Strategies To Lower Your Auto Insurance Rate

Auto insurance can be expensive, but there are ways to get a better rate. The first step is to shop around and compare quotes from different insurance companies, including smaller, regional insurers. You can also review your deductible and consider bundling your auto insurance with other types of insurance, such as homeowners or renters insurance. Improving your credit score and maintaining a good driving record can also help lower your auto insurance rate. Additionally, you can skip comprehensive and collision coverage if you have an older car, increase your deductible, and look for discounts that may be available to you.

Compare rates from different insurers

Comparing rates from different insurers is one of the most effective ways to get a better auto insurance rate. Here are some tips to help you compare rates and find the best deal:

• Shop around for the best rate: Don't just settle for the first insurer you come across. Compare rates from multiple companies, including smaller insurers, as they may offer lower rates than the big names.
• Get quotes from different types of insurers: Some insurers sell through their own agents, while others sell through independent agents who offer policies from several companies. Get quotes from both types to find the best deal.
• Consider the company's financial stability: It's important to pick a financially stable company that can provide peace of mind and financial protection. Check the financial health of insurers with rating companies like AM Best and Standard & Poor's.
• Don't shop by price alone: While price is important, it's not the only factor to consider. Ask friends and family for recommendations and check consumer complaints by contacting your state insurance department.
• Compare identical policy coverage and limits: When comparing rates, make sure you're comparing apples to apples. Ensure the coverage and limits are the same across all quotes to get an accurate price comparison.
• Review your deductible: A higher deductible usually means a lower premium. Consider how much you can afford to pay out of pocket in the event of a claim and adjust your deductible accordingly.
• Bundle your policies: Many insurers offer discounts if you bundle your auto insurance with other types of insurance, such as homeowners or renters insurance. This can also simplify your insurance by having all your policies with one carrier.
• Explore discounts: Insurers typically offer a range of discounts, such as multi-car, safe driver, and good student discounts. Ask about available discounts and factor them into your comparison.
• Check third-party ratings: An affordable premium is important, but also consider the quality of the insurer. Research third-party ratings, such as those from J.D. Power and the Better Business Bureau, to get a sense of the company's customer service and claims satisfaction.

Review your deductible

A car insurance deductible is the amount you pay out of pocket before your insurance carrier starts paying for repairs. You will have to pay the deductible each time you file a claim. The deductible is usually set when you buy your policy, but you can adjust it later if you change your mind.

Most drivers choose a $500 auto insurance deductible, but policies with higher deductibles tend to cost less. This is because you're taking on more of the costs if you file a claim, and you're less likely to make claims for minor damage because the repair costs won't exceed your deductible amount by much.

The Insurance Information Institute says raising your deductible from $200 to $500 could reduce the cost of your collision and comprehensive coverage by 15% to 30%. Boosting the deductible even higher, to $1,000, could result in savings of 40% or more.

However, choosing a higher deductible means you'll pay more out of pocket after an accident, but your monthly rates will be lower. It's a gamble that you won't have a car accident. If you do have an accident with a high-deductible policy, you're still covered, but you'll pay more out of pocket after the accident than if you had a low-deductible policy.

When selecting a deductible, it's important to consider your financial situation and how likely you are to file a claim. If you don't have savings to cover a high deductible, it may be better to choose a low-deductible policy. The higher monthly bills for insurance premiums may be a better way to protect your finances if you have an accident.

You can also choose different deductible amounts for different types of coverage. For example, you could have a $500 deductible for comprehensive coverage but a $1,000 deductible for collision coverage, or vice versa.

Bundle insurance policies

One of the most effective ways to get a better auto insurance rate is to bundle your insurance policies. This means purchasing multiple types of insurance policies from the same insurance provider. The most common type of insurance bundle is home and auto insurance, but you can also bundle other types of insurance, such as renters, condo, motorcycle, RV, boat, and umbrella policies.

