Smart Ways To Save On Auto Insurance

Car insurance is a necessary expense for drivers, but it can be a costly one. Fortunately, there are several ways to reduce the financial burden of auto insurance. Here are some strategies to help you save money on your car insurance:

- Ask for discounts: Many insurance companies offer various discounts that can lower your premium. These may include discounts for being a student with good grades, serving in the military, having safety features on your vehicle, or being a member of certain groups or associations.

- Increase your deductible: Opting for a higher deductible can result in lower monthly payments. Just ensure you have enough in your emergency fund to cover the higher deductible if needed.

- Review your coverage: Ensure you have the right amount of coverage for your needs. You may be paying for more coverage than you actually require. Evaluate the different types of coverage, such as liability coverage, bodily injury liability coverage, property damage liability coverage, and personal injury protection, to determine what is necessary for your situation.

- Shop around for insurance: Compare rates from different insurance companies and get multiple quotes to find the best deal. Prices can vary significantly between companies, so it's worth putting in the time to find a lower premium.

- Bundle your insurance policies: Many insurers offer discounts if you purchase multiple types of insurance from them, such as homeowners and auto insurance, or if you insure more than one vehicle with them.

- Improve your credit rating: In most states, insurance companies consider credit ratings when determining insurance premiums. Improving your credit score can help lower your auto insurance costs.

- Drive safely: Maintaining a safe driving record is key to getting lower car insurance rates. Avoid accidents and moving violations, and consider taking a defensive driving course to qualify for additional discounts.

- Choose a different car: The type of car you drive can impact your insurance premium. Safe and moderately priced vehicles, such as small SUVs, tend to be cheaper to insure than expensive or flashy cars.

Ask for Discounts

Discounts are a great way to save on auto insurance. While your insurance company should sign you up for the discounts you qualify for, it never hurts to ask about them and make sure. Companies don't always offer the same discounts, but there are some common types you might get.

Good Driver Discounts

If you're a good driver, you can probably get a discount. Companies see good drivers as less of a risk. You can likely get this discount if you haven't filed an insurance claim and have a good driving record. Taking a defensive driving course can also help you qualify for this discount.

Low-Mileage Discounts

If you don't drive much, your chances of staying accident-free are better. Let your company know if you work from home or only drive for pleasure. Some companies offer verified mileage programs where you can get even more savings by reporting your odometer reading regularly.

Good Student Discounts

If you have high school or college students who get good grades, let your company know. Companies often reward good students with a discount.

Multi-Policy Discounts

If you have more than one car on your policy, you'll probably get a discount. You might also get a discount for having other policies with the same company, such as home or renters insurance.

Anti-Theft Device Discounts

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

Group Insurance Discounts

Some companies offer discounts to drivers who get insurance through a group plan from their employers, professional, business, or alumni groups, or other associations. Check with your affiliated organizations to see what they offer.

Remember, it's important to compare quotes based on your own situation. Just because an insurer offers multiple discounts doesn't mean it offers the lowest overall price.

Increase Your Deductible

Increasing your deductible is a great way to save money on your auto insurance. A deductible is the amount you pay out of pocket when you file a claim before your insurance policy kicks in. For example, if your car sustains $1,500 worth of damage, and your deductible is $500, you will pay the first $500 and your insurer will cover the remaining $1,000.

Raising your deductible can lead to lower premium costs. If you rarely drive and don't anticipate getting into accidents or sustaining vehicle damage, a higher deductible could be a good option for you. By increasing your deductible from $200 to $500, you could reduce your collision and comprehensive coverage cost by 15 to 30%. Going to a $1,000 deductible can save you 40% or more.

However, it is important to ensure you have enough money set aside to pay the deductible in the event of a claim. You should also consider your emergency fund before choosing a higher deductible. While it may lower your premium costs, a higher deductible means you will need to pay more each time you file a claim. Therefore, it is crucial to weigh the potential savings against the risk of higher out-of-pocket expenses in the event of an accident or damage to your vehicle.

Additionally, if the repair costs are lower than your deductible, it may not make financial sense to file a claim. For example, if the repair bill for your car is $800 but your collision deductible is $1,000, you would be responsible for the entire repair bill as the costs are lower than the deductible.

In summary, increasing your deductible can be a strategic way to lower your auto insurance costs, but it is important to carefully consider your financial situation and the potential risks involved.

