What Can I Do to Lower the Cost of Auto Insurance?
Many motorists pay more than they should for their auto insurance policies, but there are numerous ways to lower the cost of coverage. Often the best way to ensure that the lowest price is paid for a policy is to review it and make sure not to be over-insured. Additional ways to reduce premiums are to periodically shop around, alter deductibles, check for applicable discounts, combine policies, and maintain a clean driving record as well as a good credit score.
A common mistake that policyholders make is to stay with an insurer for years without taking the time to see if more affordable rates have become available. The industry is ever-changing, and while one company may have been able to offer the cheapest rate in the past, that may no longer be the case. Obtaining and comparing quotes is free and can be done pretty quickly online. Putting aside some time to shop around can often lead to savings.
An obvious way to low cost car insurance coverage is to be a safe and responsible driver. Most consumers are aware that their driving record plays a big part in what will be paid for a policy, yet some drivers still take unnecessary risks that can lead to accidents and/or tickets. Practicing safety behind the wheel can not only save money, but can also save lives.
Tinker with Deductibles
Opting for a higher deductible can also lead to substantial savings. According to a publication released by the Insurance Information Institute, increasing a deductible from $200 to $500 could reduce comprehensive and collision coverage costs by 15 to 30 percent, and choosing a $1,000 deductible could save 40 percent. But policyholders should be sure that they can afford the amount chosen in case they have to file a claim.
Check for Discounts
There is a wide range of available auto insurance discounts offered by insurers, and consumers should make sure to take advantage of any they qualify for. Many discounts are given automatically such as those for good drivers, certain safety features, and antitheft devices. But others will need to be brought to the attention of insurers. These generally include discounts for being a good student, having aftermarket antitheft devices, taking drivers education courses, or having a child go away to college. Young adults are among the most expensive to insure, and if a child will not have access to insured vehicles, premiums can be reduced quite a bit.
Eliminate Unnecessary Coverage
Many motorists have unnecessary or duplicate coverages. When vehicles age and diminish in value, eliminating comprehensive and collision automobile insurance coverage can lower rates. Although there is no exact formula for deciding when this protection should be eliminated, owners can check the value of their vehicle to help determine if paying the premium and deductible make financial sense. Additionally, med-pay and personal injury protection can be waived in states that allow it if a motorist has an existing health care plan.
Credit Is Not Just for Loans
There have been many arguments as to why insurers use credit information as a factor when determining what they will charge for coverage, or if they will issue a policy. But numerous studies show that there is a correlation between a person's credit score and the likelihood that he or she will file a claim. All but three states (California, Hawaii, and Massachusetts) allow insurers to use credit as a rating factor, so keeping a good credit history can get a consumer not only good interest rates, but also a lower premium.