Lower Auto Insurance Costs: Keep Your Plan, Save Money

Auto insurance is expensive, but there are ways to lower your costs without changing plans. One way is to increase your deductible, which is the amount you pay out of pocket before your insurance coverage kicks in. You can also review your current policy to see if there are any changes you can make, such as dropping collision and comprehensive coverage on older cars. Another option is to bundle your auto insurance with other types of insurance, such as homeowners or renters insurance. Improving your credit score can also help lower your auto insurance rates, as can participating in a safe driving program or taking a defensive driving course. Finally, be sure to shop around and compare rates from different insurance companies to find the best deal.

Increase your deductible

One way to lower your auto insurance premium without changing plans is to increase your deductible. A deductible is the amount of money you pay out of pocket each time 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.

The relationship between deductibles and premiums is generally inverse: a higher deductible usually leads to a lower premium, and vice versa. This is because you are assuming more of the financial cost if you make a claim. For example, increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage cost by 15 to 30%. Going from $500 to $1,000 could save you an additional 31%, or 40% or more.

However, it is important to ensure you can afford a higher deductible. You should have enough money set aside to pay it if you have a claim, and you should also consider whether you would be able to afford to pay more to fix your car if you were in an accident.

Compare quotes from different insurers

Comparing quotes from different insurers is a great way to lower your auto insurance costs without changing plans. Here are some tips to help you get the most out of this strategy:

• Get multiple quotes: It is recommended to get at at least three quotes from different insurers to have a good basis for comparison. You can contact companies directly, use online tools, or even consult your state insurance department, which may provide comparisons of prices charged by major insurers.
• Compare identical coverage: When gathering quotes, make sure you are comparing identical policy coverage and limits. This ensures that you are making an apples-to-apples price comparison.
• Don't shop by price alone: While cost is important, it's not the only factor to consider. Ask friends and family for recommendations, and check consumer complaints and the financial health of insurance companies. Pick an insurer with financial stability and a good reputation.
• Comparison shop regularly: Don't just compare quotes when you're initially purchasing insurance. It's a good idea to comparison shop every 6-12 months, especially when your policy is up for renewal. This allows you to take advantage of potential savings opportunities.
• Consider different types of insurers: Some companies sell through their own agents, while others use independent agents who offer policies from multiple insurers. By getting quotes from different types of insurers, you can explore a wider range of options.
• Bundle policies: Many insurers offer discounts if you bundle your auto insurance with other types of insurance, such as homeowners or renters insurance. If you're in the market for multiple types of insurance, consider getting quotes for bundled policies.
• Ask about discounts: Different insurers offer a variety of discounts, such as good driver discounts, student discounts, or discounts for safety features in your vehicle. When comparing quotes, be sure to inquire about any applicable discounts to get the most accurate pricing.

Improve your credit score

Improving your credit score is an important way to lower your auto insurance costs without changing plans. Here are some detailed and direct tips to help you improve your credit score:

• Make on-time payments: Your payment history is the most important factor influencing your credit score. Always pay your bills on time to improve your score. Set up autopay or calendar reminders to ensure timely payments.
• Pay down revolving account balances: The amount you owe accounts for a significant portion of your credit score. Aim to keep your credit utilisation rate, or the percentage of available credit you're using, as low as possible. Make it a priority to pay off high credit card balances.
• Don't close your oldest account: The length of your credit history also matters. Closing an old credit card account can hurt your score, especially if it's one of your oldest ones. Consider using it occasionally or putting a small recurring bill on it to keep it active.
• Diversify the types of credit you have: Your credit mix, which involves managing different types of credit, accounts for a small portion of your score. Applying for different types of credit over time, such as credit cards and loans, can help improve your mix.
• Limit new credit applications: Each time you apply for new credit, a hard inquiry is made, 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 significantly harm your score. Regularly review your credit reports from major credit bureaus and dispute any errors or fraudulent activity you find.
• Become an authorised user: If you're new to credit or rebuilding your score, consider asking a loved one to add you as an authorised user on their credit card. This can positively impact your score, especially if the account has a positive payment history and a low credit utilisation rate.

Drive a car that's cheap to insure

When it comes to choosing a car to keep insurance costs down, there are a few things to consider. Firstly, the make and model of the car are important factors. Some cars are simply cheaper to insure than others.

Subarus, for example, are often the cheapest cars to insure. The Subaru Outback, in particular, is noted as being 25% cheaper to insure than the national average. The Honda CR-V is another car that is frequently cited as being cheap to insure, with insurance costs 16% lower than the average across all vehicles. The Mazda CX-5 is also mentioned as being inexpensive to insure.

In general, smaller pickups, minivans and SUVs are cheaper to insure than sedans. This is because larger sedans and SUVs are more likely to cause damage in an accident, and so insurance companies will charge more to cover them. Electric vehicles also tend to be pricier to insure due to the cost of repairs.

When choosing a car to keep insurance costs down, it is also worth considering the age of the vehicle. Older cars may be cheaper to insure because they are less likely to be stolen and their parts may be cheaper to replace. However, older cars may lack modern safety features, which can increase the cost of insurance. Newer cars with advanced safety features may be cheaper to insure because they are less likely to be involved in accidents and the severity of crashes may be reduced.

Other factors that can affect the cost of insurance include the trim level, safety features, security features, and whether the car is a high-end or luxury model. Cars with powerful engines, high theft rates, or expensive parts may also be more costly to insure.

Take a defensive driving course

One way to lower your auto insurance costs is to take a defensive driving course. Defensive driving courses are a form of driver education that goes beyond the basic rules of the road. They teach skills that help drivers avoid danger and accidents, such as collision prevention techniques, and encourage courtesy and cooperation on the road. These courses are especially useful for younger and older drivers, who may have higher insurance premiums.

In some states, insurers are required to offer defensive driving discounts, while in others, they are not. The discount you receive will vary based on your insurer, age, state, and other factors. Before signing up for a course, check your state's regulations and your insurer's available discounts. Make sure you select a course that is approved by your state and insurer, as some insurers only give defensive driving discounts to customers with good driving records.

Defensive driving courses are taught online, in a classroom, or behind the wheel. They typically cover topics such as the risks and reasons for accidents, statistics illustrating the most prevalent safety concerns, and techniques to recognize and react to danger.

Completing a defensive driving course can result in savings on your car insurance. For example, in Texas, a driver who completes an approved course can receive a discount of up to 10% for three years. In New York, completing an approved course can result in a 10% discount on your rate for three years. The length of the course can also vary, with some states only requiring a four-hour course to receive a defensive driving certificate and discount.

Defensive driving courses are generally affordable, ranging in price from $15 to $100, with most online courses costing between $20 and $40. They are a good investment, as they can help you become a better and safer driver, as well as save money on your car insurance.

Frequently asked questions