In most states, insurance companies use your credit rating to help determine your auto insurance premiums. If you have bad credit, statistics indicate that you may have a higher risk of car accidents, resulting in a higher insurance price.
Combine More than One Policy
By insuring multiple drivers and/or vehicles with the same provider, you can save on coverage. Most companies provide a discount on additional trades. It’s not just for car insurance; you can also save by adding home or renter’s insurance to your car insurance, according to Bankrate. For example, Allstate offers a 25% discount on homeowner coverage and a 10% discount on auto when you combine the two policies.
Check with your insurance company to see if you are eligible for this type of discount. Usually only family members can share a policy, although you can have joint car insurance with a roommate if you own a car together.
Save Money with Safe Driving
Being a mindful driver who avoids distractions and hazards can not only prevent serious accidents, but also help keep your car insurance rates low. For example, Travelers Insurance offers a safe driver discount of up to 23 percent, according to Nerd Wallet. On the other hand, moving violations that carry points on your driving record, such as speeding, will also increase your car insurance premiums.
Opt for a Higher Deductible
According to Investopedia, you can choose a deductible for your auto insurance ranging from about $250 to $1,000. A deductible is the amount you pay out of pocket if you have a car insurance claim. If you can afford the higher upfront costs in the event of an accident, consider raising your deductible to save money on insurance premiums.
Check with your insurance agent about how changing your deductible will affect your premiums. This step may not make sense if you can only realize minimal savings.
Install Anti-theft Systems
You can lower your annual car insurance rates by adding an anti-theft device to your vehicle or by purchasing a car with this type of equipment. For example, GEICO offers its customers an anti-theft discount of up to 25 percent.
Remove Unnecessary Coverage
Read the policy statement page and identify any aspects of your coverage that you don’t need. Removing these policies, such as rental car coverage and roadside assistance, will save you money on your car insurance.
If you have comprehensive and collision coverage on your vehicle, Investopedia recommends checking occasionally to see if it still makes sense to have these policies based on the actual cash value of your car. If the cost of comprehensive and collision plus your deductible exceeds the value of the vehicle, you can drop your coverage.
Ask for more discounts
You may be able to save money on auto coverage with unadvertised discounts. For example, ask about saving money by joining certain groups, choosing online policy information, or paying your entire premium upfront. Compare discount rates with those from other insurers to get the best rate available. Basically, if you’re thinking about switching to another auto insurance company because of the cost, talk to your agent to see if they have any ideas on how you can save.
Consider a Telematics Plan
Telematics insurance, sometimes called continuous coverage, uses a device that connects to your vehicle or smartphone app to track your mileage and driving behavior. According to Investopedia, you can probably save money with this type of coverage if you tend to drive less than 10,000 miles a year. You can also get discounts for safe driving habits. Examples of telematics programs from major insurance companies include Drive Safe and Save from State Farm, Snapshot from Progressive, and Drivewise from Allstate.
Maintain Good Grades
Drivers age 25 and younger are usually eligible for a car insurance discount based on grades. Depending on the insurance company, they may need to place in the top 20 percent of their class or have at least a 3.0 GPA (B average). Investopedia notes that these discounts can range from 1 percent to 39 percent, so it’s worth shopping around if you have a high school or college student who earns good grades on your policy.
Go Back to School
Some insurance companies provide discounts to drivers who take a defensive driving class. Typically, only approved courses qualify for this type of incentive. Some states even require insurance companies to offer this type of discount. Find out how much you can save before you join the course. Otherwise, you may end up spending more than your discount on the course itself.
Run a Background Check
Price isn’t everything when it comes to choosing the right auto insurance company. You should also check the company’s credit rating to make sure it has the money to pay your claim if needed. Sources like Standard and Poor’s provide free online reports on the financial strength of insurance companies, so search this type of database after receiving a quote.
Choose Your Car Carefully
If you’re planning to buy a car, think about these factors that will affect your car insurance premiums:
- Bigger cars are more expensive than small cars
- Luxury cars cost more to insure than price cars
- Many insurance companies offer discounts on green hybrid and electric vehicles.
For best results, get an insurance quote before you fall in love with a particular make and model. In fact, shopping around with multiple companies to get the best rate is one of the most important auto insurance tips. Experts recommend getting new car insurance quotes every year or two, or more often if your rate goes up unexpectedly.
