Lowering State Farm Auto Insurance: Tips To Reduce Your Premium

State Farm is one of the top-rated insurance companies in the United States, but policyholders can sometimes be surprised by premium spikes or sudden rate increases. Luckily, there are several ways to lower your State Farm auto insurance. You can take advantage of State Farm's various discounts, such as their Drive Safe and Save program, which offers an initial discount for enrolling and up to 30% savings based on your driving. You can also reduce your coverage, raise your deductible, or switch insurers. Improving your driving record and credit score can also help lower your insurance rates over time. Additionally, driving fewer miles each year and choosing a safer, more practical vehicle over an expensive or sports car can result in lower premiums.

Raise your deductible

Raising your deductible is a way to lower your State Farm auto insurance premium. The deductible is the amount you pay out-of-pocket before your insurance coverage kicks in. Typically, you can choose a deductible of $250, $500, or $1,000, but amounts can go as high as $2,500. When choosing your deductible amount, consider your financial situation and driving habits. If you can afford a higher out-of-pocket cost in the event of a claim and want to lower your premium, a higher deductible may be suitable. On the other hand, if you prefer lower out-of-pocket expenses at the time of a claim, opt for a lower deductible.

For example, if you have a $500 deductible and file an insurance claim for $2,000, you will be responsible for the $500 before the remaining $1,500 is paid by your insurer. Increasing your deductible can lower your insurance costs and save you hundreds of dollars a year. For instance, increasing your deductible from $500 to $1,000 may lower your car insurance rate by 10%, resulting in average savings of approximately $188 per year on comprehensive and collision coverage.

However, it's important to choose a deductible amount that you can afford if you suddenly need to file a claim. Additionally, consider the value of your vehicle when deciding on a deductible. Having a high deductible on a low-value car may not be prudent, as you could end up paying a significant portion of the car's worth in the event of a loss. For instance, a $1,000 deductible on a car valued at $3,000 may not be advisable.

Raising your deductible can be a good strategy if you have the financial means to cover the higher amount in case of a claim. It encourages you to be more responsible and discourages you from filing small claims, which could lead to higher premiums over time.

Drop excess coverage

Drop-down coverage, also known as excess coverage, is a feature of umbrella insurance policies. It is an insurance policy that acts as a supplement to your primary insurance policy by providing additional protection for your liability or property insurance coverage.

Excess coverage comes into effect when the primary policy has been exhausted and cannot provide enough funds to cover a loss or damage. For example, if a policyholder has a primary policy that covers $100,000 of property damage, and an umbrella policy that provides an additional $20,000 in coverage for property damage, the drop-down coverage from the umbrella policy will come into effect and pay the remaining $10,000 if the policyholder files a claim for damages totalling $110,000.

Excess coverage can also be useful in situations where the primary insurer is insolvent or bankrupt. However, this will only be effective if the policy specifically states that it provides drop-down coverage in such cases.

Excess coverage is typically purchased as a supplement to property or commercial insurance policies. It is particularly relevant for business owners who want additional protection for their liability or property insurance.

State Farm customers can benefit from excess coverage by purchasing an umbrella policy to supplement their primary auto insurance. This can provide added protection in the event that the primary policy's maximum payout is exceeded.

It is important to note that excess coverage does not provide broader protection than what is offered by the primary insurance policy. It simply increases the coverage limits and provides additional funds when the primary policy is exhausted.

Take a defensive driving course

Taking a defensive driving course is a great way to lower your State Farm auto insurance premium. Not only will you become a better and safer driver, but you will also be rewarded by State Farm for doing so.

State Farm offers a defensive driving course discount to its customers. The discount amount varies by state, but it typically ranges from 5% to 10% off your auto insurance policy. To be eligible for the discount, you must complete an approved defensive driving course. These courses are usually referred to as "traffic school" and cover crash prevention techniques, an overview of your vehicle's safety equipment, general safety techniques, and how to behave in the event of a crash.

In some states, such as Texas, you can also use the defensive driving course to dismiss a traffic ticket and prevent your insurance rates from increasing. This is especially useful if you are looking to remove points from your license.

