How to Save Money on Auto Insurance
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As if owning a car isn’t already expensive enough, you also have to have auto insurance. It’s the law! Rates can vary dramatically from one state to another, and from one driver to another. But there are ways to save money on auto insurance, and they’re even more important if you’re in a high-cost policy.
Try a couple of the strategies below and see how you can save money on auto insurance.
Shop Around for a Policy
This may be the single best way to save money on auto insurance. There’s a big difference in premium rates between auto insurers. That happens because one company may be looking to reduce their exposure in your state – and charge higher rates – while another is looking to expand their business in your state, and charges lower rates.
Be sure to go with a company that offers the lowest premiums for identical coverage. Be very careful that the company that charges less isn’t cutting out some important coverage types. For example, a company that’s providing lower dollar amounts of coverage will usually have lower premiums. But that will leave you more exposed in the event of an accident that’s your fault.
Shop for a New Policy Every Year or Two
The top auto insurance companies are aware that people don’t like shopping for coverage. For that reason, they’ll increase your premium with the expectation that you won’t leave. Companies also increase premiums because they may have a substantial increase in the number of claims paid in your state.
The point is, you should plan to shop for a new policy every year or two. Though the company you’re with now may have been the cheapest when you got the policy, there may be other companies offering an even lower price on similar policies now. You owe it to yourself to at least investigate the options.
Increase Your Deductible
Deductibles are most typically set at $500 because it’s a manageable amount in the event of a claim. But by increasing your deductible to $1,000 or more, you can shave a good bit off your premium.
But it’s important to realize that by increasing your deductible you’re also increasing your exposure if you’re in an at-fault accident. But you can lower that risk by making sure you have an amount in a savings account that will cover the deductible if that happens. In that way, you’ll save money on your premium, without putting yourself in a financial hole if you have to come up with a higher deductible.
Ask About Discounts
Auto insurance policies have all kinds of discounts that will lower your premium. But not all insurance companies will tell you about all the discounts that are available. That’s why you need to ask, and even see if there’s a webpage on the company site that lists all the available discounts.
Examples include discounts for:
- Low mileage
- Good student
- Multiple drivers or vehicles on the same policy
- Safety equipment on your vehicle
- Good driver (accident-free for at least three to five years)
- Affiliation with certain organizations or employers
That’s just a short list, since each company has its own discount offers. Be sure you aren’t overlooking any.
Maintain a Good Driving Record
If you haven’t had any accidents or moving violations within the past three years, you’ve already got this one in the bag. But if you do, there’s still something you can do to improve your record.
Many auto insurance companies will charge a lower premium for drivers with violations or accidents if they complete a safe driver course.
While that may sound like a perfect solution, it isn’t always (but it’s always worth a try!). Before signing up for a safe driver course, make sure it’s one approved by the insurance company. If not, they won’t recognize it. Also be sure that the cost of the course (yes, you will pay for it) won’t be higher than the amount you’re going to save on your premium.
And if all else fails, be especially careful to maintain a good driving record for at least three years. At that point, you’ll get the benefit of the good driving record on your premium, without having to do anything extra.
Bundle Your Auto Policy with Other Insurance Policies
Insurance companies will often provide a discount of as much as 10% or 15% on your auto insurance if you bundle it with other types of coverage. This can include life insurance and especially renter’s or homeowners insurance.
However, this strategy is not without disadvantages. First, it will force you to change an existing life insurance or homeowner’s or renter’s policy for a new one. Second, while you may save money on the auto insurance, you may pay more for the bundled policy. And third, it causes a complication when the day comes – and it will – that you want to change your auto insurance policy. When that day comes, you may need to change two or three policies. And that can get complicated.
But it’s at least equally possible none of those negative scenarios will play out, and you’ll save money on the bundle.
By using any one or several of these strategies, you can save money on auto insurance, and no small amount at that.