How to Seriously Lower Your Car Insurance Premium
Car insurance is one of those necessary expenses that can feel like a monthly burden. But what if you could pay less without cutting corners on coverage?
The good news is, you can. By making smarter choices and taking advantage of some lesser-known tricks, you could reduce your premium and still be protected.
Bundle Policies
If you’ve got more than one type of insurance—say, homeowners, renters, or even life insurance—consider bundling them with the same provider. Insurance companies love loyal customers and often reward them with discounts when they purchase multiple policies.
For example, State Farm offers substantial multi-policy discounts. They claim you can save as much as $1,273 by binding your auto and home insurance. Just make sure the combined cost is still cheaper than buying separate policies from different providers.
This strategy isn’t just about saving money. It’s also super convenient. Having all your policies in one place makes it easier to manage payments, renewals, and claims.
Drive Less or Use Pay-Per-Mile Insurance
If you don’t drive much, traditional insurance might not be the best fit for you. Many providers offer pay-per-mile insurance, which charges you based on how far you drive. Companies like Metromile specialize in this type of coverage.
This option is ideal for people who work from home, use public transportation, or just don’t spend much time on the road. Pay-per-mile insurance could save you hundreds of dollars a year compared to standard policies.
Another way to show you’re a low-risk driver is by joining a usage-based insurance program. Insurers like Allstate and Progressive offer apps that track your driving habits. Safe drivers often earn discounts through these programs.
Ask About Discounts
You might be surprised by how many discounts car insurance companies offer. From good driver discounts to savings for students with high grades, there’s a discount for almost everyone. Some insurers even offer discounts for taking a defensive driving course or installing anti-theft devices in your car.
Don’t assume your insurer will automatically apply these discounts. You’ll need to ask what’s available and check if you qualify. For example, GEICO offers discounts for military members, federal employees, and even daytime running lights discounts.
Keep in mind that discounts can vary by state and provider. A little research and a quick phone call could add up to big savings.
Increase Your Deductible
Your deductible is the amount you pay out of pocket before your insurance kicks in after an accident. Choosing a higher deductible can significantly lower your monthly premium. For example, raising your deductible from $200 to $500 could help you significantly reduce collision and comprehensive coverage premium costs, according to the Insurance Information Institute.
While this option might seem like an easy win, it’s not without risk. Make sure you can afford to pay the higher deductible in case of an accident. Consider setting aside the difference in a savings account so you’re prepared if the unexpected happens.
If you’re a safe driver and have a good track record, opting for a higher deductible is often a smart move. You’re less likely to file small claims, which can also help keep your premium lower over time.
Improve Your Credit Score
Believe it or not, your credit score can impact your car insurance premium. Many insurers use credit-based insurance scores to predict your likelihood of filing a claim. A higher credit score often translates to lower rates.
To improve your credit score, focus on paying your bills on time, reducing credit card balances, and avoiding new debt. Over time, these actions can lead to better insurance rates and even more financial benefits.
Some states, like California and Massachusetts, ban the use of credit scores in determining insurance rates. But if you live in a state where it’s allowed, boosting your credit score can make a noticeable difference.
Shop Around for the Best Deal
Not all car insurance companies are created equal, and their pricing proves it. While one insurer might quote you an arm and a leg, another could offer the same coverage at a fraction of the cost. Shopping around and comparing quotes from at least three providers can help you find the best deal. We recommend checking online comparison tools like NerdWallet or The Zebra for an easy start.
Remember, price isn’t the only factor to consider. Look into customer reviews, claim response times, and available discounts. Sometimes, paying a few extra dollars for better service is worth it in the long run. Companies that offer great customer support often make the claims process far less stressful.
Finally, don’t be afraid to negotiate. If you’ve found a lower quote elsewhere, let your current insurer know. They might offer to match it or provide additional discounts to keep you as a customer.
Choose a Safer Vehicle
The type of car you drive plays a big role in your insurance premium. Safer, more reliable vehicles generally cost less to insure. For example, cars with advanced safety features like lane departure warnings, automatic braking, and anti-theft systems often come with lower rates.
If you’re shopping for a new car, check the Insurance Institute for Highway Safety (IIHS) ratings to see how it ranks for safety. Vehicles with high safety ratings tend to have lower premiums.
The caveat? Newer, safer cars often have high expenses to replace parts in the event of an accident. So, a safer vehicle doesn’t always equate to cheaper insurance; do your due diligence.
Maintain a Clean Driving Record
Your driving record is one of the biggest factors insurers consider when determining your premium. Accidents, speeding tickets, and other violations can cause your rates to skyrocket.
The best way to keep your record clean is by practicing safe driving habits. Follow speed limits, avoid distractions, and never drive under the influence. Over time, a spotless record can qualify you for significant discounts.
If you do have a blemish on your record, it’s not the end of the world. Many companies offer accident forgiveness programs, which prevent your first at-fault accident from impacting your rates.
Drop Unnecessary Coverage
While it’s important to have sufficient coverage, some extras might not be worth the cost. For example, if you drive an older car with a low market value, collision and comprehensive coverage might not be necessary. The cost of these coverages could exceed what you’d get in a payout.
Before dropping any coverage, calculate the potential savings and compare it to the risk. If you’re unsure, consult with an insurance agent to make an informed decision.
Keep in mind that some version of liability coverage is required in all states, and driving without it can result in hefty fines or even license suspension.
Review Your Policy Annually
Insurance needs change over time, and so do rates. That’s why it’s a good idea to review your policy every year. Look for any unnecessary coverage or missed discounts, and consider switching providers if you find a better deal.
Life events like getting married, moving, or adding a teen driver to your policy can also impact your premium. Updating your insurer with this information could open the door to new discounts.
Regular reviews don’t just save you money—they ensure your coverage matches your current needs. A quick annual check-up could lead to surprising savings.
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