Bundling your insurance policies can lead to significant savings on your insurance premiums. Most insurance companies offer bundling discounts, which are typically some of the largest discounts available. The amount of the discount varies depending on the company, but it usually ranges from 5% to 25%. For example, State Farm offers a bundling discount of up to $1,273 annually, while Liberty Mutual offers a discount of up to $950 per year.

In addition to the potential savings, bundling your insurance policies can also make it more convenient to manage your insurance. You may be able to manage multiple insurance products in a single online account or through the same mobile app. It can also streamline billing, as you will only receive one bill for all your bundled policies each billing cycle.

When considering bundling your insurance policies, it's important to shop around and compare rates from multiple insurance companies. Even with a bundling discount, you may find that purchasing separate policies from different insurers is cheaper. Additionally, not all insurers offer the same types of insurance, so you'll need to make sure the company you choose offers the coverage you need. It's also essential to consider factors such as customer satisfaction, financial strength, and the availability of digital tools.

Claim discounts

Claiming discounts is a great way to get a better auto insurance rate. Here are some common discounts to look out for:

Multi-Policy Discounts

Many insurance companies offer discounts if you bundle your auto insurance with other types of insurance, such as homeowners, renters, or boat insurance. You can also get a reduction if you insure multiple vehicles with the same company.

Safe Driver Discounts

Safe drivers with a clean driving record, no accidents, and no moving violations for a number of years are often rewarded with lower rates. Taking a defensive driving course can also help you qualify for a discount.

Low Mileage Discounts

Some companies offer discounts to motorists who drive fewer miles per year than the average. This can also apply to those who carpool to work.

Vehicle Safety Discounts

If your car is equipped with safety features such as anti-lock brakes and airbags, you may be eligible for a discount. Insurers may also offer discounts for vehicles with certain anti-theft features.

Good Student Discounts

Full-time high school or college students with good grades (usually a B average or above) may qualify for a discount.

Group Membership Discounts

If you are a member of particular professional organizations, alumni groups, or other affiliate groups, you may be able to get a discount on your auto insurance.

Payment Discounts

In some cases, you can get a discount by paying your annual or six-month premium in full at once, or by choosing automatic payments.

Other Discounts

There may be other discounts available depending on your specific insurance company and location. These can include discounts for having multiple policies with the same carrier, being a federal employee, or owning a green vehicle.

Remember to ask your insurance provider about any available discounts and to compare rates from multiple insurers to ensure you're getting the best deal.

Improve your credit score

Improving your credit score is an important aspect of managing your finances 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 boost your credit score:

Pay your bills on time

Paying your bills on time is crucial for maintaining a good credit score. Late payments or credit delinquencies can signal to insurers that you may be a potential risk in financial management, leading to higher insurance premiums. By consistently paying your bills on or before their due dates, you can positively impact your credit and insurance scores.

Keep hard credit inquiries to a minimum

Credit inquiries can be either hard or soft checks. Hard inquiries occur when you apply for a line of credit, while soft inquiries are used by insurance companies to review your credit during the quoting process. Too many hard inquiries can negatively impact your score. Therefore, if you are working on improving your credit, consider waiting to apply for new loans or lines of credit.

Monitor your score regularly

Regularly checking your credit score can help you take proactive measures to improve it. It also allows you to spot errors or signs of identity theft early on. By routinely reviewing your credit reports, you can ensure the accuracy of your credit information and promptly address any discrepancies.

Maintain old lines of credit

Keeping long-standing credit accounts can positively impact your credit score. The duration of your credit history is a significant factor, contributing 15% to 20% to your score. Instead of closing unused credit cards, consider using them sparingly and making timely payments. This helps fortify your credit history and minimize your credit utilization ratio.

Be mindful of your credit utilization ratio

Your credit utilization ratio is the percentage of your available credit that you are currently using. While there is no set rule, it is generally recommended to keep your credit utilization below 30%. Paying off some of your debt to lower your credit utilization can help improve your credit score and, consequently, your credit-based insurance score.

Frequently asked questions