Lower Auto Insurance: When And How To Save On Premiums

There are several ways to lower your auto insurance costs. One of the best ways is to have a good driving record. You can also reduce your coverage on older cars, improve your credit score, or bundle your home and auto insurance. When buying a new car, it's worth comparing insurance costs as car insurance premiums are based on the car's price, the cost to repair it, its safety record, and the likelihood of theft. You can also ask for a higher deductible, which is the amount you pay before your insurance policy kicks in. Additionally, you can take advantage of discounts offered by insurance companies, such as multi-car discounts, vehicle safety discounts, and good student discounts.

Shop around for a lower rate

Shopping around for a lower rate is one of the best ways to keep your auto insurance costs down. Prices vary from company to company, so it's worth comparing prices among insurers.

When shopping for insurance, it's recommended to get at least three quotes to compare. You can contact companies directly, access information online, or check with your state insurance department, which may provide comparisons of prices charged by major insurers.

It's also important to not 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.

By comparing rates and shopping around, you can find the company that offers the best rate for your specific needs and situation.

In addition to shopping around, there are other ways to lower your auto insurance costs. These include taking advantage of discounts, increasing your deductible, reducing your coverage, and improving your credit score.

By combining these strategies, you can effectively lower your auto insurance rates and save money.

Search for discounts

Discounts are a great way to lower your auto insurance costs. Here are some tips to help you find and secure discounts:

Shop Around for Discounts

When shopping for auto insurance, be sure to get multiple quotes from different insurers and compare the discounts they offer. Every major insurer provides various discounts based on your driving history, vehicle features, and policy choices. By comparing quotes, you can identify which insurer offers the most discounts relevant to you. Remember to get at least three quotes to ensure a comprehensive comparison.

Ask About Discounts

Insurers offer a range of discounts, and it's important to be proactive in seeking them out. Ask your insurer or agent about all the possible discounts they provide. Some common discounts include:

• Good driver discount: If you have a good driving record with no accidents or violations, you may be eligible for a discount.
• Student discount: Full-time students with good grades can often get a discount.
• Multi-car discount: Insuring more than one vehicle with the same insurer can result in savings.
• Vehicle safety discount: If your car has modern safety features like anti-lock brakes and airbags, you may qualify for a discount.
• New car discount: Insurers may offer a discount for cars less than three years old.
• Bundling discount: You can often get a discount by bundling your auto insurance with other types of insurance, such as homeowners or renters insurance.

Take Advantage of Usage-Based Insurance

Usage-based insurance programs, such as Progressive's Snapshot® program, monitor your driving habits, including mileage, speed, and braking. If you are a safe driver with low mileage, these programs can reward you with significant discounts. However, be aware that risky driving habits may result in higher rates.

Defensive Driving Courses

Taking a defensive driving course can not only improve your driving skills but also lead to insurance discounts. Many insurers offer a defensive driving discount, and some states even require insurers to offer this. Check with your insurer to see if they provide this discount and what courses they approve.

Paperless and Automatic Payment Discounts

Many insurers offer discounts for going paperless and signing up for automatic payments. These discounts can add up to significant savings, so be sure to ask your insurer about these options.

Pay-in-Full Discount

If you have the financial means, paying your annual premium in full and upfront can often lead to a discount. This option not only saves you money but also provides the convenience of not having to worry about monthly payments.

Increase your deductible

One of the most effective ways to lower your auto insurance costs is to increase your deductible. A deductible is the amount you pay before your insurance policy starts covering costs. For instance, if your vehicle incurs $1,500 worth of damage, and your deductible is $500, you will need to pay that amount, and your insurer will cover the remaining $1,000.

By requesting a higher deductible, you can lower your insurance costs substantially. For example, increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage cost by 15 to 30%. Going to a $1,000 deductible can save you 40% or more. Before choosing a higher deductible, ensure you have enough money set aside to pay it if you have a claim.

