There are a variety of factors that can influence whether your auto insurance premium will go down. One significant factor is age; as you get older, your premium tends to decrease, especially once you pass the age of 25, as older drivers are considered less risky to insure due to their driving experience. Maintaining a clean driving record is also crucial, as accidents, tickets, and claims can increase your premium for several years. Additionally, switching insurance companies can sometimes lead to lower rates, as different insurers use varying rating factors to determine premiums. Other factors that can impact your premium include your credit score, driving frequency, marital status, vehicle type, and location.
Characteristics | Values |
---|---|
Age | Car insurance costs decrease as you get older, with the most significant reductions occurring when teen drivers hit 18 or 19 years old. Rates continue to decline as you age, particularly once drivers pass the age of 25. |
Driving Record | Accidents, tickets, and claims will increase your premium. Minor violations will factor into your insurance rate for three years, while major violations can impact your premium for up to 10 years. |
Switching Insurance Companies | Shopping around for the best deal on car insurance is a great way to pay less. |
Deductible | Raising your deductible can lower your premium because you share more financial risk with your insurer. |
Anti-Theft Device | Installing an anti-theft device, such as a car alarm or GPS tracking, can result in a discount on your comprehensive coverage policy. |
Coverage | Reducing your coverage can lower your premium, but it's important to ensure you're not underinsured. Dropping comprehensive and collision insurance that may be required by your lender can lower your premium but may result in higher out-of-pocket costs for car repairs. |
Good Driver Discount | Driving safely for three years following an accident or infraction can result in a good driver discount and lower premiums. |
Group Insurance | You may qualify for an insurance discount through group car insurance if you belong to certain clubs, work for a specific employer, or have other affiliations. |
Payment Frequency | Paying your premium in full every six months instead of monthly can result in savings. |
Credit Score | Improving your credit score can lower your rate, but this may depend on state regulations. |
Commute | If you no longer commute or start working from home, you can switch your car insurance from commuting to "pleasure use only," which can result in a small decrease in your premium. |
Homeownership | Insurers consider homeowners more stable than renters, so insurance is generally cheaper if you own a home. Bundling home and auto insurance can result in additional savings. |
Location | Moving to a small town or rural area can lower your premium as less population density typically means fewer accidents. |
Vehicle | Downsizing to a less expensive and more fuel-efficient vehicle can result in insurance savings. |
What You'll Learn
Age and experience
The biggest drop in insurance rates typically occurs between the ages of 18 and 19, with an average annual savings of $1,595 when turning 19. This decrease is attributed to insurers perceiving older drivers as less likely to file insurance claims. The rates continue to decline as drivers pass the age of 25, with the lowest rates usually offered to drivers in their 50s.
It is worth noting that insurance rates for senior drivers may slightly increase as they are considered slightly riskier to insure. However, senior citizens can still take advantage of various discounts offered by insurance companies, such as completing a senior defensive driving course, which can result in a reduced rate.
In addition to age, maintaining a clean driving record is crucial in obtaining lower insurance premiums. Accidents, tickets, and claims can increase insurance rates for several years. Minor violations can impact rates for three years, while major violations can affect premiums for up to ten years. Therefore, driving safely and avoiding infractions can help young drivers build a positive driving history and qualify for better insurance rates.
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Good driver status
Maintaining a good driving record is one of the most effective ways to keep your auto insurance premiums down. A good driver is less likely to exhibit risky driving behaviours and more likely to remain claims-free.
Insurance companies want to be assured that they are making a safe investment when they insure you, so the better your driving record, the lower your rate will be. If you have a clean driving record, you can expect to pay $2,014 annually for full coverage, compared to upwards of $2,400 for a driver with incidents on their record.
Most driving infractions and at-fault accidents will fall off your insurance record after three years, so if you've been driving safely for a while, you may notice your rate decreasing. However, this timeline depends on the type of infraction and the state you live in, as some states allow insurance companies to consider up to 10 years of driving history.
Having no accidents within the past three to five years can result in a car insurance discount of 26%, on average. Similarly, insurance companies may offer a "good driver discount", which is automatically added to your policy if you have a claim-free history.
In addition to a good driver discount, there are several other ways to save on car insurance, including:
- Shopping around and switching insurance companies
- Increasing your deductible
- Installing an anti-theft device
- Reducing your coverage
- Improving your credit score
- Taking public transit or driving less
- Buying a home
- Moving to a small town or rural area
- Taking a defensive driving course
- Paying your premium in full
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Switching insurance companies
Shop Around for the Best Rates
It's important to compare quotes from multiple insurance companies to find the best rates and coverage options for your needs. You can do this by contacting insurance companies directly, working with an independent insurance agent or broker, or using online tools and comparison sites. Getting multiple quotes will give you a good sense of the market and help you identify potential savings.
Consider Your Coverage Needs
When switching insurance companies, take the time to evaluate your coverage needs. You may be able to save money by adjusting your coverage levels. For example, if you have an older car, you might consider dropping comprehensive and collision coverage, which are typically required when you have a car loan. Instead, you could opt for liability-only coverage, which is typically much cheaper. However, keep in mind that this option comes with more financial risk if your vehicle is damaged or totaled.
Evaluate the Insurance Company
Before making the switch, be sure to research the insurance company's reputation and financial stability. Check their ratings with companies like AM Best and Standard & Poor's, and read reviews from other customers. It's important to choose a company that is reliable and has a good track record of handling claims.
