Strategies To Reduce Auto Insurance Costs After Traffic Tickets

Traffic tickets can increase your insurance rates by up to 82% and can even lead to your insurance company dropping your coverage. The severity of the violation, your driving record, and other factors determine the extent of the increase. For example, a single speeding ticket can increase insurance costs by about 25% on average, but this varies by state and insurer. To decrease insurance costs, consider taking a driver safety course, improving your credit score, or comparing quotes from different insurers.

Shop around for a new insurance policy

Shopping around for a new insurance policy is a great way to save money on your auto insurance, especially if you've recently received a traffic ticket. Here are some detailed tips on how to go about it:

Understand Your Coverage Options

First, it's important to understand the different types of coverage available and what you need. The most basic type of coverage is auto liability insurance, which is legally required in most states and covers medical bills and repair costs for other drivers when you are at fault in an accident. You can also opt for collision insurance, which covers damage to your car in an accident regardless of who is at fault, and comprehensive insurance, which covers environmental damage, vandalism, and theft. If you lease or finance your car, your lender may require you to have collision and comprehensive insurance. Even if your car is paid off, it's a good idea to consider these coverages to avoid expensive repair bills.

Choose Your Deductible

Your car insurance deductible is the amount you need to pay toward a claim before your insurance coverage kicks in. Typically, you will have a deductible for comprehensive, collision, and gap insurance coverages. While a higher deductible will result in a lower insurance rate, make sure you can afford to pay the deductible in the event of a claim.

Compare Premium Quotes

The car insurance premium is the bottom line—the total cost of your insurance per payment cycle. When comparing quotes from different insurance companies, make sure each quote includes the same coverages, limits, and deductible amounts so you are making an accurate comparison. You can use an online comparison tool or an insurance broker to get quotes from multiple companies at once. Remember, the cheapest option may not always be the best, so consider your specific needs when making a decision.

When to Shop for a New Policy

It's a good idea to shop around for car insurance at least once a year, as rates can change frequently. Additionally, if you've recently added a teenager to your policy or received a traffic ticket, it's a good time to look for a new policy, as some insurers offer discounts for teen drivers or may be more forgiving of minor infractions.

Be Truthful When Getting Quotes

Always provide honest and accurate information when getting insurance quotes. Lying about your driving history or other details to get a better rate is considered insurance fraud and can result in your rate being adjusted or your coverage being cancelled.

Take a driver safety course

Taking a driver safety course is a great way to decrease your auto insurance premiums, especially if you've incurred traffic violations. Here are some key points to consider:

Course Types and Requirements

First, it's important to understand the different types of driver safety courses available. There are generally two types: a defensive driving course and a driver improvement course. A defensive driving course focuses on improving your existing driving skills, teaching you to anticipate and react to dangerous situations. These courses typically cover accident statistics, safety concerns, and techniques for recognizing and avoiding potential collisions. On the other hand, a driver improvement course, also known as a driver education course, is designed for new drivers who are still learning the rules of the road and developing their basic driving skills.

Before enrolling in a course, check with your state's regulations and your insurance provider. Some states require insurers to offer discounts for completing defensive driving courses, while others do not. Additionally, your insurance company may have specific requirements or approved courses that you need to consider.

Course Formats and Costs

Driver safety courses are offered in various formats, including in-person classroom courses, online courses, or even through alternative methods such as DVDs or digital cable. The duration of the courses can vary, with some states requiring a minimum number of hours for the course to qualify for an insurance discount. For example, in New York, the Defensive Driving Course or Motor Vehicle Accident Prevention Course (PIRP) is 320 minutes long, presented in one or more sessions.

The cost of the course will depend on the provider and the format you choose. Contact multiple providers to compare costs, timing, and formats to find the best option for your needs and budget.

Insurance Discounts and Benefits

Completing a driver safety course can result in significant savings on your auto insurance premiums. The actual discount amount will vary depending on your insurer, age, state, and other factors. Some insurers may offer a multi-year discount, while others may provide a percentage reduction on your base rate for a set number of years. For example, in New York, completing the PIRP course can reduce your auto and motorcycle insurance premiums by 10% each year for three years.

It's important to note that taking a driver safety course may not remove the tickets or points from your driving record, but it can help prevent license suspension and demonstrate your commitment to safe driving, which insurers consider when determining your insurance rates.

