These days, every dollar counts. Saving some extra money anywhere you can is important. It’s especially true when it comes to car insurance. The premiums charged for auto insurance continue to rise (just like everything else). Finding a way to keep the monthly insurance payments low is always helpful. There are many steps you can take to lower your car insurance expenses. Here are 12 tips for saving money the next time you apply for (or renew) your car insurance.
Choose Your Car Wisely
It’s not a myth that the type of car you drive can influence your insurance rate. In fact, insurance rates are set largely based on the frequency and average cost of claims for each make and model. For example, four-wheel drive vehicles often costs more to insure because it costs much more to repair them in the event of a crash. Ditto for foreign luxury cars such as BMW and Mercedes, whose parts can be more difficult and expensive to order that most American-made vehicles.
Insurance companies even consider how often a particular vehicle is stolen. If you drive a car on the Most Often Stolen list, you’ll probably end up paying more for your insurance. The bottom line is that choosing a lower risk car, like a Toyota Prius, for example, can reduce the insurance premiums you pay right off the bat.
Bundle Your Home and Auto Insurance
Most insurance companies offer discounts as high as 15 percent if you bundle your home (or renters’) and automotive insurance. If your home and auto insurance are currently with different companies, consider moving one of them so they are bundled together. This can be done relatively quickly and painlessly. It’s an easy way to achieve some savings on both premiums you pay every month.
Some insurance companies also enable their customers to add other types of insurance to the bundle for improved discounts. Whether you want some life insurance and just have another toy to insure (boat, RV, snowmobile, etc), you can score even deeper discounts for the added business. If you have multiple insurance policies, try to get them together under a single company to yield the highest discount possible.
Ensure You Are Getting Multi-Vehicle and Age Savings
Most insurance companies offer multi-vehicle savings for customers that insure more than one car. They also provide discounts for people based on their age. Anyone who is 40-years-old and has been driving for nearly 25 years with a good driving record should not be paying as much for auto insurance as a 19-year-old who has only had their driver’s license for a few years.
However, it’s important that you ensure you’re getting these savings from your insurance company. Many people are surprised to learn that multi-vehicle savings and discounts based on experience are available from their insurance company. Insurance companies commonly keep these discounts quiet, so you may have to dig around their website or specifically ask for them. Never hesitate to ask your insurer if you are getting all the available savings and discounts that the company offers.
Add More Security Measures
Most modern vehicles come with a factory-installed alarm system. Insurance companies factor that in when calculating a policy. However, many insurance companies provide further savings to drivers who add additional security measures to their car, so consider going above and beyond what comes stock.
A second alarm system, immobilizer, GPS tracking, or a camera system can often lead to savings for car owners. Be sure to check with your insurance company to see if adding security features to your vehicle can further reduce the rates you are charged. You may be surprised by the answer. A lot of additional vehicle security systems can be purchased at normal retail outlets like Walmart for little money and easily installed by the driver. A small investment could save you lots in the long run.
Raise Your Deductible
The rule of thumb is that the higher your deductible is, the lower your monthly premium. For this reason, it may make sense to choose a $1,000 deductible rather than a $500 deductible. Some insurance companies let people go as high as $2,000 on the deductible. Having a higher deductible isn’t an issue as long as you can afford to pay out-of-pocket should something happen to your vehicle.
In any event, it never hurts to discuss the amount you could save from having a higher deductible with your insurance provider. If the savings on the monthly premiums are significant with a higher deductible, then it is definitely worth giving it some thought. Just don’t put yourself in a situation of financial emergency if something does happen to you car, and you can’t cover the deductible.
Cancel Unnecessary Coverages
Some insurance coverage is necessary, and some of it is not. For example, if your vehicle is damaged, will you need the insurance company to pay for a rental car or put you up in a hotel near work? Likely not, if you live close to family and friends that will lend you a hand (or a car).
Be sure that you’re not paying for these unnecessary coverage items on your auto insurance policy. Get the insurance company to provide an itemized break down of everything included in the policy and how much each item is costing you. Then eliminate any coverage that you don’t really need. You can even eliminate anything you’re simply unlikely to use in the event of an accident. You’d be surprised what’s hiding in the fine print, and what you are actually paying for each month.
