Smart Ways To Lower Auto Insurance Rates

There are several factors that can help auto insurance rates go down. One of the most significant factors is age; as drivers get older, especially after turning 25, insurance rates tend to decrease. Additionally, maintaining a clean driving record by avoiding accidents, traffic violations, and claims can lead to lower rates. Shopping around and switching insurance companies can also help reduce rates, as different providers offer varying rates and discounts. Improving one's credit score, installing anti-theft devices, and increasing deductibles are other ways to potentially lower auto insurance costs.

Being a safe driver for three years after an accident or infraction

Maintaining a clean driving record is one of the most effective ways to lower your auto insurance rates. Safe driving can be incentivised by insurance companies in several ways.

Accident-Free Discounts

Many insurance companies offer discounts to drivers who have had no accidents in the past three to five years. This period begins from the date of the accident and ends three to five years later. The exact time frame depends on the insurance company and the state. For example, GEICO offers an Accident-Free Good Driver discount of up to 26% in savings for drivers who have been collision-free for five years.

Violation-Free Discounts

Similarly, if you have had no traffic violations in the past three to five years, you may be eligible for a discount. This includes speeding tickets, reckless driving, driving under the influence (DUI), and other traffic violations. It's important to note that non-moving violations like parking tickets usually don't result in increased insurance rates or affect your eligibility for discounts.

Safe Driver Discounts

Some insurance companies combine accident-free and violation-free discounts, offering a single safe-driving discount to drivers who have avoided incidents and accidents within the past three to five years. For example, State Farm offers an Accident-Free Discount if you've been insured by them for three years without any chargeable incidents, including claims, violations, or tickets.

Usage-Based Insurance

Usage-based insurance, also known as telematics insurance, monitors your driving behaviour through a mobile app or a device installed in your car. It offers discounts based on your performance and driving habits. This type of insurance is offered by most major insurance companies, including Liberty Mutual's RightTrack program, which expects safe drivers to save up to 30%.

Lowered Premiums

Instead of offering specific discounts, some insurance companies will lower your rates if you've managed to avoid accidents and violations for a specified period, typically three to five years.

Defensive Driving Courses

Taking a defensive driving course can also help lower your insurance rates. These courses are typically a few hours long and cover state driving laws and accident avoidance techniques. Upon completion, you'll receive a certificate that you can share with your insurance company to receive a discount.

It's important to note that insurance companies use different algorithms and factors to determine insurance rates and discounts. Therefore, it's always a good idea to shop around, compare quotes, and contact insurance providers directly to understand their specific safe driver discounts and requirements.

Installing an anti-theft device

There are two main types of anti-theft devices: passive and active. Passive devices work automatically when you turn your vehicle off, and include automatic locks and vehicle tracking systems. Active devices require manual activation before they can protect your car, such as steering wheel locks or remote locks. You can use these systems individually or in combination for more robust protection against theft. Some anti-theft devices can even help law enforcement locate your vehicle in the event of theft.

Many insurance companies offer discounts to customers with anti-theft devices installed in their vehicles. The amount of the discount varies across insurance companies but can be as high as 20% or more. It's important to note that the discount will only apply to the comprehensive coverage portion of your insurance plan, which typically covers vehicle theft. If you only have liability insurance or collision coverage, adding an anti-theft device may not lower your rates. Additionally, some insurance companies may restrict the discount to certain types of anti-theft devices, so it's important to check with your insurance provider to see if you qualify.

There are several different types of anti-theft devices available on the market. Here are some of the most common options:

• Steering wheel locks: These devices lock your steering wheel, making it difficult for thieves to drive the car. They are typically activated by a spring and can be purchased for as little as $20.
• Brake locks: These devices attach to your vehicle's brake pedal or steering wheel, immobilizing the brake and preventing thieves from moving your car. They typically cost around $50.
• Vehicle tracking systems: These devices use GPS to help you locate your vehicle in the event of theft. They can also provide additional safety features such as sharing your location with family or calling emergency services. Basic systems start at $695, with more advanced features costing upwards of $995.
• Kill switches: These devices cut the electricity flow at the ignition switch, preventing the vehicle from being started. They can be installed by the vehicle owner or a professional technician and typically cost around $10.
• Faraday cases: These cases block radio signals, preventing thieves from using a signal booster to replicate the signals of your key fob. They are an inexpensive option, typically ranging from $15 to $50.

