Being properly insured as a driver is essential, but does it have to bust your budget? It can be tough to find answers when you’re wondering how to lower your car insurance costs without leaving yourself financially exposed. Here are some of our top tips for how to lower your car insurance costs safely and, in many cases, more easily than you might expect.
Drive Safely
One of the best and most accessible methods for how to lower your car insurance is to simply be a safe driver. The costs that insurers charge for premiums are all based on risk. They have to charge you enough to cover the risk that you’ll be in an accident and they’ll have to pay out to cover the costs of that incident. The better your driving record, the less they’ll consider you a risk and the less they’ll charge you for your premiums. It’s that simple.
That said, earning lower premiums through safe driving takes time. Certain drivers, such as teenagers, are automatically considered risky and will demand higher premiums. But if you consistently drive safely without incidents or traffic tickets, such as for speeding, you can expect your rates to drop significantly over time.
Do Your Research and Compare Rates
One of the best and most underused ways to lower car insurance costs is to simply shop around and compare quotes. Too many drivers simply insure their vehicles using the first insurance company that pops into their head, which is often the one that advertises the most heavily and not the one that can offer them the best coverage at the best rates.
Instead, take a little time and do your research. It may require a bit more up-front time investment to make the right choice, but you’ll be rewarded with better rates and more beneficial coverage. You can even opt for an insurer such as Freedom National that automatically compares rates from a wide range of insurers to get you the best available rate for your unique circumstances, all without you having to do tons of research yourself.
While there are legitimate companies that offer excellent car insurance rates, beware of companies whose rates are too good to be true. Some less-than-reputable insurers may offer rates so low that they can’t maintain financial viability. That means you might submit a claim only to find that the insurer doesn’t have the money to pay for it. Where would that leave you?
Use Multi-Car Discounts When Possible
While many insurance companies genuinely care about protecting you from financial liability and help you drive safely with peace of mind, they’re also businesses— and they want to earn your business to boost their bottom line. That means that they’ll look for ways to motivate you to increase how much coverage you purchase from them.
In many cases, this results in bulk discounts for covering multiple vehicles or drivers. Your cost to insure two vehicles or drivers will almost always be less than twice the cost of insuring one vehicle, so be sure to mention if you have multiple vehicles/drivers to insure when getting a quote from an insurer. This may help you save money in the long run.
That said, make sure that your specific instances qualify for multiple vehicle coverage or coverage for multiple drivers. For example, covering multiple drivers on the same policy usually requires that they live at the same location and are related, either by marriage or by blood relation. If two unrelated people want to get a discount for being included on the same policy, they’ll usually need to be co-owners of the vehicle being covered.
Take a Defensive Driving Course
Some insurers will reward drivers who are proactive about improving their safe driving skills. When getting a quote from an insurer or looking to lower the cost of your policy, ask about discounts for taking defensive driving courses. Not all insurers will provide a discount for this, but many will.
Just make sure that the course you sign up for is properly accredited and will be accepted by your insurer. While a defensive driving course would certainly have value beyond a lower insurance rate, you may not be willing to put in the time and effort required if you aren’t going to be compensated with lower monthly premiums.
Bundle Coverage from the Same Insurer
If you’re wondering how to lower your car insurance costs, sometimes the answer comes from your other types of insurance coverage. Many insurers will reward you for bundling multiple types of coverage from the same company. After all, they want your business, so if they can reward you for purchasing more types of coverage from them, it’s a win-win.
For example, let’s say you need both home and auto insurance coverage. Some insurers will offer a bundling discount, offering some percentage off your premiums if you purchase both coverages from them. Not only can this save you money, but it can also simplify the process of getting covered for all the various needs in your life. Plus, managing a single policy instead of multiple policies at multiple companies can be a lot less hassle.
Choose Your Vehicle Wisely
One of the ways that insurers assess their own financial risk is by looking at the type of vehicle you drive. Certain vehicles are more costly to repair, such as large or expensive vehicles that feature top-of-the-line or proprietary technology. Others are considered more likely to be involved in an accident, such as sports cars which tend to be owned by people who like to drive fast (and may occasionally forget about the speed limit).
If you want to lower your insurance costs, one of the best ways to do it is by choosing a more reasonable vehicle. Something less expensive, smaller, and with higher safety ratings can help reduce your premiums. So can accessing certain discounts for particular types of vehicles, such as those that use electricity or alternative fuel. Ask your insurer what discounts are available for specific types of vehicles.
Adjust Your Deductibles
One of the most significant effects on your monthly insurance premiums comes from your deductibles. A deductible is the set amount that the policyholder must pay for a covered incident before their insurance will step in and cover the rest. For example, if you have a $500 deductible and are involved in a covered incident, you’ll have to pay $500 out of pocket and your insurance will cover the rest.
