15 Ways to Lower Your Car Insurance Premiums
TAKEAWAYS IMPORTANT
- A discount bulk rate for insuring multiple vehicles and drivers at once is one approach to save money on car insurance.
- If you have additional insurance policies with the same company, you may be eligible for lower vehicle insurance prices.
- Maintaining a clean driving record is essential for getting cheaper auto insurance.
What Is the Cost of Car Insurance?
Every driver's car insurance costs vary depending on the state they live in, the insurance company they choose, and the type of coverage they have. However, knowing what the average driver pays for auto insurance might help you save money.
According to the most recent data available from the National Association of Insurance Commissioners, the average person paid $1,190 on vehicle insurance in 2018. (NAIC). According to NAIC data, car insurance rates increased by 30% between 2014 and 2018, despite the fact that the number of covered vehicles only increased by 7%.
According to AAA, the average cost of car insurance for new vehicles in 2020 will be $1,202 per year2. The figures are close enough together to suggest that when budgeting for a new automobile, you should factor in about $100 per month for auto insurance.
How to Save Money on Car Insurance
You may save money on auto insurance by employing a variety of tactics. You can use some or all of these strategies once you know how much auto insurance will cost you.
1. Benefit from Multi-Car Discounts
If you ask an auto insurance provider for a quote for a single vehicle, you may receive a higher quote per vehicle than if you asked about insuring many drivers or vehicles with that company. Because they desire your business, insurance firms often offer what amounts to a bulk rate. They may be ready to give you a discount if you promise to bring in more of it in certain circumstances.
Check with your insurance agent to determine whether you are eligible. Multiple drivers must, in general, live in the same house and be related by blood or marriage. Two unrelated people may also be eligible for a discount; however, they must normally own the vehicle together.
You might expect to spend more for insurance if one of your drivers is a teen. If your child has a B average or is in the top 20% of his or her class, you may be able to get a substantial student discount on the coverage, which usually lasts until your child reaches the age of 25. These reductions can range anywhere from 1% to 39%, so be careful to offer proof to your insurance agent that your adolescent is a good driver.
In addition, some providers may give you a discount on auto insurance if you have other policies with them, such as house insurance. Check to see if such discounts are available and applicable. For example, Allstate offers a 10% car insurance discount and a 25% homeowners insurance discount when you bundle them together.
2. Keep Your Eyes on the Road
To put it another way, drive safely. This should go without saying, but in today's world of rising in-car distractions, it's worth repeating. The more alert you are, the fewer accidents or moving offenses you will encounter—events that will raise your insurance costs. Depending on your driving record, Travelers offers safe driver discounts ranging from 10% to 23%.
For those who aren't aware, a motorist is usually given points for moving offenses, and having more points can result in higher insurance prices (all else being equal).
3. Enroll in a Defensive Driving Program.
When you complete an approved defensive driving course, your insurance company may offer you a discount. By taking a defensive driving, accident prevention, or other course, drivers may be able to lower the amount of points on their license.
Before you sign up for a class, make sure to ask your agent or insurance provider about this discount. After all, it's critical that the time and money spent on the course result in a significant insurance savings. It's also critical that the driver enroll in an approved course. Every state has its own rules for authorized defensive driving classes, which you can look up on GEICO's website by state.
4. Look for lower car insurance rates by shopping around.
If your coverage is due to expire and the annual premium has increased significantly, shop about and get quotes from several firms. Also, every year or two, it's probably a good idea to get quotations from different firms to see if there's a better deal out there.
Remember that cheap doesn't necessarily equal good, and going with the cheapest option isn't always the best option. This is because the creditworthiness of the insurer should also be examined. After all, what good is an insurance coverage if the corporation can't afford to pay an insurance claim?
Consider using a site that analyzes the financial strength of insurance firms to perform a background check on a certain insurer. Your insurance company's financial strength is vital, but you need also make sure you understand what your policy covers. The insurance company ratings on Insure.com are based on data compiled by Standard & Poor's.
5. Take advantage of public transportation
When you sign up for insurance, the provider will usually begin by asking you a series of questions. The number of miles you drive the insured vehicle every year may be one of the questions it asks.
If you travel three hours to work every day, your insurance premiums will almost certainly be higher than if you just drive one mile a day. If at all possible, take public transportation to reduce your mileage, but keep in mind that you'll need to reduce your mileage enough to qualify for a discount. So that your efforts aren't wasted, inquire about your insurance company's various mileage thresholds.
