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How to Save on Car Insurance: Smart Ways to Lower Your Rate

Posted: July 09,2020
by Rosen Valchev
Last updated: August 14,2020

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Smart ways to save on car insurance

The Coronavirus left many people jobless and with empty wallets. Unfortunately, car insurance is required by law, and if you don’t pay it you are taking a huge risk. Both for your finance and health. For that reason, it is wise to look for smart ways to save on car insurance.

You can call and ask your current insurer or agent about the coronavirus car insurance relief options you have. Still, it’s best if you are familiar with other smart ways to lower your car insurance rate.

You can use these to save on car insurance not only now but also in the future, when things get back to normal.

Combine multiple policies with the same insurance company

Most insurance companies will offer a discount if you hold multiple insurance policies with them. A typical example is bundling your car and your homeowners insurance.

On average you can save between 10% and 25% if you decide to do that. But combining your homeowners and car insurance isn’t your only option. Ask insurance companies if they offer a discount if you hold other insurance policies with them, like life insurance.

As you can expect, you can get a discount if you sign up for multiple auto insurance policies with the same company. You are most probably aware that companies give different quotes for different vehicles.

Let’s say GEICO has the best price and coverage for your Honda Civic. This doesn’t mean it will have the best rate for your Jeep when you compare it with other insurers. But when you insure both cars with the same company they will most likely provide a discount.

The same applies for insuring multiple drivers with the same company. However, to get this discount, individuals usually should be blood-related and live in the same residence. So it works as a family discount.

Compare different auto insurance quotes

The easiest way to do that is to go online and search for comparison websites. For instance, this website focuses mainly on auto insurance comparison and you can get quotes from different insurance companies.

These quotes are personalized so you need to fill in some information. However, the process is extremely easy and straightforward. Most of the time you are able to get quotes in under 5 minutes.

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If you are an offline type of person the best place to start your research is with friends and family. Ask your close ones which insurance companies they are currently using. If they happened to submit a claim ask them how did it go.

This is the best way to decide if the company is worth it or not. Of course, you can look for online reviews as well. Also, you can advise with an insurance broker.

Search for one that specializes in car insurance for your local area. Most of the time brokers know very well what are the best insurance companies for a certain area.

Reduce Your Car Insurance Coverage

This is obvious advice but be very mindful when doing that. There are instances when it makes sense to reduce car insurance coverage. However, there are some instances when it doesn’t.

And there is always a risk for your wallet and health when you lower your coverage. So when to reduce your car insurance coverage? Generally speaking, if your car is old and has low value it doesn’t make sense to have full comprehensive or collision insurance.

After all, if your insurance premium is as much as the value of your car what is the point of insuring it anyways? You can just buy another old car for the same amount.

Usually, the value of your car should be at least 8 -10 times higher than the price of your insurance. If liability insurance is expensive as well, it is good to consider changing the vehicle.

Yet, you can’t avoid collision insurance if you still haven’t repaid your car loan in full. Also, if you drive an expensive car, consider whether the risk of dropping your coverage is worth it.

Still, if your car currently stays in the garage most of the time it is a good time to drop unnecessary coverage and save some money on auto insurance.

Raise Your Deductible

Your deductible is the amount you need to pay when you file a claim with the insurance company.

If your deductible is lower, for example, $100 you will pay less for your auto insurance. If your deductible is higher, let’s say $1000 the insurance company will lower your car insurance price.

It makes sense that insurance companies charge higher premiums when the deductible is a small amount. In the case of an incident, they will have to pay more.

On the contrary, if you have a higher deductible you are covering a bigger portion of the possible damage costs. Thus the insurance company will pay less.

If you are a responsible and skilled driver and you can afford to pay a higher deductible in the unlikely event of an accident, you should definitely consider that option. After all the risk is low and the savings can be big.

Watch your credit score

Most people surprise when they learn their car insurance price depends on their credit score.

It may seem strange at first but it has its logical explanation. Insurance companies like all other profit organizations research the market and focus on buyers’ behavior. They are in the business of handling risk.

Research shows that people who are organized and responsible in their personal lives are more likely to be good and responsible drivers as well.

So an indirect approach to reducing your car insurance price and getting many other benefits is raising your credit score. You can check our post on how to increase your credit score to 800 and take some advice from it.

How to save on car insurance if you are a new driver?

Unfortunately, new drivers are a high-risk group for insurance companies. No driver’s history, probably unemployed and irresponsible. This puts new drivers in a disadvantaged position. 

For that reason, most insurers charge huge amounts for insuring new drivers. Nevertheless, there are some smart ways for new drivers to save on car insurance.

1. Be smart…Literally

There is one setback that you can turn into an advantage if you are a young driver. Students under the age of 25 who have good grades can save on car insurance.

If your average grade score is a B or 3.0 GPA or you are amongst the top 20% of students in your class, you can have more than a friendly pat on the shoulder. Discounts for good students vary significantly but sometimes they can go up to 30% or more.

2. Stay on your parents’ car insurance

Most new drivers and young people as a whole want to be undependable.
But this often costs a fortune. Especially in the case of car insurance.

If you stay on your parents’ policy you can save a lot. You can spend the money to go on a holiday or buy something expensive. Usually the amount you safe will be enough to do that.

3. Shop around for better rates

The fact most insurance companies charge amounts that can be compared to a robbery for new drivers doesn’t mean you can’t spot an offer. Use online providers to compare the rates of different insurance companies and choose the best offer.

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Look for other discounts

It doesn’t hurt to ask insurance companies if they offer other ways to lower your car insurance rate. And be sure, there are plenty of ways.

For instance, most companies offer affinity membership discounts and professional discounts. Also, if you own an electric or hybrid car you can get a green car discount.

When you pay the annual amount in full you get a discount again.
So don’t be afraid to reach out to insurance companies and ask. You may be surprised by the result.

Responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.

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