Having a car that’s insured and well-maintained can be a costly aspect of your life. More precisely, drivers pay much more for car policies than for the overall maintenance and gas consumption. Luckily, there are some insurance costs that you can diminish or entirely drop.
Above all, you must understand that various factors influence your premium rates. These include your job, age, credit history, and traffic accident record. Though some specific elements are not under your control, there’s no need to worry. ProMoneySavings is here to share the best tips on how to lower your annual vehicle premiums.
Table of Contents
- 1 Review Your Policy Before It Expires
- 2 Increase Your Deductible
- 3 Be A Safe Driver
- 4 Maintain Good Credit History
- 5 Shop Around
- 6 Combine Policies
- 7 Find Special Car Insurance Discounts
- 8 Drop Car Insurance You Don’t Need
- 9 Drive An Older And Cheaper Vehicle
- 10 Drive Less For Low Mileage Discounts
- 11 Install Safety Features
- 12 Find A Local Car Insurance Agent
- 13 Consider Group Insurance
- 14 Final Thoughts
- 15 FAQ
Review Your Policy Before It Expires
When it comes to arranging a new policy, never procrastinate! Indeed, some companies will offer you a further discount if you purchase insurance a month or so before your previous one expires. Of course, paying upfront means no interest on your repayments and significant savings. If you can’t afford to pay in a lump sum, consider a 0% purchase credit card that’ll waive additional monthly fees.
Get the habit of reviewing your car policy every year. Today, you can even make the comparison online, and it won’t take you more than half an hour. Comparing rates is a smart move that saves you money each year and doesn’t harm your credit rating. Check this article for more insight into cutting car expenses ten simple ways to reduce your vehicle costs.
Increase Your Deductible
For all of you with a solid financial shape and a well-founded emergency fund, raising the deductibles is a smart saving hack. Applying the higher deductibles strategy will directly decrease your annual premiums and still cover your vehicle in case of an accident.
Most drivers arrange a deductible of about $500. However, if you increase that figure to $1000, your policy might cost 40% less in some cases. What does this imply for you and the insurance company in case of a claim?
Well, in case you suffer a major accident and need $3,000 for repairs, you’ll cover $1,000 of the cost. Only then will the insurance company step in and pay the rest of the money. However, if you don’t suffer any crush throughout the year, you’ll benefit from the lower premium. So, if you’re ready to pay an increased sum in case of a collision, go for it. At least, you can always set aside the money difference in a repair fund.
Luckily, deductibles don’t impact liability insurance in any way. Meaning, if someone files a claim against your insurance for a collision, you don’t pay anything. Anyways, note that you might pay higher amounts when you renew the policy after an accident.
Be A Safe Driver
Safe driving is your golden ticket to getting a better price each year. Insurers carefully examine your driving record and then base the premiums on the likelihood to get into accidents. So, if you have had several collisions in the past few years, expect a higher rate. Higher rates are also related to traffic violations such as speeding tickets, running red lights, etc.
Any violation would signal to the insurer that you’re a risky driver who quickly gets into trouble. Even worse, a severe traffic breach can keep the premiums high for several consecutive years. The same goes for accidents caused by your fault.
Consider the following tips to avoid penalties and drive safely:
- Drive sober. Never sit behind the wheel even when you had only a drink or two. If you get caught, penalties are severe, and your premium will shoot way up. Even worse, insurers may refuse to renew your policy.
- No distractions. Avoid eating, drinking, or changing CDs while driving at all costs. Also, speaking or texting can be a huge distraction with fatal consequences. Even talking to passengers in the car can be dangerous if you’re in heavy traffic.
- Limit your speed. Not that you haven’t heard of this, but if you tend to speed, do it within the allowed range. In short, don’t exceed the prescribed speed limit by more than 15 mph. Excessive speeding tickets will cost you an arm and a leg and will doom your driving report.
Being a responsible driver is a sure way to lower your car coverage costs.
Maintain Good Credit History
Did you think your credit history is in no way related to auto insurance? Well, you were utterly wrong, and your past credit endeavors will haunt you even here. Most insurance carriers check your credit history to decide on the premium price. They do so because there is a clear correlation between your claims history and how you manage your finances.
In states like Virginia, evidence shows that bad credit holders pay as much as $1,500 more than drivers with excellent scores. This figure is only related to annual premiums, so imagine the savings over several years if you maintain a good credit score.
We suggest you check your credit regularly and dispute any items that don’t belong to you. You don’t want insurers to see you like someone prone to get involved in car accidents. The more responsible life you lead, the less likely you seem to file claims.
