Car insurance is required to safeguard you financially while driving. Whether you just have basic liability insurance or complete vehicle coverage, it’s important to make sure you’re receiving the best rate available. Do you want to know how to get cheaper car insurance? Here are 10 ways to save money on car insurance.
What Is the Cost of Car Insurance?
Car insurance rates vary based on the state you live in, the insurance company you choose, and the sort of coverage you have. However, knowing what the average driver spends for car insurance might help you save money.
According to the most recent data from the National Association of Insurance Commissioners, the average consumer paid $1,190 on car insurance in 2018. (NAIC)
According to NAIC statistics, car insurance rates increased by 30% between 2014 and 2018, despite the fact that the number of covered cars only increased by 7%.
According to AAA data, the average cost of car insurance for new cars in 2020 will be somewhat higher, at $1,202 per year.
The figures are very similar, implying that when budgeting for a new car, you may need to allocate $100 or more each month for auto insurance.
How to Save Money on Car Insurance
You can save money on car insurance by employing a variety of strategies. Once you’ve determined how much car insurance will cost you, you can put some or all of these strategies to use.
Benefit from Multi-Car Discounts
If you get a quotation from a car insurance company to cover a single car, you may wind up paying more per vehicle than if you enquired about insuring many drivers or vehicles with that company. Because they desire your business, insurance firms often give what amounts to a bulk rate. In certain cases, they are ready to offer you a discount if you bring in more of it.
Check with your insurance agent to determine whether you are eligible. Multiple drivers must generally dwell at the same address and be related by blood or marriage. Two unrelated persons may also be eligible for a discount; however, they must normally jointly own the car.
You might expect to spend extra for insurance if one of your drivers is a teen. However, if your kid has a B average or above or ranks in the top 20% of their class, you may be able to receive a substantial student discount on the coverage, which typically lasts until your child reaches 25. These reductions may vary from 1% to 39%, so be sure to show your insurance agent evidence that your adolescent is an excellent student.
In addition, some providers may offer an auto insurance discount if you have additional policies with them, such as house insurance. Allstate, for example, gives a 10% car insurance discount and a 25% house insurance discount when you combine the two, so check to see if such discounts are accessible and suitable.
Taking a Defensive Driving Course
Insurance companies may sometimes provide a discount to people who finish an authorised defensive driving course. Drivers may be able to minimise the amount of points on their licences by enrolling in a defensive driving, accident prevention, or other course.
Before you join up for a class, be sure to inform your agent/insurance company about this discount. After all, it’s essential that the time and money spent on the course result in a significant insurance savings. It is also critical that the driver enrol in an approved course. Every state has its own laws for authorised defensive driving classes, and GEICO’s website enables you to see them by state.
Check around for lower car insurance rates
If your insurance is due to expire and the yearly premium has risen significantly, try shopping around for quotes from other firms. Also, it’s definitely a good idea to get quotations from different providers every year or two, just in case there’s a better rate out there.
Remember that cheap doesn’t necessarily imply excellent, and choosing with the cheapest firm isn’t always the best choice. This is due to the fact that the insurer’s creditworthiness must also be assessed. After all, what use is a policy if the firm has the resources to pay an insurance claim?
Consider using a site that rates the financial strength of insurance companies to conduct a background check on a specific insurer. The financial soundness of your insurance provider is vital, but you should also understand what your policy covers. Standard and Poor’s data is used to compile Insure.com’s insurance business ratings.
While purchasing a large SUV may sound appealing, insuring a 5,000-pound, top-of-the-line vehicle can be more expensive than insuring a small (but safe) lower-cost commuter car. Some insurance companies may provide a discount if you purchase a hybrid or alternative fuel car. Farmers, for instance, provides a 5% discount.
You may feel good about conserving the environment while still saving money on insurance. Before making a purchase, find out the specific insurance costs for the various automobiles you’re considering.
5. Boost Your Deductibles
When choosing car insurance, you typically have the option of selecting a deductible, which is the amount of money you must pay before insurance picks up the tab in the event of an accident, theft, or other types of vehicle damage. Deductibles commonly vary from $250 to $1,000 depending on the coverage. The catch is that, in general, the greater the yearly premium, the smaller the deductible.
In contrast, the smaller the premium, the larger the deductible. Inquire your insurance agent about how raising your deductible can effect your rate. It may reduce your yearly premium by several percentage points and put money back in your pocket, or it may have no effect. If you are hesitant to submit minor claims in order to avoid boosting your premium, increasing the deductible may be an especially wise option.
Improve Your Credit Score
The driving record of a motorist is certainly an important component in deciding vehicle insurance premiums. After all, it seems to reason that a motorist with a history of accidents would cost 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 prices.
“Many insurers employ credit-based insurance ratings. It’s a difficult subject in certain statehouses…[but] insurers would argue that studies demonstrate that being responsible in your personal life makes you less likely to submit claims.”
Regardless, be aware that your credit score might be used to calculate insurance rates, and do all you can to keep it high.
Discounts for Anti-Theft Device Installation
Individuals who install anti-theft devices may be able to reduce their annual premiums. For example, GEICO provides a “possible discount” of 25% if your car has an anti-theft system.
Your insurance provider should be able to tell you which devices, when installed, can lower your premiums. Car alarms and LoJacks are two sorts of gadgets you should look into.
If lowering your insurance premium is your major motive for installing an anti-theft device, examine if the cost of adding the device will result in a big enough reduction to justify the effort and price.
Change to Pay-As-You-Go Insurance
If you’re a safe, low-mileage driver, a usage-based insurance programme (also known as black box insurance) such as Allstate’s Drivewise, Progressive’s Snapshot, or State Farm’s Drive Safe & Save may be available to you.
By enrolling in these programs, you authorise your insurer to track your driving via a telemetric device installed in your car in exchange for possible discounts based on how much you drive, when you drive, and how well you drive. If you drive less than 10,000 miles per year, you might save money with this sort of arrangement.
When calculating car insurance rates, consider the location
It’s unlikely that you’ll relocate to a different state solely to save money on car insurance. However, if you are planning a move, you should account for the potential change in your car insurance rate.
Check Your Coverage
Dropping some forms of coverage might be dangerous. After all, no one can anticipate whether or not an accident would occur. However, if you are driving an exceptionally old vehicle that is on its final legs, it may make sense to forgo collision or comprehensive coverage (depending on the cost, your driving record, and other circumstances).
The reason for this is because if the vehicle is involved in an accident, the insurance company will almost certainly total the vehicle. If the car is only worth $1,000 and collision insurance is $500 per year, it may not be worth it to acquire it.