible in the event of a claim. Shopping around for insurance and comparing rates from different companies is another effective strategy, as prices vary. Bundling your auto insurance with other types of insurance, such as homeowners or renters insurance, can also result in significant savings. Finally, taking a defensive driving course and installing safety and anti-theft features in your car can help lower your insurance premium.

Increase your deductible

One of the most effective ways to lower your auto insurance costs is to increase your deductible. A deductible is the amount you pay out of pocket before your insurance policy kicks in. For example, if your vehicle incurs $1,500 of damage, and your deductible is $500, you will pay that amount, and your insurer will cover the remaining $1,000.

By requesting a higher deductible, you can lower your insurance costs substantially. For example, increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage cost by 15 to 30%. Going to a $1,000 deductible can save you 40% or more.

However, it is important to ensure you have enough money set aside to pay the higher deductible in the event of an accident or claim. You should also consider your driving habits when deciding whether to increase your deductible. If you don't drive often and feel you are less likely to get into accidents or sustain vehicle damage, a higher deductible may be a good option.

Before making the switch, take a look at your emergency fund and ensure it is strong enough to cover the higher deductible. While a higher deductible can result in lower premium costs, you don't want to be caught off guard with insufficient funds if an accident occurs.

Additionally, consider the potential savings from increasing your deductible and whether it is worth the additional financial responsibility. For example, with some insurance companies, the savings from increasing your deductible from $500 to $1,000 may not be significant enough to justify the extra $1,000 financial obligation in the event of a claim.

In summary, increasing your deductible can be a great way to lower your auto insurance costs, but it is important to ensure you are financially prepared for the higher deductible and that the potential savings align with the increased financial responsibility.

Compare insurance quotes

Comparing insurance quotes is one of the best ways to get cheaper insurance. The average comparison shopper saves $60 per month on their car insurance by comparing quotes.

Determine your budget

Before you start comparing quotes, you need to determine your budget, the type of insurance you need, and how much coverage you require. This will help you quickly weed out overpriced insurance companies and focus on the insurers with the lowest prices. The average U.S. driver pays $135 per month for car insurance, so that can be a good starting point.

Gather the relevant information

Make sure you have the right information available, such as your Social Security number, driver's license number, vehicle identification number (VIN), and current coverage details.

Use an insurance comparison website

Insurance comparison websites allow you to compare prices and coverage options from different companies at the same time. True comparison sites like Compare.com, Insurify, and Jerry partner with insurance companies to provide real-time quotes.

Research companies with the best quotes

The largest insurance companies won't always have the best price for your specific needs. Third-party websites like J.D. Power and AM Best analyze insurance companies based on customer feedback, website and mobile performance, the shopping experience, the claims process, and financial strength. You can use these resources to research companies with the best quotes for your needs.

Select the best quote for you

After researching, narrow down your list to a few insurance companies. Review your auto insurance quotes again and select the best quote for your needs and budget. Then, complete the application for your new policy.

Compare quotes again at renewal

When your policy comes up for renewal, take time to compare car insurance quotes again to see if your current insurer is still the best deal.

Other factors to consider

When comparing insurance quotes, it's important to consider not only the price but also the coverage options and the insurance company's customer service and claims satisfaction. You may also want to check for discounts offered by the insurance companies, such as good driver discounts, good student discounts, or discounts for bundling policies.

Take a defensive driving course

Taking a defensive driving course can be a great way to bring down your auto insurance costs. Defensive driving courses are designed to improve your existing driving skills and teach you how to anticipate situations that may cause accidents. They cover the risks and reasons for accidents, statistics illustrating the most prevalent safety concerns, and techniques to quickly react to danger.

• Check with your insurance provider: Not all insurance providers offer discounts for defensive driving courses. Contact your insurer to find out if they offer this discount and what specific requirements they have.
• State regulations: Some states require insurers to offer defensive driving discounts, while others do not. Check your state's regulations or laws regarding defensive driver discounts.
• Course approval: If a defensive driving discount is available, make sure you select a course that is approved by your state and/or insurer.
• Compare costs and formats: Defensive driving courses can vary in cost, timing, and format (in-person or online). Compare different options to find the best fit for you.
• Age and eligibility: Defensive driving discounts may have age requirements and are often geared towards younger and older drivers. Check with your insurer to see if there are any age limits for the discount.
• Discount amount: The amount of the defensive driver discount can vary depending on your insurer, age, state, and other factors. Typically, discounts range from 2% to 20%, with an average of around 10%.
• Renewal: Defensive driving discounts are usually not lifetime discounts. To maintain the discount, you may need to retake the course every few years.

