Smart Ways To Lower Your Auto Insurance Costs

Auto insurance is a necessity for drivers, but it can be expensive. Luckily, there are many ways to lower your car insurance premiums and get a good deal on coverage. Here are some strategies to help you get low auto insurance:

- Shop around and compare rates from different insurance companies. Get multiple quotes to find the best price and coverage for your needs. Don't assume that one company is the cheapest, as rates can vary significantly between insurers.

- Take advantage of discounts offered by insurance companies. These may include discounts for bundling policies, insuring multiple cars, having a clean driving record, paying premiums annually, agreeing to receive documents online, having certain safety features in your car, or being a member of specific groups.

- Improve your credit score and maintain a good credit history, as this can impact your insurance rates.

- Increase your deductible. By agreeing to pay a higher deductible, you can lower your insurance premium. Just be sure you can afford the higher amount if you need to file a claim.

- Choose a car that is cheap to insure. Certain vehicles, such as expensive or sporty cars, will have higher insurance charges. Opt for a safe and moderately priced car, and consider vehicles with plenty of safety features.

- Drive safely and maintain a good driving record. Accidents and moving violations can increase your insurance rates.

- Consider usage-based or pay-per-mile insurance if you don't drive often or have a short commute. These programs track your driving behaviour and can offer discounts for safe driving habits and low mileage.

- Review your coverage regularly and drop any insurance you don't need. For older cars, you may not need comprehensive and collision coverage, as the cost of repairs may exceed the value of the car.

- Consider the insurance costs when buying a new car. Insurance premiums can vary depending on the make and model of the vehicle.

Shop around for the best rate

Shopping around for the best rate is one of the most effective ways to get low auto insurance. Here are some tips to help you get the best rate:

Get Multiple Quotes

It is important to get multiple quotes from different insurance companies to find the best rate. Prices vary from company to company, so getting at least three price quotes can help you compare and choose the most affordable option. You can contact companies directly, use the internet, or check with your state insurance department for comparisons of prices charged by major insurers.

Consider Different Types of Insurance Companies

There are different types of insurance companies, including those that sell through their own agents, those that use independent agents, and those that sell directly to consumers over the phone or online. Getting quotes from various types can help you find the best rate.

Check Financial Stability

When choosing an insurance company, it is crucial to pick one that is financially stable and has a good rating from companies like AM Best or Standard & Poor's. This ensures they can provide peace of mind and financial protection when you need it.

Don't Shop by Price Alone

While price is important, it shouldn't be the only factor when choosing an insurance company. Consider asking friends and family for recommendations and checking with your state insurance department for information on consumer complaints about the company. Pick an agent or company representative who is responsive and takes the time to answer your questions.

Compare Quotes Using a Checklist

Use a checklist to compare quotes from different insurers. Consider factors such as price, coverage, customer service, and claims handling. This will help you make an informed decision and ensure you get the best rate and the most suitable coverage for your needs.

Get Quotes from Smaller Insurers

Don't overlook smaller, regional insurers in your search. They often have higher customer satisfaction ratings than the big-name companies and may offer lower rates.

By following these tips and shopping around, you can increase your chances of finding the best rate on your auto insurance. Remember to compare multiple factors and read reviews to ensure you're getting a good deal from a reputable company.

Increase your deductible

Increasing your deductible is a great way to lower your auto insurance premium. A deductible is the amount you pay out of pocket before your insurance policy kicks in. For example, if you have a $500 deductible and your vehicle incurs $1,500 of damage, you will pay $500 and your insurer will cover the remaining $1,000.

The inverse relationship between deductibles and premiums means that a higher deductible will result in a lower premium. This is because you are assuming more of the financial burden in the event of a claim. For example, increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage cost by 15 to 30 percent. Going to a $1,000 deductible can save you 40 percent or more.

However, it is important to ensure that you have enough money set aside to pay the higher deductible in the event of a claim. You should review your emergency fund and ensure that you have sufficient savings to cover the higher deductible. Additionally, consider whether you are comfortable with the idea of paying more for car repairs than for insurance.

It is also worth noting that some states specify the deductible amount that must be offered for personal injury protection. Additionally, auto liability insurance, which covers injuries or damage that you cause to others, does not have a deductible.

