Overview
The average U.S. driver spends $1,127 per year on car insurance, which is just under $100 each month. Shocking, right? Maybe it’s not, depending on how much you’re currently paying.
Car insurance premiums can be super expensive—even higher than the national average —depending on factors like your location, age, credit score, and driving record. Plus, insurance companies each have their own formula for setting rates.
Fortunately, your car insurance premium isn’t set in stone. There are plenty of ways to reduce the cost of your car insurance policy without having a perfect driving record, or trading in your brand-new pickup truck for a 10-year-old beater.
Stay tuned for our top 10 tips for getting cheaper car insurance. Your wallet will thank you.
10 Ways to Save Money on Car Insurance
It’s a common misconception that car insurance is just expensive. But in reality, saving money on car insurance is totally possible, and it doesn’t have to be difficult. Here are 10 ways that you can score a better deal on car insurance.
1. Look for Discounts
Most car insurance companies offer discounts that can reduce your premium. The exact discounts and savings potential vary by company, but some of the most common ones are:
Multi-vehicle
Paperless billing statements
Automatic payments
New car
Safe vehicle
Military
Affinity group member
Occupation
2. Choose a Higher Deductible
Car insurance policies have a deductible, which is the amount of money you pay out-of-pocket when you have a covered claim. If you raise your deductible, it will lower your annual car insurance premium. However, make sure to choose a deductible you can afford in the event of a claim. Even though you’ll pay less in premiums, you’ll also receive less money from your insurance company if you get into an accident.
3. Improve Your Credit Score
In most states, car insurance companies are allowed to consider your credit score when calculating your auto insurance premium. If you can improve your credit score, it could help you save money on car insurance. Some ways to boost your credit score include paying your bills on time each month, keeping your credit utilization low, and paying down credit card debt.
4. Compare Quotes
Car insurance companies charge different rates for the same types and amounts of coverage. Additionally, insurers weigh rating factors, like your age and driving record, differently. To find the most affordable car insurance for your situation, it’s a good idea to compare personalized rate quotes from several insurers. You should also get new quotes after a major life event, like moving, getting married, or adding a teen driver to your policy.
5. Take a Defensive Driving Course
Many car insurance companies will reduce your car insurance premium if you complete an approved defensive driving course. You can ask your insurer for a list of qualifying programs. However, keep in mind that some insurance companies require every driver insured on the policy to complete the program in order to get the discount.
6. Bundle Your Policies
One of the most reliable ways to get cheaper car insurance is to bundle your policies. Nearly every insurer offers a discount to customers who buy car insurance with another policy, like homeowners insurance, renters insurance, RV insurance, boat insurance, or life insurance. Plus, working with a single insurer makes it easier to pay your premiums and manage your policies in one place.
7. Pay in Full
To save money on auto insurance, consider paying your annual premium upfront. Most insurance companies offer a discount if you pay your premium in full, rather than in monthly installments. Oftentimes, this discount is only 5% or 10%, but it depends on the insurer. Because of that, paying your premium in full will provide the biggest savings if you have a very high premium.
8. Review Your Coverages
Your car insurance needs will probably change over time. Reviewing your coverages annually will ensure you maintain the right amount of coverage, and it could help you save money. For example, you might be able to drop optional endorsements or reduce your coverage limits if your vehicle has depreciated considerably since you purchased the policy.
9. Consider a Pay-Per-Mile Policy
If you drive infrequently, switching from a traditional car insurance policy to a pay-per-mile policy could help you save big. With a usage-based insurance (UBI) policy, you’ll pay a flat monthly fee plus a small per-mile fee for each mile you drive. At the end of the month, you’re charged based on the distance you drove. Pay-per-mile car insurance is often recommended for people who drive less than 10,000 miles per year.
10. Enroll in a Telematics Program
Many car insurance companies offer a telematics-based insurance program, which uses a plug-in device or mobile app to track your driving behaviors, like speed and phone use. If you drive safely, you can earn a discounted premium. Some insurers even offer an initial discount upon enrollment. Not all telematics programs are created equal, though. Some programs penalize you for unsafe driving habits, which could lead to a premium increase.
The Point
If your car insurance premium is hurting your wallet, don’t worry—there are plenty of ways to get cheaper coverage. You can bundle your policies, pay your premium in full, take a defensive driving course, raise your deductible, or look for discounts, just to name a few. Try combining multiple strategies to lock in the lowest possible premium for your situation.
by your friends at The Daily Navigator
