How Can I Save Money on Auto Insurance?
Drivers have a lot of expenses to worry about. From insurance to gas money to car payments and regular maintenance, thousands of dollars are taken out of your pocket annually just to be certified for the road. If you’re wondering how you can save money, start with your car insurance. To stop overpaying, there are easy things you can do to lower your premium and save money.
One study shows that Americans are overpaying nearly $37 billion per year. But there’s good news: you aren’t locked into your current insurance premium forever. Search online for simple strategies to find out how you can save money on next month’s bill.
Here are seven ways to save money on auto insurance.
1. Look Into Insurance Company Discounts
Your car insurance rate is determined by the base rate and surcharges, minus any relevant discounts taken from that total. You can take a big chunk of change off your monthly premium by qualifying for discounts your insurer offers. Discounts can vary from insurer to insurer, so make sure to see what yours specifically offers.
Some common ways you can get a discount are by:
- Taking a defensive driver or driver training course
- Having driver affiliations with emergency roadside assistance, military, etc.
- Being a homeowner, low income individual, senior, or good student demographic
- Having a good driving history (ex. accident-free, low mileage, etc.)
2. Raise the Deductible
Raising your deductible means you would likely have to pay more money when making a claim, but it could lower your monthly rate. This is an option for people who would have the means to pay for potential damages. The higher your deductible is, the bigger percentage that will be taken off the cost of your insurance. Just make sure to consider the short and long term implications of raising the deductible before using it as a means to save money on insurance.
3. Consider Dropping Full Coverage
Save money on your premium by paying Virginia’s minimum coverage instead of full coverage. If your vehicle is paid off, consider dropping optional coverage (such as collision and comprehensive premiums) near the end of its life. Accepting the risk of having to pay those costs could be better than having to find a decent replacement with the insurance payout.
Another alternative to paying full coverage is by choosing pay-per-mile insurance (PPI). This type of insurance bases your premium on how much you actually drive. For part-time drivers or for people who only drive short distances, it could be cheaper for you to pay by the mile instead of a flat rate. Plus, the device installed in your car will monitor your driving habits and you could be rewarded additional discounts by being safe behind the wheel.
4. Bundle Your Insurance Policies
Paying for multiple insurance policies can be expensive. That’s why you should consider bundling your policies under one insurer to get a discount. This option can save you anywhere from five to 25 percent off each policy. Whether it be bundling your auto insurance with home, life, renters, or another type of insurance, see what discounts companies can offer you.
5. Pay Premiums in Advance
While it’s common for most insurance premiums to be paid monthly, there is good reason to pay your full premium annually instead. Insurance companies offer discounts for customers choosing to pay in advance and potentially save policyholders as much as 15 percent overall. Plus, paying in advance means there will be one less bill to worry about for your monthly expenses.
6. Change Up Your Vehicle
Not only do drivers have a preference for vehicles, but so do insurance companies. They reward drivers with lower premiums when they own vehicles that are deemed less risky. Part of this criteria includes a vehicle’s claim and accident histories, repair costs, or rates of car theft. This means owning an excessively sporty and luxurious vehicle could cost you more money.
NerdWallet compared national rates and found which vehicles are the cheapest models to insure. Here are the vehicles and its average annual insurance premium.
- Subaru Outback: $1,392
- Jeep Wrangler: $1,416
- Honda CR-V: $1,439
- Subaru Forester: $1,465
- Ford Escape: $1,476
Even if you don’t own or want to buy any of these vehicles, it’s possible for you to make changes to your current vehicle and make it more appealing to insurance companies. For example, having a car equipped with anti-lock brakes and anti-theft devices makes you less likely to be in an accident or victim of theft.
7. Compare Car Insurance Quotes Online
If you pay for your insurance by month, then it’s a good idea to reevaluate your premium once every six to 12 months. This will give you an opportunity to potentially qualify for a lower rate or discounts. It can also give you an idea of whether it’s time to switch insurance companies.
An easy way for you to compare car insurance rates is by searching online. Websites like Insurify, Policygenius, The Zebra, and Compare.com will match you with relevant policies from different insurers. All you have to do is enter some basic information and you’ll be one click closer to saving money on auto insurance.
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