Being frugal with auto insurance means that you first must do your homework and explore the market. We understand that shopping around for a cheaper policy isn’t the coolest thing in the world, but it’s worthwhile. Don’t be part of over a third of Americans who have never looked for less expensive premiums. This reluctance is because they either hate the paperwork or don’t have time to shop around.
Don’t forget to compare car insurance rates as these alter frequently, and yearly checkups are highly desirable. Gather at least three different quotes and opt for a financially stable company. Pay attention that the price should not always be the determining factor. Satisfied customers and fast response times in case of a claim usually point to a professional insurer.
Moreover, the number of independent agents that can do the work for you today is vast. In short, insurance agents will seek for the best coverage on the market at the most reasonable price on your behalf. For a fraction of the cost, you can pocket hundreds of dollars. Doesn’t sound bad, right?
The majority of policy providers offer a wide range of products in the insurance field. Apart from auto, you can also insure your home, boat, or even purchase life insurance. Hence, if you’re a loyal customer of a specific insurer for many years and buy multiple products, savings are guaranteed.
To save more, insure all the vehicles in the household with one company. Moreover, consider buying the homeowner’s policy and other policies you might need with the same insurer. If you bundle several insurance types, you have the background to seek a price break even if the company doesn’t offer any.
When you buy policies from different carriers, the chances of getting a lower rate are almost non-existent. Yet, always check the individual prices or coverage with the same and various providers. Comparing the regular costs with the multi-policy discount will tell you the price difference and help you make a reasonable financial decision.
Find Special Car Insurance Discounts
When the time for policy renewal comes, have a word with your car insurance agent. Ask whether you qualify for any special discounts. Such discounts are not a rare sight and depend on your insurer. Generally, you can come across the following types of car premium discounts:
- Good student discounts. Overall, insurers tend to charge younger drivers more as they tend to drive recklessly. Yet, there might be an exception to this unwritten rule. College or university students with grade average A or B can get a discounted price between 5% and 15%. The logic behind this consideration is because excellent students drive more carefully and avoid accidents.
- Older driver discounts. Some insurance companies can grant a break on the price to drivers over the age of 55. To do so, senior drivers must be good drivers and take a driver safety course. Once completed, they can qualify for a policy discount between 5% and 15%.
- Lump-sum discounts. Understandably, monthly payments are budget-friendly and convenient, but not in the long run. Insurers charge a processing fee for every payment, which is about $5. Cumulatively, you can save up to $60 a year if you pay the overall insurance bill upfront.
Taking good care of your vehicle is another way to show car insurance companies that you are a responsible owner. This can also get you discounts on your coverage.
Drop Car Insurance You Don’t Need
Why would you sign up and pay excessive amounts of money for an insurance policy that you don’t need at all? Hence, it’s crucial to purchase the right coverage that matches the car’s condition and the specific circumstances if you want to economize. Before anything, remember that the only mandatory auto insurance stipulated by law is the liability one.
Apart from the obligatory one that pays for injuries to the driver and passengers, any additional coverage can be expensive. Indeed, there’s no need to pay a double price for collision insurance if you’re driving an older vehicle. Comprehensive coverage is also a hefty choice for an old clunker.
Be careful of extra add-ons that most agents try to attach to your policy and raise your overall cost. Think about any additional riders twice and whether they’re worth it. Actually, why don’t you drop any extra coverage and save the money in a repair fund? Later, you can use this fund for repairs or a down-payment for a new car when the old one brokes down.
Drive An Older And Cheaper Vehicle
Choosing the right car can significantly influence the policy rates you get offered. After all, prices don’t always depend on the drivers, but on the vehicle they drive. Insurance companies charge more for specific car makes based on several factors:
- Price. If the automobile you’re driving is less expensive, that means your premium will be lower. In a word, cheaper cars cost less to repair and replace.
- Safety record. The record depends on the model and generally favors minivans. Larger family cars get driven at average speeds and undergo less severe damages if involved in a crash. Conversely, sports cars are riskier for insurers who believe that people that own them drive faster.
- Repair costs. Overall, foreign cars require more expensive parts to get imported from abroad. The issue with procuring spare parts urges insurers to charge higher rates for particular car brands.
- Possibility of theft. Thieves often target cars whose parts are easier to sell and highly sought on the black market. Also, they look for vehicles that are less complex to break into and steal.
Drive Less For Low Mileage Discounts
Naturally, the less you’re on the roads exploiting your car, the lower the chances for an accident. In this case, you can consider usage-based insurance or even a pay-per-mile program. Most insurers offer such options for policies, but you must first install a tracking device that records your miles. Such information gets transmitted to the insurance company, which later calculates your rates.
Many programs will award you with a discount for low mileage and safe driving habits. Check the offers of insurers, such as Metromile, Allstate, and Mile Auto, which sell pay-per-mile coverage. Note that you’ll also have to pay a base rate apart from the per-mile rate.
