11 Ways to Save on Car Insurance
Consider which car you drive
When shopping for insurance, which car you drive has as much of an effect on your insurance premium as how you drive.
It might be obvious that it’s more expensive to insure a Porsche 911 than it is to insure a Hyundai Sonata. However, there’s also a difference in expense between luxury brands like Mercedes and Audi and more affordable brands like Honda or Subaru.
You can estimate the cost of insurance before you even buy a car. Once you have your new car narrowed down to a few potential models, use online tools to check out what your rates would be for each car. This might influence your decision—and save you a few dollars, too.
Change your deductible
Although it would be amazing to be able to know about and prepare for when things go wrong, most of us don’t have that ability. This is one of the reasons insurance is necessary: It protects us financially when things go wrong.
When setting up your insurance policy, take into account how much you can afford to lose in terms of repairs. If you’re able to cover lower deductibles with ease, consider raising it. One study even found that you can save about 9% by upping your deductible from $500 to $1,000.
If you can afford it, consider raising your deductible. Otherwise, you’re paying for unnecessary coverage.
Combine multiple policies
If you have more than one insurance policy, you might be able to save by combining them. One major benefit is that it simplifies your finances to have them under one carrier. It’s certainly easier to work with one insurance agency than multiple.
The other major benefit is that some companies will offer discounts for bundling policies. If you have home and auto insurance, shop around to see where you could save.
On the same note, it’s important to get multiple quotes. Your rates could vary based on provider, and the difference might be bigger than you would think. One study found a variation of nearly $1,000 among providers for the same policy.
There are a variety of tools available online to help you compare rates and make sure you’re getting the best possible rates.
Claim the discounts you deserve
Most auto insurance companies will offer discounts if you meet certain criteria. Some common discounts give drivers bonuses for
- Accident-free driving
- Organization affinity
- Being a good student
- Combining multiple policies
- Insuring multiple cars
- Driving newer vehicles (less than 5 years old)
- Receiving paperless statements
- Safe driving
These are some common discounts; be sure to check with your agent to see if you qualify for additional discounts.
Protect your credit
Most states use your credit history when setting your premiums. Studies have demonstrated correlation between how people handle their finances and how they handle claims history. Drivers with good or poor credit could pay anywhere from $70 to $1,500 more in insurance premiums than drivers with excellent credit, depending on the state.
However, insurance providers in California, Hawaii, and Massachusetts are not allowed to consider your credit score as a factor when setting rates.
If your car is an older model, you probably don’t need to maintain the same level of coverage as you would on a newer car.
The need to insure against damage to a car decreases as the car’s value depreciates. In some cases, the premium you would pay on comprehensive and collision coverage is higher than the value of the car itself.
The value of the car is the most you can be reimbursed through comprehensive and collision insurance, so if the value of your car is low, consider whether you need to add this coverage to your policy.
Pay per mile
Some insurers offer the option to pay for insurance by the mile. This isn’t available in every state, but if you don’t drive a lot, this could reduce the amount you pay for insurance.
Make payments in full
Paying for insurance at one time in an annual or semiannual payment can save you money. It’s significantly less expensive in the short term to pay month-to-month. However, if you pay in full you’ll likely save a percentage of what you would pay after monthly payments are totaled.
Compare prices every year
It’s easy to find a policy and stick with it, but you could be missing out on bigger discounts if you don’t stay up-to-date on which policies are available. Comparing your rates is easy to do and takes a few minutes online.
Drive safer, and smarter
It’s common knowledge that avoiding accidents and traffic violations helps you keep your premiums low. You can also further reduce your premiums by allowing certain insurance providers to monitor your driving.
Some insurance companies will give you a device that plugs into your car and keeps track of habits like stopping, idle time, and daytime versus nighttime driving. Based on how your insurance company interprets the results, you could see your premium drop.