Car insurance is one of those pesky expenses that some dread paying each month but wouldn’t imagine going without. For starters, it’s illegal to drive without car insurance in most U.S. states and no matter how much you pay, you get the reassurance that if you ever get into an accident, you’ll be covered financially and medically.
Yet and still, it’s not gratifying to throw a chunk of your hard earned money to insurance month after month, year after year when nothing happens. Your money doesn’t earn interest or gain cash value. Most people never receive any cash back at the end of the year after driving safe. For the most part, it just sits there in the insurance company’s pocket and you never see it again.
While I’m all for being insured and protecting yourself, it’s also great to take advantage of helpful savings when they come along. Contrary to popular belief, not all auto insurance rates are similar and the monetary differences can make a big impact on your finances. There are some factors used to determine your auto insurance rate that you don’t necessarily have control over like your age and gender perhaps, but other factors are certainly in your control.
Here are a few things you can do to help reduce your auto insurance rate.
Shop around for Rates
This a very popular way to lower your insurance rate. If you want to find the best coverage for the best price, you can’t be tied to one particular insurance company year after year if there are better rates out there. It’s so easy to compare insurance plans online and make the switch. Here are a few price comparison tools you can use:
Esurance Comparison Tool
Quote Wizard
Nerd Wallet Price Comparison Tool
It’s important to realize that auto insurance rates vary throughout different areas of the country and most major insurance companies like Farmers, Esurance, State Farm etc. have local branches where you can deal with a representative in-person who can give you an extremely realistic quote. Your state should also have coverage requirements that you’ll need to consider when choosing a plan.
Yet and still, it’s nice to take advantage of the online comparison tools from the comfort of your own home and a lot of insurance companies will try to match the quote you received online for your convenience.
Drive a Sensible Car
The type of car you have heavily impacts your insurance premium. Newer cars, sports cars and luxury cars are going to be more expensive simply because they cost more to repair and replace should any damages to the car incur.
When my ‘97 Saturn died on me and I purchased a 2010 vehicle my insurance rates skyrocketed and when I asked my agent what the problem was, one of his first responses was my age. The next was a snarky remark somewhere along the lines of: “You’re driving a 2010 vehicle.” My premiums are slowly going down each year but that first year was rough.
It really pays to drive in more ways than you would think. If you’re serious about cutting your auto insurance costs along with your transportation costs you should opt for a more affordable economical car that’s a few years older that the current trending makes and models.
It doesn’t have to be a classic car on its’ last leg by any means, but just make sure it’s something affordable, easy on gas and has basic safety features like an alarm system, antilock brakes, etc. These features will help lower the risk of vehicle theft and insurance companies will naturally be willing to lower your rate if your car has them.
Beef Up Your Credit Score
Did you know that insurance carriers peek at your credit to help determine the amount of your premium? Maintaining a good credit score is extremely important to your financial success but it’s also a crucial factor for auto insurance carriers as well. From their perspective, drivers with good credit have fewer accidents.
You can improve your credit score by keeping your utilization preferably below 30% of your credit limit, staying organized and paying all your bills on time, limiting the amount of inquiries your obtain. You should check your score periodically to track it and make sure there are no discrepancies.
Sites like CreditKarma.com allow you to check and track your score for free. One of the best sites used to check your score is MyFico.com (you can read our review of MyFICO here). They usually offer free 14-day trials but they also have partnerships with major credit card companies in order to offer users quarterly free Fico scores as well. Whatever method or service you use, your credit score is definitely something you need to keep track of.
Limit Your Driving
If you don’t rely heavily on your car to get you around each and every day, you may qualify for a discount to drivers who average a lower mileage each year. The fewer miles you drive, the less your premium will be.
If you can walk, ride your bike, or take public transportation around your neighborhood, you could definitely decrease your auto insurance costs plus you’ll get more exercise.
Limiting the amount of miles you drive could also help you become more comfortable with the idea of raising your deductible which will in turn lower your monthly or annual premium.
Use your car as a luxury to transport you around only when you truly need it; not just to go up the street to the store. Limiting your driving is good for your health, your wallet and the environment.
Ask About Discounts
Many carriers reduce their prices in a number of ways and sometimes you can see the discounts offered on their website, but it’s always best to ask in case something wasn’t mentioned or advertised online. There are good driver discounts, student discounts, alumni discounts, multiple driver discounts, discounts based on your age, bundle discounts and much more.
Be sure to ask your carrier if they offer any special discounts that will help you lower your rate or if you’ve been with the company for a while, request they lower your premium due to your loyalty and good driving record.
How expensive are your auto insurance premiums? Have you ever used any of these strategies to reduce your auto insurance payments?
- How to Prepare Your Credit for a Mortgage - October 19, 2015
- How to Start Living on Last Month’s Income - October 6, 2015
- 4 Mistakes I Made When Financing My Car - September 29, 2015
