You already have enough bills to pay every month, and car insurance shouldn’t be something that makes you worried about paying every month. We’ll take a few ways to see how you can keep the best coverage for your needs and save money on those monthly premiums.
Understanding how insurance companies that offer car insurance calculate your premiums will go a long way to knowing where you can save based on your individual needs.
Always look for alternatives
You don’t need to stick to only one car insurance company. They typically use the same factors when calculating your premiums, but how they weigh them can be different.
“Looking for a great way to save on car insurance? All you need to do is do some comparisons from various car insurance companies”, said Jenny Mayfield, who works at Compare.com as an Insurance Specialist.
Those with strong credit and a history of safe driving can easily save by moving to the insurer, which typically is the cheapest. The savings actually differ and may increase when switching insurance companies when you have accidents (that you are at fault for) and/or bad credit. You won’t know until you ask and receive the various quotes.
There’s always a discount
Each insurance company takes their own approach to car insurance discounts. So it’s always worth checking it out and seeing if and what you qualify for.
“Insurance companies sell more than just car insurance, so if you hold more than one policy with them, then it can lead to multi-policy discounts. On top of that, if you’re a student driver or have a car with additional safety features, you may easily qualify for additional discounts.” – Lisa Eischen, who is an Agent with The Hartford.
It’s still best to do research because discounts won’t always mean the lowest monthly pricing.
Safety has its rewards
“Those with an excellent driving record tend to save a lot regarding car insurance. Avoiding any traffic violations or accidents will always keep those premiums down.” – Richard Arca said, who works for USAA as a Personal Lines Underwriting consultant.
Going to defensive driving or traffic safety schools can help remove those violations from your record and help to reduce your annual premiums on car insurance as well.
Stellar credit helps
As many already know, your credit score is a huge deciding factor for many financial aspects. In addition, many insurance companies in most states still consider credit history as part of the application.
“Always work to improve your credit score, as it will help you get the best rates. It’s a key piece in the car insurance puzzle.” – Policygenius Insurance Expert Jim Milan.
Here are some quick tips on credit improvement
- Always make any payments on time
- Keep your owed balance as low as possible compared to your total limits
- Take a moment to consider if you need another credit card, as it can hurt your score each time
Consider a deductible that is higher
Just like with health insurance, you can save on your monthly car insurance if you increase your deductible. However, you need to pay this before your car insurance kicks in. So if you have a $1,000 deductible and a $5,000 repair bill, you need to cover the first $1,000 before the insurance company pays the other $4,000.
“You need to ensure you can pay off the higher deductible if you end up with a big claim. If that’s the case, then you should consider increasing your deductible to lower your insurance premiums.” Vice President of Product, Timm Bogeberger said, who works at The Zebra.
Some cars are cheaper for insurance than others
Do some research when purchasing a car, not just on the latest features but on what car insurance premiums would look like for whatever car models you’re considering.
“Cars known for their safety, cost less to fix, or even to replace, and aren’t desirable by thieves, tend to also be less expensive to insure,” – said Kimberly Lawrence, who is a Director of Product Management for Esurance.
That means flashy sports cars tend to cost more than, for example, SUVs.
If you don’t need car insurance, get rid of it
While cars need to be insured, if you have a car that’s a clunker, you can reduce the type of insurance you have on that car. For example, you can do away with comprehensive insurance, which covers vandalism or extreme weather. At the same time, you can also do without collision insurance since that’s insurance for you to repair the car if it crashes, which wouldn’t be worthwhile to repair.
“Really old cars hitting their maximum lifespan may do better with fewer types of complete coverage, and possibly even a higher deductible, as that will help to significantly reduce the monthly premiums.” said Insurance Agent Nicole Newman from Allstate.
“If you have an older car, carrying collision and comprehensive coverage may not make sense, which can save you money on your premium. Instead, consider dropping these coverages and opting for a higher deductible.” – Mary White, Insurance Agent at State Auto.
It’s all about your car’s current value versus deductibles and coverage. Comprehensive and collision insurance won’t pay more than the car’s worth. So instead, use the money saved for a down payment on your next car or to have a fund for those inevitable repairs.
There’s car insurance based on usage
That’s right, there’s a pay-per-mile insurance offering, but you will also need to have the car tracked. You can either install a device in your car or use the smartphone app to help send the data to the insurance company, which will charge you accordingly.
“Those who rarely use their car can opt-in for usage-based insurance. You get charged based on the actual amount the car is driven and helps save a lot of money with car premiums.” – said Insurance Agent Sarah Boone from State Farm.
Some car insurance companies that offer this type of insurance are Nationwide, Allstate, Mile Auto, and Metromile. It’s also available in certain states only. You’ll still have a fixed minimum amount to pay in addition to the usage or per-mile rate.
What’s also common with some insurers is how you use your car. It’s the same as pay-per-mile insurance, but it’s how safe you’re being and your overall driving behavior. A device will track if you’re doing hard braking or speeding, and you can get better rates for safer driving.
Even signing up for these programs can get you a discount, but keep in mind that they may raise your rates if you’re driving unsafely or too much.
