Car insurance is a necessity. Most states require you to have it by law. It also just makes sense to carry it to protect yourself financially if you have an accident.
Like many necessities, though, it isn’t free. Car insurance costs can get quite expensive, so you’ll want to do everything you can to lower the price. Luckily, there are quite a few things you can do.
Improve your credit.
Many insurance companies will check your credit before giving you an insurance quote. They may also check your credit upon the renewal of your policy, which is legal in most states.
Edmunds explains that your credit history could almost double your rates if it’s bad. Bad credit is a sign you’re high-risk because experts say people with bad credit are more likely to make an insurance claim than those with good credit.
To avoid a ding from your credit, you should try to keep it in good shape. Make sure you don’t keep high balances on credit cards, pay your bills on time, and check your credit often to make sure there are no inaccuracies.
Pay in full.
Your insurance company may give you multiple options for how to pay your premium. Almost all companies will reward you for paying the premium in full by giving you a discount. You could save a couple of hundred dollars.
If you decide to pay monthly, you’ll see additional fees for the convenience of making payments. In the end, you could spend a few hundred dollars more for the same policy by making payments, rather than paying it in full.
Increase your deductible.
One of the factors that determine your insurance premium is the deductible you choose. The typical deductible is $500. It’s affordable, and most people could pay that in the event of an accident.
However, if you can afford to pay more, then you should raise your deductible. Increasing it can save you quite a bit of money. Even a slight increase could save you 15%, which is a considerable saving.
Ask for discounts.
Your insurance agent may or may not offer up discounts to you when you initially get your policy. It isn’t also typical for them to contact you about discounts when you renew. In either case, you’ll still probably miss out on savings you qualify for unless you ask about them.
Discounts insurers offer can include those for being a part of a particular organization, working for a specific company, having a good driving record, or driving under a certain number of miles per year. You can usually get multiple discounts, which can add up to significant savings.
You’ll never know all of the discounts available unless you ask and check into them yourself.
Buy new vehicles carefully.
One thing you may not realize is how much the vehicle you drive impacts your insurance rates. According to the Insurance Information Institute, your insurer will assess your vehicle just as it assesses you to determine the risk it poses.
Your insurer will consider things like how big the vehicle is, whether it’s a target of car thefts, and what safety features it has. It will even consider if certain features, such as a large engine, could lead to risky driving behaviors.
Before you get a new vehicle, look into what it would cost to insure. In general, the cheapest vehicles to insure are medium-sized sedans, SUVs, and similar vehicles.
Choose different coverage for older vehicles.
Most experts will encourage you to carry comprehensive and collision coverage in addition to liability on your auto insurance policy. Comprehensive and collision will help pay for damage to your vehicle from a crash or another incident.
However, this coverage is only good up to the fair market value of the vehicle. If you have an older car, paying for this coverage may not make sense. You’ll likely pay more than the car is worth.
Keep in mind that you’ll have to pay your deductible before the insurance pays anything. If your vehicle is worth $1,000 and your deductible is $1,000, it makes no sense to pay for insurance coverage beyond liability.
You should note that most insurance companies won’t provide you with comprehensive and collision insurance on vehicles over a certain age, but you should stay on top of things. The company may renew your policy without considering the age of your car.
Keep continuous coverage.
When you get a car insurance quote, you’ll notice companies always ask about previous coverage. They want to know if you currently have coverage, and if you’ve had any gaps in coverage.
The reason is that letting your insurance lapse shows that you may not pay your bills on time. Insurance companies reward continuous coverage, so make sure that you keep coverage at all times and never cancel insurance before you have a new policy in place.
The quotes you’ll get from insurance companies will vary significantly, because they all use their own formula to determine what to charge you. This could mean saving quite a bit if you check out your options with different insurers.
When you shop around with different companies, you have to make sure that you enter the exact same information and request the exact same coverage. You want to compare apples to apples. It can be helpful to find a resource for car insurance quotes that will allow you to get multiple quotes at a time.
Get multiple policies.
Most auto insurers will also offer other insurance products, such as renters and homeowners’ policies. They really like it when you bundle your insurance products with them, so much that they will generally offer a nice discount to you for doing so.
You should check into the various products an insurer offers because it can help you save on all your policies. Plus, if you carry all your insurance with one provider, it can streamline your billing.
Taking all of these steps can save you a substantial amount of money. Even if you only take a few of the tips, you can still save significantly. Don’t overpay for your auto insurance when there are ways to lower your rates.