Alternatively, companies like Progressive, Safeco, and State Farm track your driving habits as part of usage-based insurance programs. If you’re not speeding nor hard braking, you’ll get a discount for safe driving. Last, if you carpool to work, you might be eligible for reduced rates, too. The ultimate benefits of driving less include lower gas consumption and reduced risk of accidents.
Install Safety Features
Having few safety features in your car implies that you’re less prone to be part of an accident. Also, safety devices prevent the driver and passengers from getting seriously injured. Insurers appreciate these aspects and hope that you’ll eventually file smaller claims.
Safety features such as automatic seat belts, anti-lock brakes, and airbags can earn you a cheaper policy. Moreover, if you happen to have an anti-theft system or an alarm, expect further price slashing. Anyway, these types of discounts are not significant and cap at 5% of the total cost.
Of course, newer vehicles come with in-built safety devices, but they are also more expensive to replace. Therefore, it’s better to install additional safety systems in an older car if you want to decrease your insurance premium. Check whether your insurer is aware of all the devices in your vehicle by providing your VIN to them.
Find A Local Car Insurance Agent
Striking deals with an independent insurance agent can make the whole process easier. In case you’re shopping around for better rates, contact agents like Endorsed Local Provider (ELP). Their representatives will do the job for you and look for the best coverage at the most affordable price. Indeed, this is an ideal solution for your worries as it both saves you time and money.
On the one hand, a local agent will charge you a fee that’ll probably increase the overall monthly cost. On the other hand, agents will give you a better insight into available policies and your insurance options. Eventually, it’s up to you to decide whether you’ll go through an independent or captive agent or directly with an insurance company.
Consider Group Insurance
Most people arrange their health insurance through their employer, but has it occurred to you that the same goes for your car? Well, this is viable and can cost you less than going the usual way. The rationale behind this is that group insurance plans have lower rates since they cover a large group. In the eyes of insurers, covering a lot of individuals requires more resources than a group.
Group policies entail other perks, too. For instance, some plans include discounts on car rentals, towing services, and repairs, as well as parking in specific garages. What is more, you can arrange with your employer for the premiums to get deducted directly from your paycheck. So, the more employees a company has, the better bargains you can strike with insurance providers.
The only downside of collective policies is that you don’t get to choose the insurer. The same is true for all members of the group plan. Moreover, if you quit or lose your job, expect your policy to end with your last paycheck.
You can arrange group insurance by having a word with the human resources manager and checking what deals are available. If you aren’t eligible for such group insurance, try to obtain it through professional organizations, hobby groups, or alumni associations.
The chances are the prices of car policies will continue to rise. Yet, there are things in your power that you can do to keep rates low. Bundling policies, shopping around, and driving safely are, to name a few. These suggestions will help you steer your vehicle in the right direction for less money.
What about you? Do you pay over the moon for insurance each year? Have you been proactive and taken steps to save on your auto premium? If you have, share your recent experiences in the comment box below. Also, don’t forget to sign up for our ProMoneySavings Newsletter for more tips on smart budgeting.
How can you lower your car insurance?
Snagging cheaper insurance doesn’t have to be a pipe dream. Indeed, you can apply several strategies that’ll help you reach the set target. To do so, shop around and compare the prices of individual and bundled policies on the market. Take advantage of discounts such as low mileage, no accident record, students with good grades, and older drivers. Last, raise your deductibles or if you have an older vehicle, reduce the coverage.
When should I drop full coverage on my car?
Once you realize the policy’s cost equals or exceeds the potential payout in case of an accident, drop it immediately. Another good reference point for eliminating coverage is the 10% rule. Meaning, if the annual premium equals 10% of your vehicle’s total value, there is no point in paying for insurance. Finally, if the car is old or has high mileage, it’s best to drop the full coverage to avoid being over-insured.
Do you save money paying insurance every six months?
Making monthly payments increases the amount you eventually have to pay for insurance. Meaning, companies charge a small fee to process your regular payments each month. Therefore, if you can afford it, settle the insurance expenses every six months. Even better, you could save a more significant portion if you pay the entire policy cost at once and upfront. This approach is a real money saver for people who want to economize in every aspect of their lives.
How long should I purchase full coverage for a new car?
Full coverage policies include comprehensive insurance or damage caused by weather, vandalism, theft, or animal impacts. They also entail collision coverage if your car hits another car, a stationary object, or you’re subject to a hit-and-run. Such encompassing premiums cost $2,399 on average and are double the price of policies that cover the state minimum requirements. All in all, consider full insurance as long as you deem it necessary and can afford to pay for it.