Lower Auto Insurance Rates: Tips For Smart Savings

Auto insurance rates can be expensive, but there are several ways to lower your costs. Some of the most impactful ways to reduce your car insurance include qualifying for multiple discounts, avoiding accidents, and changing your coverage. Comparing rates, trying usage-based insurance, and knowing how your vehicle might affect your rate can also help.

Increase your deductible

One of the most effective ways to lower your auto insurance rates is to increase your deductible. A deductible is the amount of money you pay out of pocket when you file a claim against your car insurance policy. 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 increasing your deductible, you can lower your insurance premium costs. A higher deductible means you are willing to pay more towards repairs when you file a claim, and this can result in lower premium costs. For example, increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage costs by 15 to 30 percent. If you increase your deductible to $1,000, you could save 40 percent or more.

However, it is important to ensure you can afford a larger outlay if you need to repair your vehicle. You should ensure you have enough money set aside to cover the higher deductible in the event of a claim. Check your emergency fund before making any changes to your deductible. If your savings are strong, increasing your deductible may be a good option as you can use these funds to cover the higher deductible, while also enjoying lower premium costs.

It is also worth noting that if your deductible is higher than the amount of repairs needed, it may not make financial sense to file a claim. For example, if your deductible is $1,000, but the repair bill is $800, you will be responsible for the full repair bill as the costs are lower than the deductible.

Increasing your deductible can be a great way to lower your auto insurance rates, but it is important to ensure you have the financial means to cover the higher out-of-pocket expenses in the event of a claim.

Compare rates from multiple insurers

Comparing rates from multiple insurers is one of the most impactful ways to lower your auto insurance premium. Prices vary from company to company, so it's worth shopping around. It's recommended to get at least three price quotes. You can do this by calling companies directly, accessing information online, or checking with your state insurance department, which may provide comparisons of prices charged by major insurers.

When comparing rates, it's important to compare identical policy coverage and limits so that you're making an accurate price comparison. You can use a checklist to help you compare quotes from insurers.

• Don't shop by price alone. Ask friends and relatives for recommendations and check with your state insurance department to find out if they provide information on consumer complaints by the company.
• Check the financial health of insurance companies with rating companies such as AM Best and Standard & Poor's.
• Get quotes from different types of insurance companies. Some sell through their own agents, while others sell through independent agents who offer policies from several insurance companies.
• Compare rates before you buy a car. Car insurance premiums are based in part on the car's price, the cost to repair it, its overall safety record, and the likelihood of theft. Many insurers offer discounts for features that reduce the risk of injuries or theft.
• Consider usage-based insurance (UBI). UBI helps your car insurance premium align with your driving habits, including how much and how safely you drive. However, not every driver who tries UBI will be rewarded with a lower rate, as riskier driving habits might result in a higher rate.

By following these tips and comparing rates from multiple insurers, you can find the best auto insurance policy at the most affordable price for your needs.

Bundle your insurance policies

Bundling your insurance policies is a great way to save money on your auto insurance rates. By purchasing multiple types of insurance policies from the same insurance provider, you can often take advantage of bundling or multi-policy discounts. This means that you can insure both your vehicle and your property (home, condo, or renters insurance) with the same company and receive a discount on your premiums. Some companies even allow you to bundle other types of insurance, such as RV, boat, or life insurance policies, leading to even more significant savings.

There are several benefits to bundling your insurance policies. Firstly, it can result in substantial cost savings. Many insurance companies offer discounts to customers who purchase multiple types of insurance from them. These discounts can be quite significant, ranging from 5% to 30% or even more. Additionally, by combining your policies under one roof, insurance companies benefit from economies of scale and can pass those savings on to you.

Another advantage of bundling is simplified policy management. Instead of juggling multiple insurance carriers, apps, and payment due dates, you'll have just one provider to deal with. This streamlines your premium payments and makes it easier to manage your policies. It also saves you time, as you only need to communicate and deal with one company.

When considering bundling, it's important to shop around and compare quotes from different insurers. While bundling can often result in cost savings, it's not always the case. It's essential to compare rates, coverage options, and the reputation of the insurance company to find the best deal for your needs. Additionally, consider any changes or updates you want to make to your policies and get quotes accordingly.

In summary, bundling your insurance policies can be a great way to save money and simplify your insurance management. By purchasing your auto insurance and other types of insurance, such as homeowners or renters insurance, from the same company, you can often take advantage of bundling discounts. However, it's important to compare rates and coverage options from multiple insurers to ensure you're getting the best deal.

Improve your credit score

Improving your credit score is a vital step in 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 in shaping your credit-based insurance score. A pattern of late payments or credit delinquencies might indicate to insurers a higher risk of claim submissions 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. Hard inquiries occur when you apply for a line of credit, and they do affect your score. Soft inquiries, on the other hand, are when insurance companies review your credit during the quoting process, and these shouldn't impact your score. Too many hard inquiries can negatively affect your score, so consider spacing out your applications for new credit.

Monitor your score regularly

Keeping a close eye on your credit score has multiple benefits. Knowing your score enables you to take proactive measures toward improvement. Additionally, regularly checking your credit reports can help you catch errors or signs of identity theft early on. Spotting inaccuracies allows you to challenge and rectify them 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 significantly contributes to your score, so consider using your oldest credit card sparingly and ensuring timely payments. This approach can help 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're using compared to your total available credit. While there's no set rule, many financial professionals recommend utilizing no more than 30% of your total available credit. If you're using more, consider paying off some debt to bring your credit utilization score down, which may help improve your overall credit score and, in turn, your credit-based insurance score.

Take a defensive driving course

Taking a defensive driving course can be a great way to lower your auto insurance rates. These courses are designed to improve your driving skills and promote safe driving habits. They cover a range of topics, including defensive driving techniques, traffic laws, risk management, collision avoidance, and distracted driving awareness. By completing a defensive driving course, you can benefit from insurance discounts, improve your driving skills, and reduce the likelihood of accidents.

When choosing a defensive driving course, it's important to select one that is accredited and recognized by your insurance company. Most insurance companies provide a list of approved courses on their websites. The cost of these courses can vary, but they are generally affordable, ranging from $15 to $100. Online courses are typically cheaper, while in-person courses offer the benefit of direct guidance from instructors.

Upon completing the course, make sure to obtain a completion certificate. Submit this certificate to your insurance provider to claim your discount, which can range from 5% to 20% off your premium. The discount may last for several years, and you may be able to retake the course to maintain the savings.

It's worth noting that not all insurance companies offer defensive driving discounts, so it's crucial to check with your provider to determine their policy. Additionally, some companies may have specific requirements or limitations, such as age restrictions or a good driving record.

Overall, taking a defensive driving course can be a worthwhile investment. It can help you become a better and safer driver while also saving you money on your auto insurance rates.

Frequently asked questions