Course Content and Skills Learned

Driver safety courses cover a range of topics to enhance your driving knowledge and skills. These courses typically include essential information about driver attitude and behavior, defensive driving techniques, and local traffic laws. Additionally, you'll learn about the effects of medication on driving performance, reducing distractions, maintaining a safe following distance, and proper use of safety features like seat belts, airbags, and anti-lock brakes.

Driver safety courses also cover techniques for handling various driving scenarios, such as left turns, right-of-way protocols, and navigating roundabouts. They also address age-related physical changes and how to adjust your driving accordingly as you get older.

Improve your credit score

Improving your credit score can help you qualify for cheaper rates on loans, credit cards, insurance, and mortgages. Here are some tips to help you improve your credit score:

• Make on-time payments: Your payment history accounts for 35% of your FICO score, so always pay your bills on time. Set up autopay for at least the minimum amount and create calendar reminders to stay on track.
• Pay down revolving account balances: Your credit utilisation rate (the percentage of available credit you're using) is a significant factor in your credit score. Aim to keep it as low as possible, and if you have high credit card balances, make paying them off a priority.
• Don't close your oldest account: The length of your credit history makes up 15% of your FICO score and is influenced by the age of your oldest account. Avoid closing old credit card accounts, even if you no longer use them. Consider using them occasionally or putting a small recurring bill on the card to keep it active.
• Diversify your credit: Your credit mix, or the variety of credit types you have, accounts for 10% of your FICO score. This includes credit cards, auto loans, and mortgages. Your credit mix will likely improve over time as you apply for different types of credit.
• Limit new credit applications: Each time you apply for credit, a hard inquiry is made, which can knock a few points off your credit score. Only apply for credit when necessary, and consider using prequalification options that use a soft credit check instead.
• Dispute inaccurate information: Inaccurate information on your credit report can negatively impact your score. Review your credit reports from Experian, Equifax, and TransUnion, and dispute any errors or fraudulent activity you find.
• Become an authorised user: If you're new to credit or rebuilding your score, you can ask a loved one to add you as an authorised user on their credit card. This can positively impact your score, especially if the account has a positive payment history and a low credit utilisation rate.

Raise your deductible

Raising your deductible is a good way to decrease your auto insurance costs, but it's important to understand what this means and the potential risks involved.

A car insurance deductible is the amount you pay out of pocket before your insurance coverage kicks in. For example, if you have a $500 deductible and your car sustains $1,500 worth of damage, you pay the first $500 and your insurance company covers the remaining $1,000. Typically, you can choose a deductible of $250, $500, or $1,000, but it can go as high as $2,500.

Raising your deductible will usually result in lower insurance premiums. For instance, increasing your deductible from $500 to $1,000 may lower your insurance rate by about 10%. This means you could save hundreds of dollars a year. However, this also means you will have to pay more each time you file a claim. Therefore, it's important to ensure you have enough savings to cover the higher deductible in case of an accident or damage to your vehicle.

Before raising your deductible, consider your financial situation and driving habits. If you have a stable financial situation and a good driving record, a higher deductible may be a good choice. Additionally, consider the value of your vehicle. It may not be wise to have a high deductible if your car is only worth a few thousand dollars, as you could end up paying a significant portion of its value in the event of a claim.

It's also worth noting that some insurance companies may not raise your rates after a single speeding ticket, so shopping around for a new policy could help you find a better deal.

Reduce your coverage

If you're looking to reduce your auto insurance costs, one option is to lower your coverage. This can be done in two ways: by decreasing your policy limits or by dropping unnecessary types of coverage.

For example, if you own an older car that isn't worth much, you might consider dropping collision and comprehensive coverage. Collision coverage helps pay for damage to your car if you're in an accident, while comprehensive coverage pays for damage to your car caused by things other than a collision, such as weather events, fire, theft, or vandalism. If your car is worth less than ten times your premium, purchasing this coverage may not be cost-effective.

Before making any changes to your coverage, it's important to check your state's insurance laws, as well as any coverage requirements from your lender or lessor, to ensure you remain in compliance. Additionally, if you have a car loan or lease, your lender likely requires you to maintain full coverage, which includes both collision and comprehensive insurance.

Another factor to consider is the age of your vehicle. As a car gets older, the cost to replace it in the event of an accident decreases, so you may be able to lower your limits associated with vehicle repair. If you've paid off your car loan or owe only a small amount, you may no longer need gap insurance, which covers the difference between the actual cash value of your car and the amount you owe on your loan.

Keep in mind that reducing your coverage may result in higher out-of-pocket costs if you're in an accident. It's important to weigh the benefits of a lower premium against the potential costs of reduced coverage.

Frequently asked questions