Improve your credit score

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

• Pay your bills on time: Making it a habit to settle your bills on or before their due dates can positively impact your credit and, consequently, your insurance scores. Late payments or credit delinquencies might signal to insurers a potential risk in financial management.
• Keep hard credit inquiries to a minimum: Too many hard inquiries can negatively impact your score. When insurance companies review your credit, it is considered a soft inquiry and won't affect your actual credit tier. Hard inquiries occur when you apply for a line of credit, and this does affect your score.
• Monitor your score regularly: Keeping a close eye on your credit score can help you take proactive measures toward improvement. Routine checks of your credit reports can also help uncover errors or signs of identity theft early on.
• Maintain old lines of credit: Keeping long-standing credit accounts can benefit your credit score. Rather than closing an unused credit card, consider using it sparingly and ensuring payments are made on time. This helps fortify your credit history and minimize your credit utilization ratio.
• Be aware of your credit utilization ratio: Your credit utilization ratio measures how much credit you have available compared to how much you use. Many finance professionals recommend that you utilize no more than 30% of your total available credit. Paying off some of your debt to bring your credit utilization score down may help improve your credit score and, in turn, your credit-based insurance score.

Take advantage of discounts

Discounts are a great way to save on your auto insurance. While your insurance company should sign you up for the discounts you qualify for, it's always worth asking about them to make sure. Here are some common types of discounts to look out for:

Multi-Policy Discounts

If you buy homeowners and auto coverage from the same insurer, you will often be given a discount. You may also get a reduction if you insure multiple cars with the same company. Some companies also offer discounts if you have other policies with them, such as renters insurance.

Safe Driver Discounts

Companies see good drivers as less of a risk, so you can probably get a discount if you haven't filed an insurance claim and have a good driving record. Maintaining a safe driving record is key to getting lower car insurance rates.

Low Mileage Discounts

Some companies offer discounts to motorists who drive fewer miles per year than the average. Low mileage discounts can also apply to drivers who carpool to work. If you work from home or only drive for pleasure, let your insurance company know.

Good Student Discounts

If you have high school or college students who get good grades, let your insurance company know. Companies often reward good students with a discount. This discount generally lasts until your child reaches the age of 25.

Defensive Driving Course Discounts

Insurance companies sometimes provide discounts to drivers who complete an approved defensive driving course. Drivers may also be able to reduce the number of points on their licenses by taking such a course.

Anti-Theft Device Discounts

Cars with more anti-theft devices are less likely to be stolen, which is good for you and your insurance company. If you have anti-theft devices or add them after you buy a policy, tell your company.

Paperless Billing Discounts

You may get a discount for agreeing to receive documents online.

Group Insurance Discounts

Some companies offer reductions to drivers who get insurance through a group plan from their employers, or through professional, business, or alumni groups. Ask your employer and inquire with groups or clubs you are a member of to see if this is possible.

Drive a car that's cheap to insure

Driving a car that's cheap to insure is one of the most effective ways to save on auto insurance. The make, model, and year of your vehicle are some of the factors that determine your insurance premium.

When it comes to choosing a vehicle that's cheap to insure, here are some things to consider:

• Vehicle Type: Smaller pickups, minivans, and SUVs tend to be cheaper to insure than larger sedans and SUVs. Compact and midsize cars are also more affordable to insure.
• Vehicle Price: While insurance costs tend to increase with the vehicle's price, the cheapest cars to buy aren't always the cheapest to insure. Vehicles with values between $26,000 and $32,000 often have lower insurance rates than cheaper cars. More expensive cars, valued at over $38,000, tend to have higher insurance rates.
• Safety Features: Choosing a vehicle with good safety ratings and features can help lower your insurance premium. Family-friendly vehicles with a good safety record and collision-avoidance features are often cheaper to insure.
• Repair and Replacement Costs: Vehicles with lower repair and replacement costs are generally cheaper to insure. Older cars may be cheaper to insure due to the increased availability of replacement parts, but they may also lack modern safety features.
• Anti-Theft Features: Cars with anti-theft devices and security features are often cheaper to insure because they reduce the risk of theft.
• Engine Size: Cars with larger engines are typically more expensive to insure, as they are associated with higher speeds and reckless driving.
• Age and Gender of Driver: Younger drivers tend to pay more for insurance, and male drivers usually have higher insurance rates than female drivers.
• Subaru Outback ($1,603)
• Honda CR-V ($1,726)
• Ford Escape ($1,734)
• Honda Odyssey ($1,735)
• Jeep Wrangler ($1,820)
• GMC Sierra 1500 ($1,867)
• Toyota RAV4 ($1,869)
• Nissan Rogue ($1,880)

When shopping for a car, it's important to consider not only the purchase price and fuel efficiency but also the insurance costs. By choosing a vehicle that's cheap to insure, you can save hundreds of dollars each year on your insurance premium.

Frequently asked questions