Also, inquire with your provider about the number of miles you are currently driving, as most can supply you with a better insurance price.
6. Reduce the size of your vehicle
While purchasing a large SUV may seem appealing, insuring a 5,000-pound, top-of-the-line vehicle can be more costly than insuring a small (but safe) low-cost commuter car. If you acquire a hybrid or alternative fuel vehicle, some insurers may give you a discount. Farmers, for instance, gives a 5% discount.
You can feel good about helping the environment while still saving money on insurance. Before making a purchase, find out the specific insurance costs for the various vehicles you're considering.
7. Make Your Deductibles Higher
When purchasing automobile insurance, you often have the option of picking a deductible, which is the amount of money you must pay before insurance will cover the cost of repairs in the event of an accident, theft, or other sorts of vehicle damage. Deductibles normally range from $250 to $1,000, depending on the coverage. The catch is that the lower the deductible, the higher the annual premium in general.
Conversely, the cheaper the premium, the greater the deductible. Inquire your insurance agent about how raising your deductible can effect your rate. It could lower your annual premium by several percentage points, putting money back in your pocket, or it could be nothing. If you're hesitant to file minor claims because you don't want your premium to go up, increasing your deductible can be a good idea.
8. Boost Your Credit Score
The driving record of a driver is certainly a significant element in deciding the cost of vehicle insurance. After all, it's understandable that a motorist with a history of accidents could end up costing the insurance company a lot of money. However, many people are astonished to learn that insurance firms may take credit scores into account when deciding insurance premiums.
Why is your credit score taken into account? The Insurance Information Institute's senior vice president and head of media relations, Michael Barry, puts it thus way:
Regardless of whether that is accurate, be aware that your credit score is used to calculate insurance premiums, and do everything you can to maintain a good one.
9. When calculating car insurance rates, keep your location in mind.
It's improbable that you'll relocate to a distant state solely to save money on vehicle insurance. When making a move, however, the possibility of a change in your auto insurance rate should be factored into your budget.
10. Check Your Insurance Coverage
It can be risky to forego certain forms of coverage. After all, no one can say whether or not an accident will happen. If you're driving a severely old car that's on its final legs, though, dropping collision or comprehensive coverage may make sense (depending on the cost, your driving record, and other circumstances).
The reason for this is that if the vehicle is involved in an accident, the insurance company will almost certainly declare the vehicle totaled. If the car is only worth $1,000 and collision coverage costs $500 per year, it may not be worthwhile to purchase it.
11. Get Discounts on Anti-Theft Device Installation
Individuals who install anti-theft devices may be able to cut their annual premiums. If your automobile has an anti-theft system, GEICO, for example, promises a “potential savings” of 25%.
Your insurance company should be able to inform you which devices, if installed, can help you save money on your premiums. Car alarms and LoJacks are two sorts of gadgets you should look into.
If lowering your insurance premium is your primary motive for installing an anti-theft device, examine if the cost of adding the device will result in a big enough savings to justify the trouble and price.
12. Consult with your agent
It's worth noting that, in addition to the ones mentioned in this article, there may be more ways to save money. In fact, it's a good idea to inquire if the company offers any unique discounts, such as for military members or employees of a specific company. You never know what kind of discounts are available for your specific situation.
13. Change to a pay-as-you-go insurance plan.
A usage-based insurance program (also known as black box insurance) like as Allstate's Drivewise, Progressive's Snapshot, or State Farm's Drive Safe & Save may be available to you if you're a safe, low-mileage driver. In exchange for prospective discounts based on how much you drive, when you drive, and how well you drive, you sign up for these programs, which allow your insurance to track your driving using a telemetric device installed in your car. You might be able to save money with this type of service if you drive less than 10,000 miles each year.
14. Look for Additional Savings
Insurers offer a wide range of discounts. Look for discounts like these:
- Agreements to get e-bills and paperwork Offers to pay the complete annual or six-month fee at once
- Discounts are available through memberships in specific organizations or groups.
- Don't let a big list of prospective discounts persuade you. Multiple insurers' discount and regular costs are compared.
15. Get Rid of Insurance You May Not Need
You may not require all of the policy's features, such as roadside assistance and automobile rental coverage. Examine your insurance policy line by line and ask to have everything you don't need removed.
Final Thoughts
Auto insurance premiums are likely to continue to rise in the future. There are, however, a number of things you may do to lessen the sting. These 15 pointers should help you get on the right track. Remember to shop around for the best auto insurance companies to discover one that meets your demands and matches your budget.
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