Auto insurance is one of those necessary expenses in life many people don’t pay much attention to. Once you purchase your auto insurance policy inertia sets in and it is easier to simply renew your policy every 6-12 months than it is to shop for better insurance rates. But you may be able to save 30% or more on your annual bill by shopping for cheaper car insurance rates, making it well worth the effort.
Just because you’re required to own auto insurance doesn’t mean that your auto insurance policy has to break has to break your bank every month. There are several ways that you can lower your car insurance policy.
I know that shopping for auto insurance can be a long and very confusing process. There are dozens of different kinds of coverage and a bunch of terms that you don’t understand. That’s why I am here to help. This article should help you get the car insurance that you need at the lowest possible rate.
How to Shop for Affordable Auto Insurance
The first thing you need to do is grab a copy of your current car insurance policy and write down your coverage and rates. Next, get car insurance rate quotes from other automobile insurance companies. You can call or visit an independent insurance agent, visit individual websites, and check online comparison sites for multiple auto insurance quotes. Be sure to check the major companies as well as some of the smaller companies – you never know which company will have the best rates until you get a quote. It’s also a good idea to read customer reviews to make sure you are going with a reputable company – the cheapest car insurance doesn’t do you any good if you can’t file a claim.
Be sure to double check your current insurance policy when making comparisons between auto insurance companies to ensure you are comparing apples to apples because a small difference in the language of the policy can have a big influence on the price. Here is a tutorial for comparing auto insurance policies. Follow those tips to make sure you are looking at the same features.
If you’ve held your auto insurance plan for several years, then it’s quite possible that you’re paying way too much for your life insurance coverage. Every year, there are dozens of new insurance companies that hit the market, and the insurance products are constantly changing. Additionally, your insurance needs could have changed since you’ve purchased the coverage.
Get Multiple Auto Insurance Quotes
Ideally you want to compare 3-5 car insurance quotes before deciding to switch companies. The following list is a good place to start. Some of these websites in this list are insurance companies and a few are insurance aggregators that will give you multiple quotes from various auto insurance companies. There may be some overlap if you get quotes from more than one aggregator, but you will need multiple quotes to do a car insurance comparison anyway.
Get new quotes for major life events. Your insurance rates may drop when you turn age 25, get married, move to another city or state, have a shorter commute, change jobs (certain occupations may qualify for discounts), or for other major life events. It is always a good idea to get a new car insurance quote for any of these events.
How to Lower Your Auto Insurance Premiums
Mitigate your risk profile
Your insurance rates are often based on the perceived risk you pose. Factors such as your age, marital status, how many miles you drive, where you live, your credit score, driving record, claims history, auto insurance coverage history, occupation, and other factors can affect your auto insurance rates.
For example, most insurance companies are going to give you a discount on your rates if you don’t do a lot of driving every mile. Every company is going to have a different limit for their low mileage discount. Most companies have their threshold around 8,000 – 10,000 miles. If you take the bus, or you get to carpool to work every day, then it could save you hundreds of dollars every year on your car insurance policy.
Increase your deductible and drop unnecessary coverage.
Raising your deductible can save you up to 30% on your auto insurance premiums. Increase your deductible to $500 or $1,000 if you can afford that much for repairs. With an older car, drop collision and comprehensive coverage when the car is worth less than 10 times what you pay for the insurance (check Kelly Blue Book for used vehicle values). You can also consider dropping comprehensive coverage if you have fully paid any outstanding loans or if you can afford repairs if you are at fault.
In most cases, policyholders have too much coverage on their car. While the extra protection is nice, it’s going to be very expensive. If you’re looking to save money, cutting out some of that coverage.
Maintain a good driving record.
One ticket or accident may not increase your auto insurance payment, but then again, it may. Your best bet is not to find out! Drive defensively and observe traffic laws to avoid traffic tickets and possible increases to your insurance premiums. Defensive driving is not only safer, but you will probably save money on gas and maintenance costs as well. Win-win situation.
This is one of the best ways to save money on your auto insurance coverage. The more traffic violations or accidents that you have on your record, the more that you’re going to pay for your coverage. From the standpoint of the auto insurance company, they are going to try and determine how much risk that you are to pay for your life insurance.
If you want to save money, it’s important that you slow down on the way to work every morning. Taking a little longer to get to work could save you thousands of dollars on your auto insurance policy. Not only will you save money on your auto insurance, but you’ll also not have to pay any speeding tickets. That’s hundreds of dollars of savings right there.