Understand the Impact of Your Driving Record
Your driving record plays a significant role in determining your insurance rates. If you have a good driving record, with no accidents or moving violations, you are more likely to get better rates when switching insurance companies. Maintaining a clean driving record demonstrates that you are a lower-risk driver, which insurers reward with lower premiums.
Look for Available Discounts
When comparing insurance companies, be sure to ask about available discounts. Many companies offer discounts for various factors, such as having a good credit score, being a student, taking a defensive driving course, or having safety features in your vehicle. By taking advantage of these discounts, you can further reduce your premium when switching insurance providers.
Timing of the Switch
You can switch insurance companies at any time, but it's generally a good idea to do so when your current policy is up for renewal. This will help you avoid cancellation fees or other penalties associated with early termination. Additionally, reviewing your policy at renewal time allows you to assess any changes in your coverage needs and shop around for the best rates.
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Installing anti-theft devices
There are various types of anti-theft devices available on the market, ranging from manual to automatic and remote disabling devices. Here are some of the most common and effective options:
- Steering wheel lock: This device immobilizes your steering wheel, preventing thieves from driving off with your car. Basic models feature a metal rod that locks into the steering wheel, while newer models include an enclosed case that snaps onto the steering wheel.
- Brake lock: This device is attached to your vehicle's brake pedal or steering wheel, making it impossible to push down on the gas pedal and drive away.
- Kill switch: This device requires installation and disables all electricity in the vehicle, rendering it undrivable until turned off by the owner. Some people install multiple hidden kill switches to deter thieves.
- Transponder keys: Transponder keys must be in the vehicle for it to be driven. They provide a higher level of security and have been found to decrease car theft significantly.
- Audible alarms: These systems vibrate or sound an alarm when thieves touch your vehicle. While alarms are sensitive and can be set off easily, they can still be an effective deterrent.
- GPS trackers: These devices allow you to track your vehicle's location in real time and send alerts if your car is in motion. More advanced GPS trackers can also immobilize your vehicle remotely.
- Vehicle recovery systems: These systems use radio frequency technology to help law enforcement locate and recover your stolen vehicle.
- Faraday case: This device blocks radio signals, preventing thieves from using a signal booster to replicate your key fob's signals and break into your car.
- Tag technology: This is a wireless tracking device installed by a trained technician throughout your vehicle. It is more advanced than a standard GPS tracker, and its signal cannot be tampered with. It uses electronic identification to help recover your vehicle, even if internal wires are cut.
It's important to note that the impact of installing anti-theft devices on your insurance premium may vary depending on your insurance provider and location. Be sure to check with your insurance company to understand their specific policies and requirements for obtaining a discount. Additionally, some devices may require professional installation, so consider the cost of installation when making your decision.
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Moving location
Moving to a new location can impact your auto insurance premium, and the impact can go both ways. Here are some factors that can influence your premium when you move:
Location-Specific Factors
Your new location's characteristics can affect your premium. For example, if you move from a rural to an urban area, your premium may increase by up to 40% due to higher traffic, crime rates, and accident risks. On the other hand, moving to a less populated area may result in a lower premium.
State Regulations
Each state has its own auto insurance regulations, and moving to a different state will likely lead to changes in your coverage requirements. Some states have higher insurance costs than others. For instance, Louisiana, New York, and Michigan are known for their high auto insurance premiums. In contrast, North Dakota, Maine, and Iowa have the cheapest rates in the U.S.
Local Cost of Living
The cost of living in your new location can also impact your premium. If you move to an area with a higher cost of living, the cost of car repairs and medical care after accidents will be higher, which your insurer will need to cover.
Weather Conditions
If your new location is prone to severe weather conditions, such as tornadoes, hurricanes, or wildfires, it may result in higher premiums due to the increased likelihood of claims.
Commute Distance
A longer commute distance to your workplace in the new location can also increase your premium. This is because the more time you spend on the road, the higher the chances of being involved in an accident.
Crime Rates
Crime rates in your new location can significantly influence your premium. If your new neighbourhood has higher car theft or vandalism rates, you may see an increase in your premium.
No-Fault vs At-Fault States
Whether your new state follows a no-fault or at-fault system can also impact your premium. In no-fault states, insurance rates are typically higher as each driver must carry personal injury protection, leading to additional coverage requirements.
Credit Score
While not all states consider credit scores when determining premiums, moving to a state that does may impact your premium, especially if you have a low credit score.
Age
If you're under 25, moving to a new location may result in higher premiums due to your age. Young drivers tend to have higher rates because of their lack of driving experience and higher chances of accidents.
In conclusion, moving to a new location can indeed impact your auto insurance premium, and the change can go either way. It's essential to notify your insurance provider about your move and compare quotes from different companies to ensure you're getting the best rates for your new location.
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Frequently asked questions
Your premium could go down if you pay off your car and you drop the comprehensive and collision insurance that's required by your lender. However, this could mean paying more out of pocket for car repairs.
Yes, car insurance rates tend to decrease as drivers age, particularly once they pass the age of 25.
Yes, getting married can reduce car insurance costs. Insurers tend to view married people as less likely to get into accidents and more likely to obey the rules of the road.
Moving to a small town or rural area could lower your premium. Population density is often linked to the number of accidents that occur, with less dense areas usually seeing fewer accidents.