Drop Coverage You Don't Need

Dropping unnecessary coverage is a great way to save money on your auto insurance. Here are some things to consider when deciding whether to drop full coverage:

The Value of Your Car

The value of your car is a crucial factor in determining whether to keep or drop full coverage. As a vehicle ages and accumulates mileage, its value decreases. If your car is old and has high mileage, it may not be worth the cost of full coverage. Compare your car's value to the cost of full coverage to make an informed decision.

Your Financial Situation

Consider your financial situation and risk tolerance. If you struggle to afford auto insurance, dropping full coverage could provide some relief. However, keep in mind that this would mean you'd have to pay for repairs or a new car out of pocket in the event of an accident. Assess your financial ability to handle such expenses.

The Condition and Usage of Your Car

If your car is in good condition and you don't drive it frequently, the risk of accidents and damage is lower. In such cases, you may consider dropping full coverage, as the likelihood of needing it is reduced.

The Cost of Repairs

Some cars have expensive repair costs, especially if they require specialised parts. If your car has high repair costs, maintaining full coverage can help offset these expenses in the event of an accident.

Your Deductible

When considering dropping full coverage, evaluate your deductible. If you have a low deductible, dropping full coverage may not provide significant savings. However, if you have a high deductible, dropping full coverage could result in substantial savings on your insurance premiums.

Alternative Coverage Options

Even if you decide to drop full coverage, you may still want to retain certain types of coverage, such as liability insurance, which is required by state law. Additionally, consider your needs and whether you require coverage for specific scenarios, such as collisions with animals or vandalism.

Remember, the decision to drop full coverage should be made based on your specific circumstances and a careful assessment of the benefits and risks involved.

Buy an Insurance-Friendly Vehicle

When it comes to buying a car, it's easy to get caught up in the excitement of it all and focus on the bells and whistles. However, it's important to remember that the type of car you choose will have a significant impact on your insurance premiums. Here are some tips to help you buy an insurance-friendly vehicle and save money on your auto insurance:

Know the Insurance-Friendly Vehicles

Firstly, you need to know which types of vehicles are considered insurance-friendly. Generally, high-performance vehicles, expensive luxury cars, vehicles with high horsepower, and extremely small cars tend to have very expensive insurance premiums. On the other hand, minivans, mid-size SUVs, and family sedans often have lower insurance rates. So, if you're looking for a discount, it's best to avoid the high-performance and luxury options.

Consider Theft Rates

The theft rate of a vehicle also plays a role in determining insurance costs. Insurance companies usually offer lower rates for cars with lower theft rates. You can check out the National Insurance Crime Bureau (NICB) website to find out the theft rating of a particular car model. By choosing a vehicle with a low theft rate, you can keep your insurance costs down.

Research Repair Costs

Some vehicles are built in a way that makes them cheaper to repair after an accident. These fall into the category of insurance-friendly cars. The repair cost depends on the quality and availability of spare parts and accessories. Do your research to find out which car models have lower repair costs, as this can help you save on insurance.

Domestic vs. Foreign-Made Cars

It's also worth noting that insurance companies often charge more for foreign-made vehicles. This is because the repair costs for these cars tend to be higher due to the need to ship replacement parts from other countries. If you're looking to save on insurance, consider opting for a domestically manufactured car.

Consult a Trusted Agent

While the above tips can guide your decision-making process, consulting an auto insurance agent can provide you with more personalized advice. They can help you understand which specific makes and models are more insurance-friendly based on your needs and preferences. However, be sure to check the agent's background and reputation before taking their advice.

Change How You Pay Premiums

Changing how you pay your premiums can be a great way to save money on your auto insurance. Here are some ways to do this:

Payment Discounts

Many insurance companies offer discounts for paying your premium in full or setting up automatic payments. While the discount may be small, it can still save you money over time.

Pay Annually

Insurance companies often offer a discount if you pay your premium annually rather than monthly. If you can afford to pay for a year's worth of coverage upfront, this can be a great way to save money on your auto insurance.

Bundle Your Insurance Policies

If you have multiple insurance policies, such as homeowners and auto insurance, consider bundling them with the same company. Many insurers offer discounts for customers who purchase more than one type of insurance from them. Additionally, some companies offer discounts for insuring multiple vehicles with them.

Improve Your Credit Score

In most states, insurance companies use your credit score to help determine your premium. Therefore, improving your credit score can lead to lower insurance premiums. Ways to improve your credit score include making timely payments, keeping credit card balances low, and only opening new credit accounts when necessary.

Pay-Per-Mile Insurance

If you don't drive often, consider pay-per-mile insurance. This type of insurance bases your premium on how much you drive, so if you have a short commute or rarely drive, you can save money on your premium.

Frequently asked questions