As a car owner, paying for insurance every month can put a serious dent in your budget.
Many drivers simply accept their premium amount as an unchangeable fact of life and continue paying more than necessary.
However, there are several effective ways to lower your car insurance costs.
By implementing a few smart strategies, you can reduce your premium and keep more money in your pocket each month.
In this article, I will share five proven tips for slashing your car insurance bill.
From increasing your deductibles to bundling multiple policies to maintaining a clean driving record, making simple changes can yield significant savings.
If your goal is to lower your premium, you owe it to yourself to explore all options for reducing costs in a responsible way.
Paying less for car insurance may require some effort, but by following these recommendations you can enjoy the rewards of a lower bill each month.
Shop Around for Car Insurance Rates
As a vehicle owner, one of the best ways I’ve found to lower my car insurance premium is to shop around for the best rates.
Comparing quotes from different insurance companies has saved me hundreds of dollars per year.
Rates can vary significantly between companies for the exact same coverage.
I recommend checking with at least 3-4 companies to find the best deal.
Some of the major insurance companies are Geico, Progressive, State Farm, Liberty Mutual, and USAA.
Compare their rates as well as some of the smaller regional companies in your area.
Be prepared to provide the same information for each quote to get an accurate comparison.
Check if you’re eligible for any discounts to further lower your premium.
Many companies offer discounts for bundling auto with homeowners or renters insurance, safe driver, anti-theft devices, students, etc.
Ask about any discounts you may qualify for and factor those into your decision.
Review the quotes in detail and understand exactly what coverage limits and deductibles are included.
Don’t just choose the cheapest option – make sure it provides adequate coverage for your needs.
You want to find the best balance of affordability and protection.
Shopping around for the best deal on car insurance and taking advantage of available discounts is key to slashing your premium.
An hour or two of research could save you $500 per year or more.
So take the time to get multiple quotes and choose a policy that gives you the coverage you need at a price you can afford.
Ask About Discounts to Lower Your Premium
As the policyholder, there are several ways I can lower my car insurance premium.
One of the most effective methods is to inquire about available discounts.
Many insurers offer incentives for safe drivers and bundling multiple policies.
Safe Driver Discounts
If I have a clean driving record without any accidents or traffic violations, I may qualify for a safe driver discount of up to 30% off my premium.
Some companies also offer accident forgiveness as an add-on, which can help prevent premium increases even after one minor accident.
Bundling Discounts
Bundling my car insurance policy with other policies like home, life or umbrella insurance is an easy way to lower premiums.
Most insurers offer bundling or multi-policy discounts of 10-25% per policy.
Combining policies also means fewer bills to pay and companies to deal with.
Usage-Based Discounts
Usage-based or telematics programs that track my driving habits using a mobile app or device plugged in my car can earn me a discount of up to 30% for safe and low-mileage driving.
The exact discount will depend on factors like time of day I drive, mileage and braking/accelerating habits.
I would have to opt-in to a usage-based program and share driving data to qualify.
Other Discounts
Additional discounts for anti-theft devices, students, military members, loyalty (staying with the same company for years), and more may also decrease my premium by 5-15% or more, depending on the insurer and state I live in.
It pays to ask about any other discounts I may be eligible for to maximize my savings.
With some research and questions, I have the potential to lower my car insurance costs by hundreds of dollars per year through multiple discounts.
The time spent negotiating a lower premium is well worth the long-term financial benefit.
Raise Your Deductible
As a car insurance policyholder, one of the most effective ways I’ve found to lower my premium is by increasing my deductible amount.
The deductible is the amount you agree to pay out of pocket for any claim before your insurance coverage kicks in.
By raising your deductible, you’re taking on more financial responsibility in the event of an accident or claim.
In return, your insurance company will lower your premium.
I started with a $500 deductible, which is typical, but found I could save substantially by increasing to $1,000.
For every $500 increase in my deductible, my premium dropped by up to 25%, saving me hundreds per year.
However, only raise your deductible to an amount you can afford in case you need to pay it.
You don’t want it so high you can’t pay out of pocket if you have an accident.
Choosing a higher deductible means you’re less likely to file small claims that increases costs for insurance companies.
Fewer claims mean lower risk for the company and lower premiums for you.
If you have a solid emergency fund in case of any out-of-pocket costs, opting for a higher deductible can be a smart way to cut your premium.
Some other tips to lower your premium include:
•Maintain a good driving record.
Your premium is highly affected by your driving history and number of claims.
Avoid traffic violations and accidents whenever possible.
