Did you know 95% of American households own cars? That’s right, most Americans drive nowadays. And while owning a car and driving around is certainly pleasurable, shopping for car insurance is not a fun or straightforward activity.
There are many factors that go into estimating the auto insurance premiums you end up paying. Understanding these factors will ensure you not only get adequate coverage but also save money while at it.
Car insurance is a necessity; if you drive, you must have it. But adequate car insurance doesn’t have to cost an arm and a leg. With the right information, you can insure your car adequately without breaking the bank.
And in the following article, we show you exactly how to save big on your auto insurance. Without further ado, let us start since there is a lot to learn.
How to Save on Your Car Insurance
We have outlined the following tips in no particular order. Pick and run with what works in your particular situation and always research and research some more before signing your car insurance policy. As you’d expect, you can always get a better deal if you play your cards right.
That said, here’s how to save on your car insurance.
Most drivers usually go with the first car insurance company they find and never bother to check other options for many years to come. But that’s the wrong approach to take, especially if you want to save some money on your car insurance.
Each insurance company is different, and they all use varying criteria when determining your car insurance premiums. As such, it pays to compare different companies before buying a car or when it’s time to renew your policy.
There are big disparities in car insurance premiums, and you can always get a cheaper quote for the same type and amount of coverage from a different company. All you have to is shop around before making a commitment.
There are many car insurance comparison tools online meaning you don’t have to leave the comfort of your house to compare quotes from different companies. According to Insurance Information Institute, it pays to compare at least three insurance companies.
Additionally, don’t shy from asking friends and family for recommendations based on their experiences. Do you due diligence and research your insurance company before committing. Remember when it comes to car insurance, cheapest is not always the best. Go with a reputable company that has a proven record of handling claims.
Raise Your Deductible
Many drivers usually end up paying more than is necessary in car insurance premiums simply because they lack the knowledge to make informed decisions. For instance, many drivers don’t understand how deductibles work, and how you can save on your car insurance with a higher deductible.
A deductible is the amount of money you pay out of pocket towards a collision or comprehensive claim. In most states, the deductible ranges from $250 to $1,000, but you can raise it as you desire depending on your budget.
A low deductible means you will pay higher car insurance premiums and vice versa. To save big money in the long run, it pays to raise your deductible provided you can afford should the worst happens. That means you should have enough money in your emergency fund to cover the cost in the event of an accident.
According to an article by Money Management International, you can save up to 7% on your car insurance premiums if you raise your deductible from $250 to $500, 9% if you raise the deductible from $500 to $1,000, and 16% if you raise your deductible from $500 to $2,000.
Over time, you can save a lot of money by raising your deductible. After all, if you can afford $2,000 to cover the cost of repairs, why would you go with a $100 deductible? That’s buying insurance you don’t need.
Ask for Discounts
When you go shopping, you are always on the lookout for discounts and offers. Heck, some of you are talented bargainers, heckling the seller until they bulge. But do you do the same thing with your car insurance company?
If you have no idea, many car insurance companies offer a wide range of discounts. Right this moment, you could qualify for a couple, but you wouldn’t know unless you ask. Ask your insurance agent about available discounts and you’ll be surprised.
Insurance companies offer discounts for save driving whereby they install a device on your car and track your driving habits. Other companies will offer you up to 39% off if your kid scores B average and above – and this discount is valid until your child is 25 years old.
According to an article by Zebra.com, there are more than 10 other types of discounts at your disposal, so check with your insurance company to see which offers you’re eligible for. Combining multiple discounts can help you lower your car insurance premiums significantly, saving you a lot of money over time.
Maintain a Good Credit Score
Car insurance carriers use several factors to determine your car insurance premiums. They range from where you live, your martial status, your driving habits, the type of car you drive, how much you drive, and purpose of the drive.
In most states, car insurance companies also use your credit history to determine the car insurance premiums you end up paying. If you have a poor credit history, expect to pay more than a drive with a good credit score.
And that’s because insurance firms view drivers with poor credit history as riskier to insure compared to drivers with good insurance credit scoring. Data from car insurance companies shows that drivers with poor credit histories tend to make more claims often than drivers with good credit history.
They reason that if you can manage your finances well (hence the good credit score), you will treat your car better and are less likely to cause an accident or file a claim. So, it pays to maintain a good credit history not only with car insurers but also other lenders.
Drive Less and Drive Safely
If you drive five miles per day, you will end up paying more in car insurance premiums than someone who drives, say, one mile per day. That’s because insurance providers use your mileage to determine the insurance rates you pay.
If you can use mass transit or carpool to work, you can reduce your car insurance premiums drastically. Car insurance companies typically reward drivers who drive less than 10,000 miles per year with discounts as well. They figure if you don’t drive around much, you’re less likely to be involved in an accident.
Driving safely will also net you some discounts, and a clean driving history will lower your premiums since you’re a low-risk customer. If you keeping racking up traffic tickets, however, you can only expect your premiums to go up. DUIs are practically frowned up by most insurance companies, and some firms will refuse to insure you altogether.
Bundle Your Insurance Policies
One more way to save on your car insurance is purchasing all of your insurance policies from the same insurance company. Insurance providers are willing to offer you a better deal if you’re bringing more business.
You can bundle your homeowner’s and car insurance policies, for instance, and enjoy discounts from your insurance provider. If you have multiple drivers in your household, you can add them to your policy instead of buying different policies for each vehicle.
Together with the discounts, it will be a lot easier to manage your finances when you’re working with a single company. Over time, you can combine your other insurance policies as well to enjoy bigger savings.
These are just some of the proven ways you can save on your car insurance. We hope the above tips will help you save hundreds of dollars on your car insurance.
What are some tips you use to save $$$ on insurance payments? Share ’em in the comments!