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Car insurance is mandatory in most states. But you are not obliged to pay a fortune for it
The constantly increasing rates of car accidents drive up auto insurance average prices every single year. For that reason, many people are now wondering how to lower car insurance premiums and avoid breaking the bank.
Let’s face it. Car insurance is not very fun. People rarely get excited when spending their money on car insurance.
However, car insurance is mandatory in most states. But you are not obliged to pay a fortune for it. If you frown when it’s time to pay your car insurance premium, probably there is a lot of room for improvement.
Below we will give you 15 great tips and ideas for cutting your car insurance costs.
#1. Be a Responsible Driver
Ever wondered why there are so many car accidents? It’s simple. Because there are many reckless drivers.
It’s common sense that insurance companies will charge higher premiums to irresponsible drivers. These drivers are a big expense to insurance companies as they get into accidents more often.
Because of that, car insurance is on average 10% to 25% cheaper for safe drivers. So it is important to be a responsible driver not just for the sake of your physical health. Your financial health will be better off without car accidents as well.
However, sometimes even if you are a mindful driver you can get into an accident. If it’s not your fault your insurance premium probably won’t increase. Unfortunately, in the opposite scenario, your insurance costs will rise with almost 100% certainty.
Whether you are at fault or not, you should take some action to lower your car insurance price after an accident or at least keep it at its current level. Here is what we recommend.
- Always inform your insurer about the accident (no matter if it’s your fault or not or if the accident is big or small)
- If your current policy price increases switch your provider to find a better deal
- Ask if your current insurance policy includes accident forgiveness
- Use the other methods we are going to list below to lower your insurance costs after an accident
#2. Combine Multiple Insurance Policies with the Same Provider
One of the easiest ways to make big savings on car insurance is to bundle it with other insurance policies. Many insurance providers would gladly give you between 10% to 30% average discount if you have multiple insurance policies with them.
A classic example is having homeowners and car insurance with the same company. Still, some provide discounts if you sign up for other kinds of insurance, like life insurance, for instance.
However, make sure to ask the company before you do this. It’s counterintuitive, but there are certain companies that can charge more if you decide to insure everything with them.
#3. Group Insurance
One of the perks you get as an employee is enjoying occasional group discounts. Many insurance companies reach out to employers to make bulk sales.
To ensure they generate a lot of business they provide a discount for individuals who sign up through their employers.
Apart from that, you can also get a discount if you are a member of a local or nationwide affinity group. Also, some companies offer discounts for individuals of certain professions.
For example, Farmer’s give up to 18% for a number of professions, including CPAs, architects, pilots, dentists, and more.
#4. Raise Your Deductible
Unfortunately, when you get in an accident you still have an additional expense, apart from the insurance premium you paid beforehand. A deductible is an amount you pay if you get in an accident to file a claim with your insurer.
Usually, deductibles revolve around $100. If you are a safe driver or you have managed to save some money you can consider raising your deductible. Yes, you will pay more if you get in an accident. But what is the likelihood of that happening?
And if you increase your deductible to $500 or even $1000 you can save as much as 40% which is not little. Of course, you should be cautious when doing that and calculate the risks you are taking on.
#5. Shop Around and Compare Rates
There are many insurance companies and all of them claim they are the best. But how can you check that? Not so complicated actually. Simply compare. Your starting point obviously will be the price of the policy.
You can use websites like this one to get real quotes from a vast amount of insurance companies. After you picked up a few that have a reasonable price you can check their terms and conditions and choose the best for your needs.
#6. Make Annual Rate Checks
If you insure your car with the same company year after year the rate should get lower or at least stay the same, right? It makes sense since you are a loyal client. Well in reality, more often than not, it’s exactly the opposite.
Many people assume the above and insurance companies take advantage of that fact. They are increasing their premium prices under the radar of customers and hope this remains unnoticed.
Ensure you compare rates annually to get the best offer as prices of different insurers are constantly moving up and down.
#7. Consider Insurance Costs Before You Buy Your Car
One of the main price determinants of car insurance is the car itself. Naturally, insurance for a larger vehicle will cost more. Also, sport model cars that are more dangerous on the road will get hit with higher premiums too.
So how to get cheap car insurance for your vehicle? Just follow this simple rule.
Safe cars save on car insurance. If your car model is generally viewed as safe, insurance companies will provide you with lower quotes.
#8. Multiple Vehicles Discount
In the same way, you can get a discount if you bundle life, homeowners and car insurance you can save by having multiple vehicles insured with the same company. The best part is that not all vehicles should be yours.
If your other family members have cars you still qualify for the multi-policy discount. It functions as a family discount. To take advantage you and your family members should buy multiple car insurance policies with the same vendor.
