For the most part, car insurance is a necessary cost we have to face. Most states require it, and without it, you’re left facing any repair or replacement fees on your own. That doesn’t mean you should have no say in the price you pay. There are different ways to shave down your auto policy premium and come out on top. Whether you’re buying your first car or renewing your coverage, it’s worth looking into your options. With that in mind, here are the best ways you can save on your auto insurance.
Compare Insurance Policies
One of the most straightforward steps to saving on auto insurance is to comparison shop. Before you purchase a car, see what the range of insurance costs looks like among insurers. Your car insurance company takes various factors into account when they give you a quote. Some cars are pricier to insure than others. That might be because it is a unique model or older, with fewer parts available on the market.
On top of that, personal traits like your driving record can shift your policy’s cost. But, not every company assesses the same way. One insurer may offer you a lower premium than another, even with an accident on record. So, look into the different offerings available to you. You want to spend smart, too. A lower initial premium can lead to higher costs long-term.
Keep Your Eyes on The Road
Being a safe driver is another one of the best ways to save on your auto insurance. But safe driving is getting harder with today’s laundry list of possible distractions. From cellphones to music playlists, anything and everything can pull your eyes away from the windshield. Although it’s tempting, don’t believe the lie you tell yourself that you can multitask while driving.
Driving safely lessens your chances of accidents or traffic violations, which ultimately raise your insurance rates. The points added to your record can result in much higher insurance premiums. Some insurers have programs you can join, like Allstate’s Drivewise, that track your safe driving habits and rewards you for them. For example, Drivewise lets you earn savings just for activating it on the mobile app and cash back every six months after. Look to see if your current or potential auto policy provider has similar opportunities.
Increase Your Deducible
With health care, you have an annual deductible to overcome before your insurer takes over the payments. In contrast, an auto policy’s deductible applies every time you make a claim. It’s common to see $500 and $1,000 cited as typical deductibles for car insurance, although they generally work in a range of $100 to $2,000.
Raising your deductible is one way you can save on your auto insurance. While you’ll be responsible for the amount you choose if you make a claim, it can save you money in the long run. A higher deductible means that you pay a lower monthly premium, sometimes significantly. According to the Insurance Information Institute (I.I.I.), taking your deductible up from $200 to $500 could bring down your collision and comprehensive coverage price by 15- to 30%.
However, Progressive reports that you’ll see the most savings when you jump from $100 to $250, whereas going from $1,000 to $2,000 offers the least. Considering that (plus an emergency fund to cover any claims out of pocket), a higher deductible is a savings tip that might only work for some. Your car’s value and your financial situation can help you decide if raising your deductible will work for you.
Improve Your Driving Skills
Improving your driving skills goes hand in hand with that mindful driving. You want to be the best and safest driver possible. That not only protects you out on the road but other drivers out there as well. One way you can improve your driving prowess and knowledge is to take a defensive driving course. An adequately accredited course can sometimes take points off your license and help you earn a discount on your premium.
Each insurer and state has different rules regarding accredited defensive driving courses. Some groups may have age limitations, meaning they only offer the discount to those above or below a certain age who take the course. That’s because they’re trying to target high-risk drivers. Alternatively, they may only offer the program in specific states. It’s essential to check which options are available to you before signing up.
Some starting points to look at include AAA’s Roadwise senior defensive driving program for members and Geico’s defensive driving discount. Geico even has a tool that lets you check defensive driving course eligibility by state.
Maintain a Good Credit History
One of the factors in your car insurance costs is your personal history. Although you might be familiar with insurers reviewing your driving record, you may not know they look at your credit score, too. Based on your credit standing, an insurer may reject you entirely or use it to decide your auto policy price.
Therefore, if you want to lower your future car insurance premium, it might be worth improving your credit habits. For example, paying your bills on time, lowering your credit utilization rate, and learning the differences good debt vs. bad debt has on your score.
Some states no longer use credit history to determine care insurance premiums, though. It’s banned in California, Hawaii, and Massachusetts, while some other states put restrictions on the practices. So, research what allowances your state makes. Then you’ll know whether to factor in your credit score when you go comparison shopping.
Check for Safety Devices
Remember: the more significant the risk, the higher the premium. If your insurer believes that you are more likely to file a claim, they will increase your auto policy’s price. The reasons for the risk could range from the car’s age to the area you live in. For example, if you live in a location that might make you susceptible to theft or vandalism, that could increase your premium. However, you can tackle these expenses with safety devices.
Your insurance company has a list of the devices they accept for each discount. One instance includes State Farm, which has multiple safe vehicle discounts. They’ll provide you savings if you install an approved anti-theft device, have a car with a passive restraint system, or anti-lock brakes.
Speak with an agent from your insurer to see which devices could entitle you to savings.
Look for Discounts
Another one of the best ways to save on your auto insurance is to keep an eye out for the many different types of discounts out there. They vary vastly, which helps a wide range of people find savings. You’ve already seen a few discounts above, but here are some more common ones to consider:
- Low Mileage – An insurer might offer you a discount for driving under a specified number of miles each year.
- New Car – You can qualify for savings if you’re the first owner of a brand new car.
- Bundling – If you already have a homeowners or renters insurance policy with a company, they may provide you a discount when you also get your auto insurance through them.
- Smart Student – You might be dreading the increase in premiums when your teen starts driving. But, your provider may reward them with a discount if they fit certain criteria, like good grades or completing a driver’s ed course.
- Electronic Payment – Providers often have discounts for clients who sign up for paperless paying.
- Membership Status – If you are a current member of or work for qualifying organizations, you can earn savings.
There are aplenty of discounts available. So, don’t forget to explore your options before you choose an auto policy. Your agent should also review which savings opportunities work best for you.
The Bottom Line
Paying for insurance always comes with some financial sting. However, there are tools at the ready to help ease the burden each month. From discounts to comparison shopping, the right auto policy for your wallet might be right around the corner. Remember to explore your options, and don’t be afraid to ask questions. The right insurer and agent should prioritize your welfare above all else.