How to Save on Car Insurance
Car insurance is a necessary expense that can take up a lot of room in your budget. While peace of mind is priceless, the cost of a good car insurance policy can be a different story. When it comes to car insurance shopping, most vehicle owners can relate to feeling a bit conflicted. On the one hand, you want to make sure that you have good coverage in the event of an accident. On the other hand, it would be nice to save money on car insurance and have some extra funds each month.
If you are wondering what are some ways to save on car insurance, you have come to the right place! There are several ways that you can reduce your premium costs and still have excellent coverage. So, hop into the driver’s seat and cruise these seven tips to save on car insurance.
Good credit goes a long way.
Before you begin the process of car insurance shopping, it’s a good idea to check your credit score first. Insurers in most states will take your credit history into account when they calculate the cost of your policy, so establishing good credit is a great way to save on car insurance. If you live in California, Hawaii, or Massachusetts, you’re off the hook; insurance companies in these states are not allowed to set insurance rates based on your credit history.
If your credit isn’t so hot, don’t worry, there are a few easy steps you can take to improve your score. Be diligent about making your payments on time, do not open any new lines of credit unless absolutely necessary, and make sure to keep the balances on your current accounts below your credit limit.
Compare prices from different insurers.
One of the most effective ways to save money on car insurance is by comparing prices of different providers in your area. Several factors can affect car insurance rates, like your age, your driving history, and even where you live. Each insurance provider will apply your information differently, so car insurance rates can vary by hundreds of dollars each month and rates for the same company can differ from state to state.
To make sure you are getting the best deal possible, collect quotes from different types of insurers, like larger commercial providers, local businesses, and companies that sell direct to consumers online or through an app, like esurance. This way, you can see all of your options before you commit to a policy. A good tip to make sure that you continue to save money on car insurance is to repeat this process and shop around each time your policy is up for renewal.
Keep in mind that the cheapest option does not automatically equal the best option. Of course, saving money on car insurance is important, but remember that you want to go with a provider that you trust and one that will take excellent care of you in the event of an accident. An important part of car insurance shopping is striking a good balance between saving money on car insurance and finding a dependable provider.
Ask about car insurance discounts.
Car insurance providers offer all kinds of discounts and savings opportunities. One of the best tips to save on car insurance is to ask your agent about potential discounts and review each one to see what you are eligible for. Even if you already have car insurance discounts on your policy, there could always be more deals available to you. To give you some ideas, here are five common discounts that can save you money on car insurance:
- Bundling – Combining two or more types of insurance, like auto and homeowners insurance, into one policy can reduce your monthly premium price by five to ten percent.
- Automatic payments/ paperless billing – Setting your monthly payments to auto draft or signing up for paperless billing is a great way to save money on car insurance and help the environment! Win-win!
- Organizations and memberships – If you are a member of an affiliated organization, like an alumni association or a professional group, check to see if your member benefits include discounts on car insurance.
- Good grades – If you have a young driver on your policy, their hard work could pay off in more ways than one, such as with car insurance discounts for keeping their grades up.
- Annual payments – Paying your car insurance premiums annually or bi-annually, rather than monthly, can save you up to ten percent or more.
Just remember, when you are car insurance shopping, always consider the overall cost of your policy. It may be tempting to go with the company that offers the most discounts, but with high premium prices, you may end up paying more than a company with low premiums and fewer discounts.
Safe driving can lead to big car insurance savings.
Safe driving drastically reduces the chance that you will need to file a claim with your car insurance company. So, many insurers offer ways to save on car insurance just for being a responsible driver!
Consider signing up for a safe driver program that uses telematics to monitor your speed, braking, and other driving habits. All you have to do is install a small device in your car, drive carefully, and enjoy the savings! For example, with Right Track® by Liberty Mutual, you could save between five and thirty percent just for completing your morning commute safely.
Keeping your driving record clear of speeding tickets, traffic violations, and of course, accidents will also help keep your premiums down. If you do happen to get a negative mark on your driving record, you may be able to get the violation dismissed by taking a defensive driving course.
Only pay for what you need.
If you drive an older model vehicle, or just don’t use your car very much, it’s a good idea to think about what are some ways you can save on car insurance by dropping coverage that you don’t need.
Based on the value of your car, you could save quite a bit of money by eliminating collision and comprehensive coverage, which can cost twice as much as basic liability insurance. So, if your car is worth less than what you currently pay in yearly premiums, sticking with the basics is well worth the savings. It’s also wise to look at each line of your policy and evaluate how to save on car insurance by cutting extra services, like roadside assistance. You can even put the money that you save towards purchasing a new car in the future!
Another great tip to save on car insurance is to go with an insurer that offers mileage-based coverage. If you utilize public transit or enjoy a nice walk to work and don’t use your car much, you may be paying more for car insurance than you need to. Ask your agent about mileage thresholds or pay-per-mile programs that track how much you drive to help you save money on car insurance.
Raise your deductible.
Your deductible for collision and comprehensive insurance is the amount that you are responsible for paying when you file a claim. For example, with a $500 deductible, if your car needs repairs that cost $2,000, you pay $500, and the insurance company will pay $1500. Raising your deductible is an easy way to save on car insurance and significantly reduce your premium costs. Just be sure that you have enough set aside to cover your deductible in case you ever need to file a claim.
Research insurance costs before you buy a new car.
If you’re in the market for a new vehicle, don’t forget to research insurance prices for the car that you have in mind. Car insurance rates are calculated based on certain factors, like how much repairs will cost, the likelihood of theft, and claims statistics for the same model. Some car insurance companies will even offer discounts for certain safety features or eco-friendly hybrid cars. Keep in mind that vehicles with a good safety record and a moderate price tag, like compact cars and small SUVs, will cost less to insure than a big pickup truck or expensive sports car.
Now that you know how to save money on car insurance, here are some ideas on what you can do with your extra funds!