9 Ways to Put the Brakes on Car Insurance Bills

Photo (cc) by David Villarreal Fernández

In 2010, the last year data was available, American households spent an average of $1,010 for car insurance, according to the Bureau of Labor Statistics.

That’s a lot, but there are loads of ways to save on car insurance. In the video below, Money Talks News founder Stacy Johnson offers a few ideas. Check it out, then read on for a bunch more.

Now, let’s flesh out Stacy’s ideas and add more.

1. Know your policy

Step one with any kind of insurance is understanding what you’re paying for. As Stacy said in the video, what he did was create a spreadsheet listing the different components of his policy, along with explanations and the cost of each. However you choose to approach it, know as much as possible about your policy. Take it out (or read it online) and look under the hood. Learn exactly what you’re paying for, what it costs, and how you might reduce the expense.

If you’re not sure what something means or costs, call your company or agent and ask. Part of your premium is going to pay for customer service; use it.

2. Ask for discounts

There are dozens of discounts that can take a chunk out of your premium. A few of many examples:

  • Being a member of an organization like a fraternity, credit union, or educational association
  • Having safety features like air bags, anti-theft systems, or anti-lock brakes
  • Having good grades
  • Being over 50
  • Being a non-smoker

If you assume your insurance company will automatically apply applicable discounts, you’re probably wrong. Few insurance companies actively attempt to reduce their profits by calling you and offering discounts. Pick up the phone and ask for a full list of available discounts.

3. Raise your deductible

The deductible is simply what you’re willing to pay in the event of an at-fault accident. Shoulder more of the burden and you’ll lower your premiums.

The Insurance Institute says going from $200 to $500 will knock 15 to 30 percent off the cost of the comprehensive part of your policy. Set your deductible to $1,000 and you could save 40 percent.

Think of the max you’d be willing to pay, then raise your deductible to that level. Most people wouldn’t report a $500 accident for (justifiable) fear of a premium increase. If that’s true, why would you pay extra for a $500 deductible?

4. Check your credit

Your credit can affect your insurance rates, because insurance companies have apparently decided that people with wrecked credit are more likely to wreck cars.

Have a great credit history and you’ll see more affordable quotes. Have a blemished credit history and you’ll deal with higher premiums. If you haven’t checked it lately, do it free at annualcreditreport.com.

5. Before car-shopping, insurance shop

When it’s time to buy a car, don’t just compare gas mileage, style, and features; compare insurance costs as well.

Some cars are more expensive to insure than others. Insure.com recently released a study of the least expensive cars to insure for 2013. Top three: The Ford Edge SE (average annual premium $1,128), the Jeep Grand Cherokee Laredo (average annual premium $1,148), and the Subaru Outback 2.5i Premium (average annual premium $1,150).

Whether new or used, before you buy any car, go call your existing company or use online insurance quote comparisons like ours and see what you’ll be paying.

6. Shop regularly

When you’re buying a car isn’t the only time to shop insurance. Carriers have no incentive to offer you the lowest rate, especially once they already have you as a customer. They know what a pain it is for most consumers to shop rates and switch companies, so they’ll raise rates, confident you won’t leave.

Don’t be a patsy. Whenever you get your annual or semi-annual bill, spend a few minutes comparing quotes from competing companies. If you find a better deal, ask your insurer to match it, or switch companies.

7. Group your policies

You can sometimes get a discount by grouping your policies. For example, carrying renters insurance and car insurance with the same company can lower your premiums. And if you have multiple cars in your household, keep them on the same insurance plan for another potential discount.

8. Keep a clean driving record

Your driving record obviously affects your premium: Accidents and tickets add points to your driver’s license and raise your rates.

Insurance.com analyzed the effect of traffic violations on more than 490,000 quotes. Here are some scary statistics:

  • Not wearing a seatbelt – average 2.8 percent increase
  • Speeding up to 14 mph over – average 10.62 percent increase
  • Tailgating – average 13.37 percent increase
  • Reckless driving – average 21.9 percent increase

Nobody tries to get tickets, of course, but if you get one, try everything in your power to avoid points, from hiring a lawyer to opting for traffic school.

9. Drive less

I save a ton on insurance simply because I don’t drive much. I work from home and live near everything, so I only drive about 1,000 miles a year. While you probably can’t stop driving altogether, you can do a few things to lower your total yearly miles and your insurance cost:

  • Carpool – Carpool with co-workers and cut out up to four driving days a week.
  • Walk – Walk whenever you can. You might end up saving on health insurance while you save on car insurance.
  • Use public transportation – Sign up for a frequent traveler card at your local transit office and you’ll save on trips too.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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