Unfortunately, you can’t get a discount if you just recommend a friend to sign up. Still, you can always ask the insurance company if they provide a way to capitalize on your referrals.
#9. Lower Your Coverage
The most obvious approach to save on car insurance is to reduce your coverage. However, this is easier said than done. When to reduce car insurance coverage and how to do it are common questions.
Of course, you can’t drop your coverage if you are already signed up only for liability insurance that is required by law. Nevertheless, there are instances when it makes perfect sense to drop more expensive collision and comprehensive insurance.
If you drive an old car it is just not financially smart to have expensive insurance. Instead of paying so much for insurance, you can just buy another cheap car if anything happens.
Still, if the liability insurance of your old vehicle is expensive too, consider purchasing a new car or used car in a better condition. It’s not worth it to end up paying more over the years for insurance than the value of your car. Your insurance cost should be typically at least 10 times less than the value of the vehicle.
Also if your car currently spends most of its time in your garage this could be a perfect moment to temporarily drop expensive insurance coverage. Which brings us to the next point.
#10. Drive Fewer Miles
The number of miles you drive influence the price of your car insurance. This is perfectly logical. The less you drive the lower is the chance of a crash or another accident.
For that reason, insurance companies typically provide different quotes depending on the average miles you drive annually. If you are looking to get a discount in this way do your research. Generally to get a mileage discount you should meet certain mileage eligibility criteria set by the company.
Usually, you would have to significantly decrease your mileage to rank for the discount. However, if you are lucky you can be close to a certain threshold and get a great discount by dropping just a few miles per day, week, or month.
#11. Pay Only for What You Drive
That is yet another way to lower your insurance based on the miles you drive. There are certain services that give the opportunity to pay only for what you use. One example is certain mobile providers let you pay only for the minutes you use.
The same exists with car insurance. It is the so-called black box insurance. The insurer installs a device in your car to track the miles you drive. Then you are obliged to pay-per-mile only for the miles you drive.
However, bear in mind that the company won’t track only the miles. It will also monitor when you drive and your driving behavior to determine the amount of discount you get. If you are a skilled driver here is a chance to monetize that even further.
#12. Get Down to Studying
Most insurance companies in a way discriminate against all new drivers with outrageously expensive premium prices. Insurance providers simply say new drivers are a very high-risk group. And that can’t be denied.
No experience behind the wheel, driving old and dangerous cars, speeding very often. These are just a few of the dangerous driving behaviors that are typical for youngsters. However, this is an obvious generalization. It’s just not possible that all new drivers are reckless and irresponsible.
But how would insurance companies know you are not like your peers? Simple. They will peek into another area of your life that can show you are smart and mindful. Your behavior as a student.
Never had the motivation to study? That may be well worth it when it comes to your car insurance. If you are under 25 years old and have good grades you can save up to 30% or more of your car insurance.
To qualify you should have an average grade score of B or above, a 3.0 GPA or you should be amongst the top 20% of students in your class.
Unfortunately, new drivers over the age of 25 can’t take advantage of that. Anyways all new drivers should compare prices and look for discounts, regardless of their age. For example, Nationwide usually has good prices for new drivers. You can always check at comparison sites like insurify.
#13. Sign up for a Defensive Driving Course
Taking a defensive driving, accident prevention or another similar course helps not only to reduce the point you have on your license. A large number of insurance companies will provide a discount if you attend such a course proactively.
Ensure your efforts will be paid off and ask the insurer before taking the course. You don’t want to waste your time, although it’s a good idea to take such courses anyway.
#14. Improve your credit score
Not many individuals know that credit scores actually affect the price of insurance. That is right. Improving your credit score would not only mean better interest rates on credit but also other perks. Like a drop in your car insurance cost, for instance.
Plus, improving your credit score is beneficial for you in other aspects. For example, you can get better rewards credit cards in the long run.
Read More: Does Debt Consolidation Hurt My Credit Score
#15. Try to Get Another Discount
It is in the nature of things to negotiate for the price of different items and services, right? So how to negotiate for your car insurance? The straightforward answer is you can’t.
If you call an insurance company and start to act like you are on an auction sale the agent will most probably hang up. Asking for a cut in the price of your premium out of nowhere is like asking for a cut in your electricity bill.
Nevertheless, there is a secret to negotiating with insurance companies. You can always inquire about all the different types of discounts they have. That opens the door for them to give you information on how to lower your rate.
But if you and the company are not a good fit simply look for a different offer.
There are myriad insurance companies and to stay competitive they must provide great offers, terms, and conditions. Otherwise, they will cease to exists. So don’t hesitate to research all discounts provided by different insurers.
It sounds tedious and boring but you can make some big savings. To reward yourself for the great job, you can spend a portion of the money you saved on something more amusing. It’s well deserved!