To find out if you are eligible for the defensive driving course discount and to get a list of approved courses, contact your local State Farm agent. They will be able to provide you with the specific requirements and conditions for the discount.

It is important to note that the defensive driving course discount may only be available to drivers above a certain age, typically above 50 or 60 years old. Additionally, the discount may only be applicable if you voluntarily take the course and not as a result of a court order.

By taking a defensive driving course, you can improve your driving skills, increase your knowledge of safe driving practices, and potentially save money on your State Farm auto insurance policy. Contact your local State Farm agent today to find out more about this discount and how you can take advantage of it.

Improve your credit score

Improving your credit score takes time and consistency. Here are some detailed and direct tips to improve your credit score:

• Pay your loans on time: Payment history is the most influential factor in calculating your credit score. Late or missed payments can significantly impact your score. Set up autopay for at least the minimum amount and create calendar reminders to ensure timely payments.
• Pay down revolving account balances: The amount you owe impacts your credit score. Aim to keep your credit utilisation rate, or the percentage of available credit used, as low as possible. Consider paying off high credit card balances as a priority.
• Don't close your oldest account: The length of your credit history matters. Avoid closing old accounts, even if you no longer use them, as this can shorten your credit history. Consider using your oldest credit card occasionally or putting a small recurring bill on it to keep it active.
• Diversify your credit: Having a mix of credit types, such as credit cards, auto loans, student loans, and mortgages, can strengthen your credit profile. However, avoid taking on unnecessary debt just to build credit.
• Limit new credit applications: Every time you apply for credit, a hard inquiry is recorded, which can negatively impact your score. Only apply for credit when necessary, and consider prequalification options that use soft credit checks instead.
• Dispute inaccurate information: Inaccurate information on your credit report can negatively affect your score. Regularly review your reports and dispute any errors or fraudulent activity.
• Become an authorised user: If you're new to credit, consider becoming an authorised user on a family member or friend's credit card account with a good payment history and low credit utilisation. Ensure the account reports to all three major credit bureaus (Equifax, Experian, and TransUnion) for maximum benefit.
• Pay bills on time: Ensure you pay at least the minimum amount on each of your credit accounts to maintain a positive payment history. Set up automatic payments or reminders to avoid late payments, which can stay on your credit report for up to seven years.
• Deal with collections accounts: Paying off collections accounts can help remove the threat of legal action and may persuade collection agencies to stop reporting the debt. You can also dispute and have inaccurate or outdated collections accounts removed from your credit report.
• Use a secured credit card: A secured credit card requires an upfront deposit, which serves as collateral. Using it responsibly by making on-time payments can help build or rebuild your credit history.
• Get credit for rent and utility payments: Services like Experian Boost can help you get credit for on-time rent and utility payments, which can positively impact your score.

Sign up for Drive Safe & Save

State Farm's Drive Safe & Save program is a telematics program that rewards you for good driving with a discounted premium. The program tracks miles driven, acceleration, braking, turns, speed, and distracted driving. By signing up for Drive Safe & Save, drivers can save up to 50% on their rate.

Here's how to sign up for Drive Safe & Save:

Check your phone's eligibility:

Text SAVE to 42407 to check if your phone is compatible with the Drive Safe & Save app. If your phone is eligible, you will receive a link to download the app.

Download the Drive Safe & Save app:

The Drive Safe & Save app is available for download in the App Store or Google Play. Once you have downloaded the app, open it and sign in. You can sign in using your driver's license information or your statefarm.com user ID and password.

Complete the setup:

In certain states, you may be required to take additional steps in the app to finish your enrollment, such as accepting the terms and conditions, verifying your email address, and confirming your mailing address.

Receive and set up the Bluetooth beacon:

State Farm will send you a Bluetooth beacon to pair with the Drive Safe & Save app. Place the beacon behind your rearview mirror, or another sturdy and stationary location, and follow the instructions in the app to complete the pairing process.

Start driving and saving:

With the Drive Safe & Save app and Bluetooth beacon set up, you can start driving and earning discounts. The app will automatically record your trips and provide feedback on your driving habits. The more safely you drive, the more you can save on your State Farm auto insurance premium.

Frequently asked questions