By installing an anti-theft device, you can not only help protect your vehicle from theft but also take advantage of potential discounts on your auto insurance rates. Be sure to check with your insurance provider to see what specific anti-theft devices are eligible for a discount and how much you could save on your premium.

Taking public transport or driving less

One way to lower your auto insurance rates is to drive less. This can be achieved by taking public transportation or carpooling. By reducing your mileage, you may be eligible for low-mileage discounts offered by some insurance companies.

If you switch from driving to taking the bus or another form of public transportation, you can also change your car insurance from commuting use to "pleasure use only". This can result in a decrease in your insurance premiums. For example, giving up commuting and switching to public transportation can lead to an average nationwide drop in premiums of about 2%.

Additionally, if you no longer need to drive as often, you can consider reducing your coverage. If you have an older vehicle that is paid off, you may choose to only have liability coverage. This can lower your insurance costs significantly. However, it's important to ensure that you still meet the minimum insurance requirements for your state.

Another option to consider is increasing your deductible. Your deductible is the amount you pay before your insurance coverage kicks in. By increasing your deductible, you can lower your insurance premium because you are sharing more of the financial risk with your insurer. For example, increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage costs by 15% to 30%. Just be sure that you can afford to pay the higher deductible in the event of an accident.

In summary, taking public transportation or driving less can help lower your auto insurance rates by qualifying you for low-mileage discounts, changing your insurance to "pleasure use only", reducing your coverage, or increasing your deductible. These strategies can result in significant savings on your auto insurance premiums.

Increasing your deductible

The amount you pay will vary based on each person's individual policy. On average, most car insurance deductibles fall between $500 and $1000.

If you increase your deductible, you will pay less on a monthly basis for coverage because you will end up paying more out of pocket if you file a claim. A higher deductible means a reduced cost in your insurance premium.

For example, if you have a deductible of $1000 and you have an auto accident that costs $4000 to repair your car, you will have to pay $1000 out of pocket as your deductible, and then your insurance company would cover the additional $3000 (or up to your coverage limit).

It's important to note that while raising your deductible will lower your premium, there are other effects to consider. Having a high deductible could bring some serious financial consequences, especially if you are someone who tends to make frequent claims with your insurance company. Every time a claim is made, you will have to pay your deductible. If your deductible is extremely high, you will be responsible for paying it in full every time a claim occurs.

Therefore, when deciding whether to increase your deductible, it's important to consider your financial situation, your location, and the frequency of accidents or claims you are involved in. If you have sufficient savings to pay a large sum all at once, then a higher deductible may be a good option. However, if you are involved in frequent accidents or claims, a lower deductible may be preferable to avoid paying a large sum each time.

Additionally, a higher deductible may not be the best option if you have a lower-value car, as the cost to repair damage may not be worth the potential savings on your premium.

In summary, increasing your deductible can be a way to lower your auto insurance rates, but it's important to carefully consider your individual circumstances and weigh the potential savings against the risk of higher out-of-pocket costs in the event of a claim.

Paying your premium in full

One way to lower your auto insurance premium is to pay your premium in full. While setting up your car insurance premium to be billed monthly might be easier for budgeting, paying a larger chunk at once could save you money. For example, if you opt to pay your premium in full every six months, you could save around 9%. This is because insurance companies often charge more for billing monthly, so if you can afford to pay a larger amount less frequently, you can avoid these extra costs.

Additionally, paying your premium in full can give you peace of mind. Knowing that your insurance is paid for the next six months or year can reduce financial stress and worry about unexpected costs.

Furthermore, paying your premium in full can be a good opportunity to review your policy. When you make a large payment, you may be more inclined to carefully review your coverage and ensure that it still meets your needs. This can help you identify any changes or updates that you need to make to your policy.

Finally, paying your premium in full can be a good way to build a positive relationship with your insurance company. Demonstrating your financial responsibility and commitment to your policy can help establish a good standing with your insurer. This could lead to better customer service, faster claims processing, and even potential discounts or loyalty rewards in the future.

Frequently asked questions