•Compare quotes from different companies.
Shop around at different insurance companies to find the best deal.
Compare the coverage and premiums to your current policy.
You may find you can get better, more affordable coverage with another provider.
•Reduce coverage on older vehicles.
If you have an older car, consider dropping collision and comprehensive coverage.
The premiums may outweigh the value of the vehicle.
Only retain liability coverage.
•Ask about discounts.
Inquire with your insurance agent about ways to qualify for premium discounts, e.g.
safe driver, multi-policy, student, anti-theft device, etc.
Every discount can help lower your bill.
By following these tips, you can significantly slash your car insurance premium and keep more money in your pocket each month.
Review your policy details and consider making changes to lower your rates today.
Consider Dropping Comprehensive and Collision Coverage
As a car insurance policyholder, lowering your premium should be a top priority to save money.
One effective way to slash your bill is to consider dropping comprehensive and collision coverage on older vehicles.
Comprehensive and collision coverage: necessary evils?
Comprehensive and collision coverage account for a significant portion of most drivers’ premiums.
These optional coverages pay for damage to your own vehicle from events like collisions, theft, vandalism, or weather incidents.
However, the older a vehicle gets, the less these coverages make financial sense.
Once a vehicle is 8-10 years old, its value has depreciated substantially.
The premiums you’re paying for comprehensive and collision likely far outweigh any potential payout from an insurance claim.
For example, if you’re paying $1,000 per year for these coverages but your 10-year-old vehicle is only worth $5,000, it doesn’t make sense to keep them.
You’d be better off dropping coverage and self-insuring for any loss, saving $1,000 a year in premiums.
Do the math and determine if dropping coverage makes sense
To see if eliminating comprehensive and collision is right for you, first determine your vehicle’s estimated value using Kelley Blue Book or NADA Guides.
Next, contact your insurance agent or company to find out how much you’re paying annually for just those two coverages.
Compare the premium to your vehicle’s value.
If the premium is more than 10% of the vehicle’s worth, dropping coverage is probably a smart financial move.
For many drivers, eliminating comprehensive and collision coverage on older paid-off vehicles can lower their auto insurance premiums substantially while posing little increased financial risk.
If saving money on your insurance bill is important, it’s worth doing the analysis to determine if dropping these optional coverages makes sense for your situation.
Every dollar saved on premiums stays in your pocket rather than going to the insurance company.
Improve Your Credit Score
One of the most effective ways to lower your car insurance premiums is to improve your credit score.
Insurance companies view people with high credit scores as less risky to insure since they are more likely to pay their bills on time.
People with low credit scores, on the other hand, are seen as higher risk.
As a result, improving your score can translate into lower rates.
Here are some tips to boost your credit score:
Check your credit report for errors
Request free copies of your credit reports from the three major credit bureaus—Equifax, Experian and TransUnion—once a year at annualcreditreport.com.
Review the reports closely to ensure all information is accurate.
Dispute any errors with the credit bureaus to get them corrected.
Pay down your credit card balances
Keep your credit card balances low relative to your limits.
High balances hurt your score the most.
Pay off the entire balance each month if possible.
If you can’t pay in full, pay at least the minimum amount due on time.
Late or missed payments severely damage your score.
Don’t close old or unused credit card accounts
Closing accounts can actually hurt your score.
It lowers your available credit and credit history length, which accounts for 15% of your score.
Only close accounts if there is an annual fee that cannot be waived.
Limit new applications for credit
New credit applications reduce your average account age and number of hard inquiries, both of which can lower your score slightly.
Only apply for new credit when really needed.
Multiple applications in a short period of time can signal risk to lenders and substantially hurt your score.
By following these tips consistently over time, you can significantly raise your credit score and slash the amount you pay for car insurance.
An improved score means you’ll qualify for lower rates, which can save you hundreds of dollars per year on premiums.
The effort required is well worth the long-term financial benefits.
Conclusion
After exploring several ways to lower your car insurance premium, the key takeaway is that you have more control over how much you pay than you may realize.
By shopping around for the best rate, increasing your deductibles, improving your credit score, reducing coverage on older vehicles, and taking advantage of discounts, you can make a sizable dent in your bill.
While insurance is necessary to protect you financially in the event of an accident, that doesn’t mean you should pay more than you have to.
By implementing even a few of these cost-saving tips, you’ll be well on your way to slashing your premium and keeping more money in your pocket each month.
The savings can really add up over time, so take action today to lower your rates and gain greater financial freedom.
0 Comments