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, and small changes can add up to big savings.
Reviewing your auto insurance policy can uncover new ways to save. Here are some tips that can help you reduce car insurance premiums.
1. Increase your deductible
Increasing your car insurance deductible from $200 to $500 or $1,000 can cut your collision and comprehensive coverage premium costs, notes the Insurance Information Institute.
Afraid you won’t be able to meet that amount if you’re involved in a car accident? Create an emergency fund to cover the cost.
2. Choose the pay-as-you-drive option
Several insurance companies will give you a break on your premiums if you let them use technology to track your driving behavior. These companies generally monitor things such as:
- How many miles you drive
- How often you slam on the breaks
- The time of day you drive
For example, sign up for Allstate’s Drivewise and you immediately get a 3 percent discount on your premium, plus up to 15 percent cash back after 50 trips — and every six months thereafter — if you drive safely.
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.
In addition, each insurer sets rates based on its own in-house criteria. So, your profile may net you better rates at one insurer than another.
4. Ask about discounts
Insurance companies offer a variety of discounts to qualifying policyholders. For example:
- Over-50 discount
- Multivehicle discount
- Teenagers with GPA of 3.0 or higher discount
- Loyal customer discount
- Antitheft 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. Some companies won’t offer price breaks unless you ask for them.
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 can significantly reduce the mileage you put on your wheels, 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:
As a rule of thumb, if your older car is worth less than 10 times the insurance premium, having collision and/or comprehensive coverage may not be cost effective. To find out whether this is true for you, check the value of your car.
The III says you can find out what your car is worth for free on websites such as Kelley Blue Book, National Association of Auto Dealers (NADA), and TrueCar.
Keep in mind that if you drop these coverages and 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 might 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 because of such factors as carpooling, 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, because you will be less likely to be involved in a 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 can result in higher premiums. For more, check out:
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.
Do you have tips for saving money on car insurance? Share with us in comments or on our Facebook page.
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