Generally, the higher your deductible, the lower your monthly insurance premiums. Deductibles can range from between $250 to $1,000.
Obviously a lower deductible is financially beneficial if you’re involved in an incident, because it means that you’ll have to pay less out of pocket.
Depending on the likelihood of you being in an accident, raising your deductible to save on insurance costs may or may not be a wise choice. Experiment with how adjustments to your deductible affect your monthly premium. If the monthly savings are significant, it may be worth considering.
Boost Your Credit Score
It’s not just your driving record that insurers use to determine whether you’re a high-risk bet for insurance. Many insurers also use other factors to set your insurance premiums, and one of the more surprising factors that can influence those costs is your credit score.
While on the surface, your credit score may not seem like it has much to do with your driving, research actually suggests otherwise. Many insurers have conducted studies that show a correlation between lower credits cores and riskier driving behavior. The idea behind these studies is that if someone is likely to take more financial risks, they may be more likely to take risks behind the wheel, too.
You can argue whether or not that connection makes sense, but the fact is that your credit score can impact your insurance premiums in many areas, so you can help yourself save by boosting your score where possible.
Examine Your Coverage for Potential Savings
Too often, policyholders will simply stick with their existing policy as it auto-renews time and time again, even if their circumstances have changed. While this might seem convenient, the truth is that your driving habits and insurance needs may be different today than they were a year or more ago.
Every once in a while, you should take the time to actually look at your insurance policy and see if there are any places that you could make adjustments to help save you money. This could include everything from changes to your deductibles to adjustments to certain coverage levels. Maybe you decide that you don’t need the maximum amount of comprehensive coverage and you could lower your car insurance costs by edging that amount down a bit. You’d be surprised by what you find when you take the time to actually look at your policy.
Ask About Discounts
More and more insurance companies are offering discounts for specific actions. Even if you’ve had the same coverage for a while, it’s worth checking to see whether your insurer has added any perks that can lower your car insurance costs. These can involve everything from loyalty discounts for staying with the same insurer to lowered rates for adding anti-theft devices to your vehicle.
Some insurers even offer devices that track the way you drive your car. While this may make some drivers uncomfortable, the devices can determine whether you provide yourself plenty of stopping distance, maintain consistent speeds, and generally drive safely, then reward you with lower premiums based on the data. Ask your insurer about discounts, perks, and other ways you might be able to save on your premiums.
Get Rid of Unnecessary Coverage
While there are specific coverage types that are required by law, such as property damage liability and personal injury liability coverage, there are others that are considered ‘extras.’ These range from coverage that can help give you more peace of mind and financial security in the event of an incident to luxuries that can make submitting a claim have less of an impact on your day-to-day life.
For example, comprehensive coverage often isn’t legally required, but it can help protect your vehicle in incidents that don’t involve other vehicles— such as damage that occurs if you strike an animal on the highway, or damage due to weather.
Other coverages can include free roadside assistance or rental car coverage while your vehicle is in the shop during covered repairs.
While these coverages can be convenient when you need them, sometimes they’re simply boosting your monthly premiums without much return on your investment. If your monthly car insurance premiums are hitting your wallet particularly hard, consider dropping some of these extra coverages.
Take the Bus or Train
Remember when we mentioned earlier that insurance companies assign premiums based on risk? One of the ways they do that is by trying to figure out just how much you’ll be driving the car you’re trying to cover. After all, the more you drive your vehicle, the higher the likelihood that you’ll be involved in a traffic incident.
One of the ways you can lower your car insurance costs is by reducing the amount of miles you drive. This can be particularly helpful when it comes to your work commute. If you’re spending hours a day in your car going to and from work, you might be able to earn yourself a discount by replacing that commute in your car with public transit. That said, you’ll want to check that your reduction in miles will be enough for a discount before making this significant lifestyle change. It’s as simple as asking your insurer what their mileage thresholds are for discounted premiums.
Reduce Coverage on Older or Lower Value Vehicles
Old vehicles or those that are very low in market value often don’t need the same level of coverage as newer, higher-value cars. You can save money by reducing coverage on these vehicles, as long as you don’t feel that you’re leaving yourself financially exposed by doing so. Paying $500 a year or more to insure a car that’s market value is less than $1,000 in total doesn’t really make financial sense. In some cases, reducing the coverage on older vehicles to the legally required minimum can be a smart option.
Conclusion
Have more questions about how to lower your car insurance costs? Freedom National compares rates from a wide range of insurers to get you the best possible value without sacrificing quality coverage. Plus you can learn all about car insurance from our expansive knowledge base of articles, guides, and glossary terms.
