8 Ways To Lower Your Auto Insurance Costs & Save Money
If you need help with any of the insurance terms used in this guide, feel free to use our insurance glossary
Are you paying too much for your auto insurance? If you believe you are, then
the following suggestions may help you save hundreds of dollars!
1. Shop around
Sure, you’ve read this tip everywhere but it’s true. Only until
shopping around
for auto insurance coverage and getting quotes on premiums from several
insurance companies, will you know for certain that you’re getting the best
available rate on your car insurance coverage.
When shopping for your auto insurance policy, remember to compare more than
insurance rates. Ask about how insurance claims are approved and processed, and
how quickly they’re paid. Look into each insurers’ financial stability (there
are independent rating services that can help you with this.) Remember, during
times of stress, such as after an accident, you will be dealing closely with the
insurance company that you choose. Knowing this, you must make sure that the
company you choose will be there to help when you need it most.
2. Before You Buy a Car, Compare Insurance Costs Before you buy a new or used car, check insurance costs. Car insurance premiums
are based in part on the car’s sticker price, the cost to repair it, its overall
safety record, and the likelihood of theft. Many insurers offer discounts for
features that reduce the risk of injuries or theft. These include daytime
running lights and anti-theft devices. To help you decide what car to buy, you
can get information from the Insurance Institute for Highway Safety
(www.iihs.org).
3. Select a higher insurance deductible When you file a claim, a deductible is the amount you pay first before your
insurer pays the remaining balance. Often people select lower deductibles, so
when they have to submit a claim, their out-of-pocket expenses are minimal. But
the truth is, the higher your collision and comprehensive deductibles the lower
your auto insurance premium. The savings by increasing your deductible to say
$1,000 from $250 are significant—you can save hundreds of dollars off your
insurance premium.
Of course, the flipside is that if you should have to submit an insurance claim,
you are responsible for paying the deductible. So select the maximum deductible
you can afford to pay—the higher the better because the difference in your car
insurance premiums will mean more cash in your pocket.
4. Remove or reduce coverage on older vehicles If your car is getting up there in age, you may want to think about dropping the
collision or comprehensive coverage (or both) on your policy. You need to think
about this one though - it's not always a clear-cut decision. You need to weigh
the cost of the two coverages with the value of your car and your chosen
deductibles. For example, if you had a 10-year-old car that’s worth about $1000,
and your deductible was $1000, the coverage is not actually going to help you.
5. Ask about discounts Most insurance companies offer discounts. While the availability of discounts
will vary depending on your insurer, where you live and whether you meet
eligibility, make sure to ask if there are any discounts that you can take
advantage of. The following is a list of a few of the more common discounts (if
available in your state, each insurer will have different eligibility
requirements):
Multi-vehicle discount - available if you insure multiple vehicles with the
same insurer
Multi-line discount - available if you insure your home and auto with the same
insurer
Good driver discount - if you have not had an accident or ticket in a long
time
Good student discount - if you’re a student with good grades, usually about a
B average
Safe driver discount - if you’ve taken and passed an accredited driver safety
course
Anti-theft discount - if your vehicle has certain anti-theft devices installed
Safe vehicle discount - if your vehicle has certain extra safety features
Retiree discount - if you’ve reached a certain age, usually 50 or 55
Low mileage discount - if your vehicle is not driven often
Occupational discount - if you work in a certain field or hold a certain
degree
Auto club discount - if you are a member of an auto club, like AAA
Association discount - if you belong to certain associations, like your alma
mater
Away-at-school discount – if your child is attending school out of town
6. Choose a car that costs less to insure
If you’re purchasing a new car and have narrowed it down to two or three
options, compare the auto insurance rates of each to see if there is a notable
difference in the cost to insure. Remember, insurance rates are more for
vehicles with high theft rates and repair costs. If there is a significant
difference in cost to insure your first choice car, you may have to reconsider.
7. Drive safely
OK, this one is obvious but true. Drivers with no accidents, tickets or
insurance claims almost always pay less for their auto insurance coverage. Your
driving record is an influential factor in determining your insurance rate.
Tickets and at-fault accidents affect your insurance rates for years. With a
less than perfect driving record, you can find yourself paying a lot of extra
insurance premium over the years.
8. Maintain a Good Credit Record Establishing a solid credit history can cut your insurance costs. Insurers are
increasingly using credit information to price auto insurance policies. To
protect your credit standing, pay your bills on time, don't obtain more credit
than you need and keep your credit balances as low as possible.
Check your
credit record on a regular basis and have errors corrected promptly so that your
record remains accurate.
Shop online for auto insurance rates Shopping around for auto insurance coverage and getting quotes from multiple
companies is the best way to know you are getting the coverage you need at a
price you can afford. If you think you are paying too much, for any reason,
compare quotes online instantly today
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