By taking a defensive driving course, you can not only improve your driving skills and become a safer driver, but also potentially save on your auto insurance costs. Be sure to do your research and understand the specific requirements and discounts offered by your insurance provider and state.

Improve your credit score

Improving your credit score is an important aspect of managing your financial health effectively. Achieving a higher credit score can unlock benefits such as loan approvals, more favourable interest rates, and increased credit limits. Here are some strategies to help you enhance your credit score:

Pay your bills on time

Timely payment of your bills is crucial for shaping your credit-based insurance score. A pattern of late payments or credit delinquencies might indicate to insurers a potential risk in financial management, possibly suggesting a higher likelihood of submitting claims for minor damages. By making it a habit to settle your bills on or before their due dates, you can positively impact your credit and, consequently, your insurance scores.

Keep hard credit inquiries to a minimum

Credit inquiries come in two forms: hard checks and soft checks. A hard inquiry occurs when you apply for a line of credit, and the company pulls your credit report. Too many hard inquiries can negatively impact your score. Soft inquiries, such as when insurance companies review your credit, do not affect your score. If you are trying to build your credit, consider waiting to apply for new loans or lines of credit.

Monitor your score regularly

Keeping a close eye on your credit score has multiple advantages. Knowing your score enables you to take proactive measures toward improvement. Routine checks of your credit reports can also help you identify errors or signs of identity theft early on. Spotting discrepancies allows you to challenge and rectify any inaccuracies promptly.

Maintain old lines of credit

Maintaining long-standing credit accounts can benefit your credit score, including the portion that influences your insurance rates. The duration of your credit history can significantly contribute to your score, so consider keeping old credit cards open and using them sparingly while ensuring timely payments. This approach can help fortify your credit history and minimize your credit utilization ratio.

Be aware of your credit utilization ratio

In addition to the number of lines of credit you have, your credit utilization ratio—the ratio of used credit to available credit—will also impact your credit rating. While there is no set rule, it is generally recommended to utilize no more than 30% of your total available credit. Paying off some of your debt to lower your credit utilization score may help improve your overall credit score and, in turn, your credit-based insurance score.

Review your coverage

Reviewing your auto insurance coverage is an important step in ensuring you are getting the best deal for your needs. Here are some detailed tips on how to review your coverage:

Understand Your Current Coverage

Start by thoroughly reviewing your current auto insurance policy. Familiarize yourself with the different types of coverage included in your policy, such as liability, collision, and comprehensive insurance. Check your coverage limits and deductibles to ensure they meet your needs.

Assess Your Current Situation

Consider any changes in your life that may impact your insurance needs. For example, if you have recently paid off your car loan, you may no longer need gap insurance. If your vehicle is older, you may want to reduce your coverage, as it may not be cost-effective to maintain comprehensive and collision coverage.

Evaluate Your Driving Habits

Your driving habits play a significant role in determining your insurance rates. If you have a good driving record, you may be eligible for discounts or lower rates. On the other hand, if you have accumulated speeding tickets, accidents, or other violations, your rates may increase. Be mindful that rates can fluctuate depending on your age, with higher rates for teenagers and drivers in their 20s, and lower rates once you reach your 30s.

Compare with Other Providers

Don't be afraid to shop around and compare rates from other insurance providers. Prices and coverage options can vary significantly between companies. By obtaining quotes from multiple insurers, you can identify potential savings or additional coverage options that better suit your needs.

Consider Bundling Policies

Many insurance companies offer discounts if you bundle your auto insurance with other types of insurance, such as homeowners or renters insurance. If you have multiple vehicles, insuring them with the same company can also lead to cost savings.

It is important to review your auto insurance coverage periodically, especially at renewal time. Your circumstances may change over time, and insurance companies may adjust their rates or coverage options. By conducting regular reviews, you can ensure that your coverage remains up-to-date and aligned with your needs.

Remember, when reviewing your auto insurance coverage, focus on finding the right balance between cost and the level of protection you need. While saving money is important, ensuring you have adequate coverage to protect yourself financially in the event of an accident or incident is crucial.

Frequently asked questions