Year-End Review: 10 Tips to Cut Car Insurance Costs

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Car insurance can be a pain in the neck to understand, but failing to do so can cost you big bucks. Not all policies are the same across the board, and small changes can equate to big savings.

The new year is almost here, so it’s time for a year-end review of your auto insurance policy. Money Talks News founder Stacy Johnson offers some tips that can help you reduce car insurance premiums. Watch the video below and continue reading for additional money-saving tips.

1. Increase your deductible

You can save 10 percent to 15 percent on comprehensive and collision coverage by raising your deductible from $250 to $1,000. Afraid that you will not be able to cover that amount before the insurance kicks in if you are involved in a car accident? Create an emergency fund to cover the cost so that if you must file a claim you will not have to wreck your budget.

2. Choose the pay-as-you-drive option

With Progressive Snapshot, you could save on your premiums by plugging a small device into your car’s diagnostic port to track your driving, including how many miles, how often you slam on the brakes and how often you drive between midnight and 4 a.m.

State Farm’s Drive Safe & Save program uses your car’s OnStar, In-Drive or Sync communication system to collect your driving information.

Allstate’s Drivewise devise plugs into the diagnostic port.

Will you save money? Perhaps, depending on the program and how you drive. Besides tracking mileage, insurers may check to see if you brake hard, if you make jack-rabbit starts, if you speed, or if you regularly drive late at night.

Check to see if pay-as-you-drive programs are available in your state. Often you can try it out for a month to see how much you’d likely save.

3. Comparison shop

Prices change, so it’s important to compare what you’re paying now with rates at other companies.

The lowest price doesn’t always mean the best policy for you. You want a company that’s not only financially stable but also offers dependable and timely service. The Insurance Information Institute recommends that you ask for recommendations from friends and family, get online quotes, call local providers, review consumer guides and search your state insurance department’s website.

You’ll want to compare quotes from no less than three insurance companies. You can find quotes with our insurance tool.

4. Inquire about discounts

Insurance companies offer a variety of discounts to qualifying policyholders. For example:

  • Over 50 discount.
  • Multi-vehicle discount.
  • Teenagers with GPA of 3.0 or higher discount.
  • Loyal customer discount.
  • Anti-theft devices discount.
  • College student discount.
  • Accident-free discount.
  • Moving violation-free discount.
  • Low annual mileage discount.

Check with your insurance company to make sure you’re getting all of the discounts you qualify for.

5. Carpool

How much you drive in a year is a factor in how much you pay for insurance. Ask your insurance company if you can save by reducing your mileage and by how much. Carpooling with others who take the same route to work could significantly reduce the mileage you put on your car, saving you money on premiums as well as reducing the wear and tear on your car.

6. Purchase only what you need

If you own an older vehicle, you may not need to carry comprehensive and collision coverage.

The Insurance Information Institute says:

If your car is worth less than 10 times the premium, purchasing the coverage may not be cost-effective. Auto dealers and banks can tell you the worth of cars. Or you can look it up online at Kelley’s Blue Book.

But keep in mind that if you have an accident that’s your fault, you’ll be on the hook for the full value of your car. This is another instance where a healthy emergency fund is critical.

7. Bundle up

You could get a better rate on your car insurance if you also buy your homeowners and other types of insurance from the same company.

8. Notify your provider of any changes

Changes in your driving patterns can yield large savings. If your daily mileage decreases due to factors such as relocation or a shorter commute — or you no longer drive to work because you now work at home or have retired — your rates will likely follow suit, as you will be less likely to be involved in a car crash. Also, removing drivers who no longer operate your vehicle from the policy will reduce your premiums.

9. Maintain good credit

Like it or not, many insurance companies equate bad credit with a higher likelihood of filing claims. That means a bad credit score could result in higher premiums. See “18 Tips to Give Your Credit Score a Boost.”

10. Don’t pay monthly

Your car insurance company likely offers a discount for paying your bill all at once instead of in monthly installments. The savings can be substantial.

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Comments & discussion

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  • marketfog

    Wonder of wonders. I recently traded my 2006 Camry for a 2014 Escape. The insurance coverage stayed the same except I added new car replacement. My premium went down $100!

    • Jcatz824

      It probably went down because of more safety and anti-theft features on the 2014 Escape or maybe the 2006 Camry is a vehicle that is more likely to be stolen and “chopped up” for parts.

  • satulapo

    i think ur missing the most important thing in your list: don’t pay a down payment for your insurance

    when i bought my car, i had to pay a useless $300 just to get my insurance policy. talk about money down the drain.

    i know a few companies don’t require deposits, so you better use one of them if you don’t want to throw $300-400 away. I know that 4autoinsurancequote doesn’t require a down payment. a quick google search could probably reveal more companies that don’t.

    • Jcatz824

      I’ve never paid any such thing as a down payment for car insurance. Maybe it has something to do with the state in which you live. I live in Southern New Jersey and over the course of 35 years, I have been with 2 insurance companies – first Liberty Mutual and now Geico. Any money I paid them went toward the cost of the policy. I have an excellent driving record so maybe that has something to do with it.

  • Jim Wiggins

    I am adding collision coverage back on my older vehicle. I was hit by a fully insured driver. I have a police report and the accident is his fault. His adjuster contacted me promptly and assessed the damage. I have been waiting for two months for his company to pay. If I had collision coverage my insurance company would do all of the legal work to ensure that his company paid for the damages. Fortunately a replaced tail light got me back on the road. My dents and torn bumper can wait.

  • “Scull-Dog”

    Do not forget to take defensive driving for fun… It can also lower your insurance premium.