While increasing your deductible can lead to significant savings, it is important to remember that you will need to pay more each time you file a claim with your insurance company. Therefore, it is crucial to ensure that you have sufficient funds to cover the higher costs. Review your emergency fund before making any changes to your auto insurance deductible. If your emergency savings are strong, increasing your deductible may be a good option as you can utilise those funds to cover the deductible while benefiting from lower premium costs.

However, if you have a spotty driving record or don't think you can meet a higher deductible, this strategy may not be suitable. Additionally, before making the switch, ensure that you have enough cash on hand, as the savings you accumulate over time by lowering your premiums may not be sufficient to build your emergency fund in case of unexpected car repairs.

Reduce your coverage

One way to lower your auto insurance is to reduce your coverage. Here are some ways to do that:

Lower your policy limits

Before reducing your coverage, make sure you are complying with your state's insurance laws, as well as any coverage requirements from your lender or lessor. If you are, then you can lower your liability insurance limits to reduce your premium.

Drop unnecessary types of coverage

If you own an old car that isn't worth very much, you might consider dropping collision and comprehensive coverage. Collision insurance pays to repair damage to your car if it crashes into another vehicle or object, or flips over. Comprehensive insurance pays if your car is stolen or damaged by storms, vandalism or by hitting an animal. If your car is worth less than your deductible plus the amount you pay for annual coverage, then it's probably not worth keeping these types of coverage.

Drop insurance you don't need

If your car is a clunker, it might be time to drop collision and comprehensive insurance. Evaluate whether it's worth paying for coverage that may reimburse you only a small amount if anything. If you do drop these types of insurance, remember to set aside the money you would have spent on them for car repairs or a down payment on a new car.

Drop extra coverage

As long as you are still satisfying your state's minimum insurance requirements, you can reduce your limits or drop extra coverage altogether. But before you do, weigh the benefits of a lower premium against the loss of protection.

Move to another city or state

Moving to another city or state can be a good time to lower your auto insurance. This is because insurance rates are determined by factors such as population density, accident frequency, crime rates, and vehicle theft frequency, which vary between different areas. If you are moving from a densely populated area with high crime rates to a less populated area with lower crime rates, you may be able to benefit from lower insurance rates.

• Contact your current insurance provider: Let your insurance company know about your move as soon as possible. If you are moving out of state, ask them if they offer coverage in your new state. They may also be able to refer you to another agent or company if they don't operate in your new location.
• Understand the insurance requirements in your new state: Different states have different laws and requirements for auto insurance. Check the Department of Motor Vehicles (DMV) website or your new state's official website to find out the specific requirements for registration, auto insurance, and driver's license. Some states may require additional forms of coverage, such as underinsured/uninsured motorist coverage, personal injury protection, or medical payments coverage.
• Shop around for quotes: Compare rates from multiple insurance providers in your new area. Get quotes from at least three different companies to ensure you are getting a competitive rate. Don't forget to include small, independent insurance companies that operate only in your new state, as they often provide impressive rates.
• Consider the impact of your new location on your policy: The area you live in can significantly affect your insurance rates. If your new neighborhood has fewer cars, a lower crime rate, and a lower risk of accidents, theft, and collisions, you may be able to negotiate a lower rate. On the other hand, if you are moving to an area with a higher claims history, your rates may increase.
• Adjust your policy as needed: Review your current policy and make any necessary adjustments to comply with the laws and requirements of your new state. You may need to increase or decrease your coverage, depending on the minimum coverage requirements of your new state.
• Update your address and registration: Inform your insurance company of your new address and update your vehicle registration with the DMV. In some cases, you may need to obtain a new driver's license, especially if you are moving out of state.
• Cancel your old policy: Once you have secured a new policy and ensured that there are no lapses in coverage, you can proceed to cancel your old insurance policy. Make sure to check the cancellation terms of your previous policy, as some companies may impose termination fees.

Remember, it is essential to have auto insurance in place before making any changes to your driver's license or vehicle registration. Failing to transition your insurance, license, and registration within the required timeframe can result in fines.

Frequently asked questions