Car insurance can be one of the main expenses to worry about. Insurance costs are affected by factors such as your location, how much you drive, and your driving history, among others. However, you can’t drive without one because you risk getting fined or losing your driving license.
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How to Save On Your Car Insurance
In 2018, the average cost per insured vehicle was $1,190 according to the National Association of Insurance Commissioners (NAIC).[1] According to the report, although there was only a 7% increase in the number of insured vehicles between 2014 and 2018, insurance premiums had increased by a whopping 30% in the same period. If you’re ready to start saving on your auto insurance, read on to learn some of the strategies that you can use.
1. Compare Insurance Costs When Buying a Car
Insurance companies, just like consumers, have a preference for vehicles. Insurers consider factors such as the price of the car, rates of car theft, cost of repair, and safety records to determine insurance costs. Therefore, ensuring an excessively sporty and luxurious car is expensive.
You can reduce your car insurance costs by buying a car that’s known to be safe or one that comes with anti-theft features. Regardless of whether you’re buying a new or used car, it’s important to consider how much you’ll spend on insurance. Some of the vehicles that are among the cheapest to insure include: [2]
- Ford Escape
- Subaru Forester
- Honda CR-V
- Jeep Wrangler
- Subaru Outback
If your car has a high insurance premium, you should consider changing it. Alternatively, you can upgrade your car to make it more appealing to your insurer. For instance, you can reduce the risk of car theft by installing anti-theft features or make it less likely to be involved in an accident by equipping it with anti-lock brakes.
2. Ask for Discount Options
Insurance companies consider relevant discounts to determine their premiums. You can cut your insurance premium by taking advantage of the discounts offered by your insurance company. Since these discounts vary from one insurance firm to the other, it’s advisable to consider what your specific insurer offers.
You can get a discount and reduce your insurance premiums in the following ways:
- Ensuring you have no accidents on your driving record
- Completing driving courses
- Working on your school grades if you’re a student or becoming a homeowner
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3. Consider Different Insurance Companies
Different insurance companies charge differently, hence it pays to shop around. If you’re looking for insurance for your new car, you can compare quotes from different companies. During this process, you can also ask prospective companies insurance-related questions to help you make informed decisions. You can also talk with your family and friends to learn about their experience with different insurers.
It’s advisable to shop for insurance every six months as this will enable you to know if you qualify for a discount.[3] The information can also enable you to determine if it’s time to switch to another company. However, keep in mind that the cheapest company is not always the best. You should consider the reputation of a company before you register with them. You can get valuable information from your state insurance department.
You can also compare auto insurance rates online to determine the most affordable one for you. Websites such as Compare.com, Policy Genius, and Insurify can help you to compare different insurers.[4] You only need to provide some basic information to find insurance companies that can save you some money.
4. Review Your Coverage
You can reduce your car insurance expenses by going for minimum coverage instead of full coverage. For instance, if you have an extremely old vehicle that you are about to dispose of, you can drop comprehensive premiums. However, when you drop this coverage, you must be ready to pay them in case of an accident. In most cases, you’ll save your insurance expenses if you drop full coverage.
You can also drop full coverage by selecting pay-per-mile insurance. When you select this option, your insurance premiums will be determined by the distance that you drive. However, this option is ideal for part-time drivers or those who don’t drive long distances. Another benefit of ditching flat rate charges is that you could qualify for discounts when you have safe driving habits.
5. Pay In Advance
Some insurance companies offer their clients discounts when they pay their premiums in advance. You can save as much as 15% by clearing your premiums in advance. However, before you use this approach, it’s advisable to research if your company offers this discount. Therefore, although many people pay their insurance monthly, you can save by paying the full amount annually. In addition, you won’t be worrying about monthly bills when you pay annually.
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6. Raise Your Deductible
If you raise your deductible, you’ll be paying more money when making a claim and this could reduce your monthly rate. However, this method should only be used by those who can settle possible damages. Therefore, you can reduce your insurance premiums by selecting a higher deductible on your insurance.[5]
7. Improve Your Credit Rating
Insurance companies also consider the driver’s record to determine their premiums. Generally, insurers charge drivers involved in a lot of accidents more than those who are rarely involved. However, some insurers also consider the credit ratings of their clients to determine insurance premiums.
Some insurance companies believe that credit ratings can help them to know the kind of customers they’re dealing with.[6] According to these insurers, those responsible for their personal life are less likely to file claims. Although this approach is contentious, you can check your reports regularly and see how you can improve your scores. Therefore, you can improve your credit rating to reduce your insurance costs.
8. Bundle Your Insurance
Some insurance companies give discounts to customers who purchase one or more insurance types from them. For instance, some insurers will give you a discount for insuring another vehicle with them. However, before you think of relying on one company for all your insurance needs, you should research and compare multi-policy costs to see if there’s any discount.
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Sources
[1] https://content.naic.org/article/news_release_naic_releases_20172018_auto_insurance_database_report.htm
[2] https://www.nerdwallet.com/blog/insurance/cars-cheapest-auto-insurance-rates/
[3] https://insurify.com/blog/car-insurance/9-reasons-to-shop-for-car-insurance-every-6-months/#:~:text=Assessing%20your%20insurance%20policy%20every,decreasing%20value%20of%20your%20car.
[4] https://insurify.com/blog/car-insurance/the-best-and-worst-sites-to-compare-car-insurance-quotes/
[5] http://www.iii.org/article/understanding-your-insurance-deductible
[6] https://www.investopedia.com/articles/pf/08/car-insurance-costs.asp#citation-15
