Finding practical ways to save on auto insurance does not have to be as time-consuming or difficult as you might suspect. Here are 7 tips on how you can save money on car insurance.
1. Shop Around For Car Insurance Rates
Shopping around is important because insurers may offer different prices, even when you’re receiving quotes for similar auto insurance policies. You may even find that levels of coverage can vary widely between auto insurance providers. Plus, different insurers may offer various discount opportunities — some more than others.
Shopping around may take some time, but it’s well worth it, especially if you can find coverage that meets your needs and saves you hundreds of dollars (if not more) on your policy.
2. Pay Attention And Drive Safely
Insurance companies often offer better car insurance rates to drivers who have a clean driving record, with no accidents, or speeding tickets. Plus, insurers may also lower or maintain your premiums if you haven’t filed a claim within the last few years.
In some cases, drivers can also take a defensive driving course to improve their driving record and insurance premiums.
3. Increase Your Deductible
An insurance deductible is the money you need to pay out of pocket during a successful claim before your insurer pays the rest. Depending on your specific auto insurance plan, various deductible amounts may be applicable to different types of coverages such as collision, comprehensive, and personal injury protection.
The higher your deductible, the more an insurer may be willing to lower your premiums, since it means you’re more likely to have to cover an expense out of pocket. Make sure before deciding on your deductible that you can afford to pay it in case you do need to file a claim.
4. Improve Your Credit
Your credit score is a number that is assigned to you based on your credit history and prior financial behavior. Lenders use it to measure and assess your creditworthiness, or how likely you are to pay back your loans.
Many insurance companies use your credit score as a point of reference when assessing whether to approve you for a policy, and most will use it to help determine your rate.
The higher your credit score, the more likely you’ll be offered a lower rate. If your credit score isn’t great, you can work on improving it by making consistent on-time payments on your loans, minimizing your credit card balance, and holding off on applying for too many new loans in quick succession.
5. Research Discounts And Deals
Most major car insurance companies offer special programs and discounts for auto insurance. Be sure to ask around to see if there are any discounts you may qualify for.
Possible discount opportunities here include:
- Paying your bills in advance (annually or every 6 months)
- Enrolling in automatic bill payment plans.
- Bundling policies with the same insurer (like auto and home insurance)
- Group discounts for membership with specific organizations or employers
- Programs which reward drivers for good driving habits
- Multi-car discounts if you enroll multiple household vehicles
- Student, military, federal government employee, retiree, or senior discounts
6. Drop The Features You Don’t Use
There’s rarely any point in paying for car insurance coverage you don’t need. By way of example, if you do not travel frequently, you can consider dropping car rental coverage to decrease costs.
Or if your vehicle is older, consider lowering the amount of collision insurance — which pays to repair damage to your vehicle — especially if it’s cheaper to replace your vehicle than it is to make repairs.
Before dropping certain types of coverage, make sure you first carefully assess factors such as your driving needs, whether you lease or own your vehicle, and the type of car you drive.
7. Consider Switching To Usage-Based Insurance
Usage-based car insurance charges you a policy premium based on your individual driving needs and habits. If you drive less frequently, travel fewer miles, and practice safer driving habits, auto insurance companies are often happy to reward you with reduced insurance rates.
Registration for a usage-based insurance program typically involves placing a tracking device – which sends information on driving patterns and habits back to the insurer – inside of your vehicle.
After installing the tool, the car insurance company monitors your driving habits on the road. After an initial testing and observation period, you could shave a significant amount of money off your insurance premiums depending on your driving behavior.