Pay your premium up front.
Many companies offer a discount on your auto insurance premiums if you are willing to pay your entire premium in advance instead of paying each month. Be sure to ask your company if they offer this type of auto insurance discount - you could save up to 10% or more.
Not only will you save money, but you also don’t have to worry about making payments every month. If you want to save money, make one lump payment. Most insurance companies will give you a decent discount. Not only that, but most companies are going to charge a fee every time that you make a payment, and you’ll only have to pay that fee once.
Get good grades.
Many auto insurance companies offer discounts of 10-15% for students who maintain good grades. These discounts are often available for high school and college students. Check with your insurance agency for more details.
Join an association or club.
Many large associations and clubs are able to negotiate group discounts for auto insurance. Examples include AARP, Costco, AAA, military organizations, trade groups, unions, and more.
The type of vehicle affects insurance rates.
Vehicles with higher safety ratings, lower maintenance costs, or lower purchase prices may be cheaper to insure than expensive vehicles or those with low safety ratings. Ask about discounts for day time running lights, multiple airbags, anti-lock breaks, and other safety features. It's a good idea to get an auto insurance quote when shopping for new cars so you have an idea of how much it will cost to insure your new vehicle.
Combine insurance policies under one roof
Some insurance companies will give you a multi-line discount when you have multiple insurance policies through their company. This can include a multiple car discount, but also for combining other insurance policies such as your homeowner's insurance policy, renter's insurance, etc.
Other discounts to ask about:
Defensive driving discounts, low annual mileage discounts, no accidents or moving violations, policy renewal discounts, etc.
Car Insurance is Required; Don't Pay Too Much
You now have the information you need to search for lower auto insurance rates. Take the time to run some quotes and you may save yourself a couple hundred dollars per year - money that can certainly be put to better use.
Before you purchase car insurance, it’s important you understand the different types of auto insurance. Not only do you need to find the cheapest policy, but you also need to ensure you have the perfect plan.
Not having proper coverage could leave you with massive repair bills or fees that you have to pay.
There are 5 types of coverage you should take note of when you’re looking for the best possible plan.
The first type of coverage is liability coverage. This type of insurance protection will pay for any cost of repairing property damage or medical bills if you’re at fault. This is the most basic form of auto insurance, and is usually required in all states.
One way to lower your auto insurance premiums is to drop full coverage auto insurance and only buy liability insurance. There are pros and cons to dropping full coverage, so it's a good idea to read up on those details before trying to save a buck. You may be required to maintain full coverage if you still have a car loan. And it may be a good idea to keep full coverage if you don't have enough money to self-insure (repair or replace your car if something happens to it).
The next type is collision coverage, which pays for repairs costs if you’re in an accident. If your car is totaled, which means the cost of repairs is more than the value of the care, the plan will pay for the value of your car. As we mentioned, depending on the age of your car, collision coverage might be a waste of money. If you have a newer car which is expensive, then you should consider purchasing this type of coverage.
In some cases, you might be required to have collision coverage, regardless.
Personal Injury Protection
Third, personal injury protection (pip) is good for paying for any hospital bills. If you’re in an accident, then those medical bills and health care could cost you thousands and thousands of dollars. That’s where your PIP coverage comes in. With these type of coverage, any medical bills for you and your passengers will be paid for, regardless of who is at fault for the accident.
Underinsured / Uninsured Motorist Protection
Next, underinsured/uninsured motorist protection can be one of the most valuable types of coverage. While every state requires that you to have auto insurance, there are still millions of Americans that don’t have auto insurance. If you were to be an accident and the other driver didn’t have auto insurance, then you would be responsible for paying for all of those bills. That’s where your underinsurance/uninsured insurance coverage comes in. One of the best parts of these type of protection is that it’s pretty cheap to add to your coverage.
Comprehensive Auto Coverage
The last type of auto insurance (and the most well-known) is comprehensive. Comprehensive coverage will pay for your repairs for damage done to your car that isn’t related to a covered accident. If something happens to your car, like hitting a dear, or a tree falls on your car, then your standard auto insurance plan won’t pay for those damages. Comprehensive coverage is great, if you can afford it.
It’s excellent to have the maximum amount of coverage, but it’s going to be much more expensive than a standard plan.
Questions? Ask away in the comments below.