Car Insurance Cost-Cutters Due to the litigious nature of our society and the rising cost of vehicles, car insurance rates are hefty throughout the nation. The bad news is that insurance isn’t likely to decrease in price any time soon. The good news is that there are things that you can do to minimise the increase and/or lessen the burden on your wallet. Let’s take a look at 12 tips you can employ to save thousands of dollars.
Key Points
1. Insure multiple vehicles and drivers
If you obtain a quote from an auto insurance company to insure a single vehicle, you might end up obtaining a higher quote (per vehicle) than if you inquired about insuring several drivers and/or vehicles with that company. This is because insurance companies will offer what amounts to a bulk rate because they want your business,
and under some circumstances, they are willing to give you a deal if it means you’ll bring in more of it.
To obtain a discount, ask your agent/insurance company to see if you qualify and get a quote. Generally speaking, multiple drivers must live at the same residence and be related by blood or by marriage. Two
non-related people may also be able to obtain a discount. However, they usually must jointly own the vehicle.
Incidentally, some companies may also provide an auto insurance discount if you maintain other policies with the firm (ex. homeowner’s insurance). Check with your agent/insurance company to see if such discounts are available and applicable.
2. Keep a Clean Record
It should go without saying that the more accidents or moving violations an individual has, the more he or she will tend to pay in terms of annual premiums. For those unaware, points are typically assessed to a driver for moving violations. Generally speaking, more points can lead to higher insurance premiums (all else being equal).
3. Enroll in a Defensive Driving Course
Sometimes, insurance companies will provide a discount for those that complete an approved defensive driving course. Also, sometimes a driver can reduce the number of points he or she has on his or her licence by taking defensive driving, accident prevention, or other courses.
Make sure to directly ask your agent/insurance company about this discount before signing up for a class. After all, it’s important that the effort being expended and the cost of the course translate into a big enough savings. It’s also important that the driver sign up for an accredited course.
4. Do some comparison shopping
If your policy has just been renewed and the annual premium has gone up
markedly, consider shopping around and obtaining quotes from competing companies. Also, every year or two, it probably makes sense to obtain quotes from other companies just in case there is a lower rate elsewhere.
However, remember that cheap doesn’t always mean good, and going with the lower-priced company isn’t always the wisest decision.
That’s because the insurer’s credit worthiness should also be considered. After all, what good is a policy if the company doesn’t have the wherewithal to pay an insurance claim? To run a check on a particular insurer, consider checking out a site that rates the financial strength of insurance companies (such as A.M. Best).
5. Use Public Transportation
When you sign up for insurance, the company will generally issue you a questionnaire. Among the questions it asks might be the number of miles you drive the insured automobile per year.
If you use your vehicle to commute three hours to work every day, you will generally pay more in insurance premiums than someone who only drives one mile a day.
If possible, try to use mass transit to rack up fewer miles, keeping in mind that you will usually have to decrease your mileage significantly before incurring a discount. Ask your agent/insurance company about the company’s different mileage thresholds so your efforts won’t be wasted.
6. Choose Your Vehicle With Care
Buying a huge SUV may sound exciting, but insuring a 5,000-pound,
top-of-the-line vehicle can be more expensive than insuring a small (but safe) lower-cost commuting car. Also, older cars are often cheaper to insure than their more modern counterparts. Again, speak with your agent/insurance company to find out the exact rates to insure the different vehicles you’re considering before making a purchase.
Consider Increasing Your Deductibles.
When selecting car insurance, you can typically choose a deductible, or the amount of money you would have to lay out before insurance picks up the tab in the event of an accident, theft, or other type of damage to the vehicle. Depending on the policy, deductibles typically range from $250 to $1,000. The catch is that, generally speaking, the lower the deductible, the higher the annual premium. Conversely, the higher the deductible is, the lower the premium. Ask your agent/insurance company how your premium might be affected if you raised your deductible. In some cases, it may increase the annual premium by several percent, putting money back in your pocket; in others, the savings may be minimal.
8. Improve Your Credit Score
A driver’s record is obviously a big factor in determining auto insurance costs. After all, it makes sense that a driver who has been in lots of accidents could cost the insurance company lots of money. However, people are sometimes surprised to find that insurance companies may also consider their credit ratings when determining insurance premiums.
Why is a person’s credit rating considered? The theory is that individuals who keep their financial situations in ship-shape condition will tend to be more careful when it comes to driving. Regardless of whether that’s true, be aware that your credit rating can be a factor in figuring insurance premiums and do your utmost to keep that rating high.
9. Pay Attention to Your Location
It’s unlikely that you will move to a different location (i.e., state)
simply because it has lower car insurance rates. However, when planning ahead, the potential change in your car insurance rate is something you will want to factor into your budget.
10. Eliminate Unnecessary Coverage
Dropping certain types of coverage can be a slippery slope. After all, nobody can predict if or when an accident will occur. However, if an individual is driving an extremely old automobile that’s on its last legs, it may make sense (depending on the cost, the individual’s driving record, and other factors) to drop collision coverage. The reason for this is that were the vehicle to be involved in an accident, the insurance company would likely total the car. If the value of the car is only $1,000 and collision coverage costs $500 per year, it may not make sense to buy it.
In any case, before making any such decision, consider speaking with your financial advisor and your agent/insurance company.
Remember, every situation is different, and the decision is up to you.
Install Anti-Theft Devices 11.
Individuals have the potential to lower their annual premiums, sometimes by as much as several percent, if they install anti-theft devices. Your agent or insurance company should be able to tell you specifically which devices,
when installed, can lower premiums. Car alarms and LoJacks are two types of devices that you might want to inquire about. If lowering your insurance premium is your primary motivation for installing an anti-theft device, make sure to consider whether the cost of adding the device will result in a significant enough savings to justify the trouble and expense.
12. Interrogate Your Agent
It’s important to note that there may be other potential cost savings to be had in addition to the ones described in this article. In fact, that’s why it often makes sense for you to speak directly with your agent or representative of the insurance company to ask if there are any special discounts that the company offers for individuals such as military personnel or employees of a certain company. The insurance company may also offer a “good student” rate or some other special savings. You never know what sort of discount pricing might be available for your circumstances, but unless you ask, you probably won’t be able to take advantage of it.
Bottom Line
The price of auto insurance is likely to continue to rise in the future. However,
there are many things you can do to reduce the sting, and hopefully these 12 tips will have you driving in the right direction.