Cancel Collision Coverage
If you’re driving a really old car, you should give serious thought to canceling the collision coverage. First of all, collision coverage is usually a significant portion of any insurance premium. Second, collision coverage likely isn’t needed if your car is more than 10 years old. The value of an older vehicle with lots of miles on it is extremely low. So low, in fact, that it may not be worth paying to repair the car in the event of a collision.
If the car gets into an accident, your insurance will likely just write it off. The smart thing would be to just buy a new car. As a rule, if the value of a car is worth the same *or less) than the deductible, you would be better off to cancel the collision coverage. Put those savings toward the purchase of another vehicle. Talk to your insurance company about whether this kind of move is possible. Not all insurers let their customers cancel collision coverage, especially if there is still anything owing on the car loan. However, it could be a smart decision if you drive an older car.
Don’t Drive Your Car to Work
How much your car is driven, and at what time of day, are major factors in your insurance rates. There’s a reason that every insurance application asks how many miles you drive to work every day. The best answer is “zero.”
If you drive your car to work every day in rush hour traffic, you’ll pay higher rates. It’s just the laws of probability working against you, since there are more accidents during morning and evening commnutes than any other time.
If you own a car, but don’t use it to get to work, make sure your insurance company knows. Whether you walk, take the bus, get dropped off, or carpool with a co-worker, not driving to work every day can provide big savings.
The way insurance companies look at it, the more you drive your car, the higher the likelihood that you will get into an accident. If you can afford to use public transit to get to and from work, it will save you money on your auto insurance. It will also keep the number of miles down that you put on your car each year, which is another thing that can influence the cost of insurance.
Take a Defensive Driving Course
This is especially helpful to teenagers who are inexperienced drivers. Or parents of those teenagers who are paying to insure their kids while they drive. Most insurance companies offer a discount to new drivers who have taken a driver’s training course. There are plenty to choose from, just make sure your insurance company recognizes whichever training you’re considering.
Discounts of 5-to-10 percent are often provided to young drivers that have taken defensive driving courses. Insurance companies also provide discounts for teens who have taken a driver’s education course at their high school. In general, younger drivers (particularly teenagers) are the most expensive segment of society to insure when it comes to driving. They are statistically the most likely demographic to get into an accident, whether through inexperience or recklessness. So anything you can do to lower the cost for a teen driver (or their paying parent) is important.
Shop Around
One of the best ways to save on auto insurance is to simply shop around. You should get quotes from three or four different insurers before making a decision. This allows you to compare and contrast, then choose the most affordable or suitable insurance available. Trust us, not all auto insurance policies are the same.
Significant savings can be found if you are patient and take the time to shop around. Best of all, you can now comparison shop from the comfort of home. Almost every major insurer offers free online quotes on their website, eliminating the need to make phone calls or schedule meetings. Taking the time to check various insurance rates online will ensure that you’re getting the best deal possible.
Purchase Online
Most insurance companies now prefer that you buy your insurance online. It simply costs them much less, which can make their pricing more competitive. Most insurers frown on the classic insurance broker model, since they have to pay the broker for the business they bring their way. Insurers are so committed to having you purchase through their website, that they offer discounted rates if you buy online.
This is another small thing that you can do to save money on monthly auto insurance premiums. All the savings add up. The reality is that it’s often easier (and more convenient) to buy auto insurance through the internet than it is in-person or over the phone. When looking online for the best possible quote, take note of the companies that offer a discount if you buy via their website.
Become a Better Driver
Nothing impacts the amount you pay for car insurance more than your personal driving record. Keeping a clean driving record is the best way to keep those premiums down. Tickets and convictions will negatively impact your insurance for up to three years. Accidents can affect rates for six years or longer.
In this situation, it literally to be as careful as possible on the roads. In the end, nobody pays higher insurance premiums than unsafe drivers. Making sure you drive safe each and every day is really the best way to keep your insurance rates as low as possible. The longer you have a clean driving record, the lower and lower your insurance costs can be. So drive safe, be careful, and save money in the process.
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