Though auto insurance is one of the biggest household expenses after housing and transportation, there are a few ways to trim costs without shortchanging yourself. With a little education and effort, you can lower your premiums.
The easiest way to lower your premium is to increase your deductible. Your deductible is how much you pay up front to fix your car before your insurance kicks in and helps to pay the rest. If you decide to pay more for the repairs out of your own pocket, you’ll get a lower monthly premium. But make sure you can afford the deductible. If your deductible is $500, for example, and you raise it to $1,000, you’ll be saving on your premium. But if you get into an accident, you’ll want that extra $500 handy.
You can also get discounts on your premiums. Insurance companies offer many different auto policy discounts. If you get your auto policy and your homeowners policy through the same insurance company, you can get a discount on both policies. If you have a good driving record, meaning you haven’t had accidents or traffic violations in a number of years, companies will often give you a discount for being a safe driver. You will probably get a discount on your premium if your car has safety features such as anti-lock brakes, airbags and anti-theft devices.
One of the best ways to keep your premiums down is to drive safely and maintain a good driving record. Insurers will reward you with lower rates for being a safe driver, and some insurers even offer accident forgiveness to prevent your rates from going up after your first at-fault accident. Some companies will give you a discount if you complete a defensive driving course, which can show that you’re serious about improving as a driver and reducing your chances of getting into an accident.
Another way to be sure you’ve got the best deal is to shop around. You can compare different insurance quotes from competing insurers. You may find that insurers quote a wide variety of rates for the same type and level of coverage, so don’t make your decision based on cost alone. Be sure to compare the offerings of competing insurance companies in terms of both coverage and discounts. The insurer who gives you the best deal won’t necessarily be the cheapest one. At the same time, don’t be persuaded into buying coverage when you don’t need it.
Improving your credit score can also benefit you via reduced insurance premiums – in most states, insurers use credit-based insurance scores to set your insurance rates, and the higher your score, the lower your rates. Paying your bills on time, lowering your credit card balances and refraining from taking on new debt will gradually improve your credit score and lower your insurance premiums.
And, again, once you’re over 25, look to reduce coverage on older cars that might not need full coverage. If you have an older car that is not worth as much as what you owe on it – that is, your car has depreciated – you might be better off without collision and comprehensive coverage. The premium savings can more than make up for any repair or replacement costs if the car is totaled.
That’s the kind of thing you can do to lower your auto insurance premiums without doing anything radical to your policy, and still retain the kind of coverage you need. Review your policy on a regular basis and make changes as your needs and circumstances change.
