The topic of discussion today is reducing the cost of your car insurance. We have several useful tips that will help you save money while ensuring that you get the best coverage possible. By the end of our discussion, you will have a comprehensive understanding of various ways to reduce your car insurance costs and find the best deal that suits your needs. Let’s get started!
In this article, we will examine the top 11 strategies for significantly reducing your car insurance expenses. Whether you are an experienced driver or a novice, understanding these tactics can make a huge difference in your monthly premiums. So, let’s dive right in!
Top 11 Ways to Lower Your Car Insurance
- Don’t Assume One Company Is the Cheapest
don’t assume that any one company is the cheapest. And what I mean by that is for drivers with good credit, the difference between the worst and the best insurance is about £100 a month. A driver with poor credit, the same thing, it’s even more. So it can make a difference between the best and worst person paying for that coverage with that company can be £200 a month. Don’t assume Progressive is the cheapest because in your situations, they might be the cheapest. But for someone that has perfect credit and has a house and all that other stuff, they may be £200 more a month for that situation. But it’s very situational and that doesn’t change from state to state either. What I mean is the difference of the company that might be the cheapest in Michigan may be the highest in Florida. Don’t just base it on one specific company.
- Explore Local or Regional Insurance Companies
don’t ignore your local or regional insurance companies. I’m a perfect example of this. I actually work for a local company. We’re considered, if you were to look us up, you would find us as local, but we work with 21 some odd States, be it cells 17 different companies up to 21 States. That’s a small company with a huge reach. Whatever your situation is, don’t just rely on Allstate or State Farm where they can only sell you Allstate or State Farm. For same reasons, they might be cheap in one area but not in the other. It’s always good to talk to a local agent that can look at multiple companies for you and determine what’s the best fit.
- Understand the Impact of Credit
your credit plays a very, very large factor. There are states like Hawaii, California, Massachusetts, they don’t allow you to charge different for credit. But in the majority of things, they’ve been able to articulate that credit does play a factor on claims in history. That’s one of the things you need to improve. Ways to do that: make your loan payments on time, keep credit card balances low or near half limit. My dad actually was a CPA, so I kind of grew up in the credit world. Having credit cards that are close to that half limit or lower, personal opinion, don’t use them at all. It’ll hurt your credit, but it’s still worth it in the end. I’d rather save the money than pay the interest. Don’t use credit checks or loans to open accounts and limit the amount of credit you have available. Those are just some of the ways that you can improve your credit score, which improves what’s called an Insurance score, which is kind of a fancy word for credit.
- Consider Insurance Costs When Purchasing a Vehicle
consider insurance cost when you’re purchasing a vehicle. That’s the number one thing I see people miss when they’re purchasing a vehicle. They never think how much is the insurance gonna be on this. I’ve had people actually have to return the car because of the cost of the insurance was as much as the car loan and they just couldn’t afford it. So make sure that you get the difference in price. The Volkswagens vs. the Infinities is a big price difference. A station wagon or a van, which is considered a station wagon, is different than driving an Acura, which is considered a performance car. When you’re looking at the car, grab a couple of ins, that’s the best way to do it, call your insurance agent and have them plug it into their system and give you an idea of what price difference you’re going to be looking at. In your car insurance, it can be £100 a month more for just a different car. Make sure you’re mindful of that.
- Check for Available Discounts
check for discounts. If you can qualify for a homeownership discount, which most states allow. If you’re married, you usually get a better price. If you don’t have kids, you’re getting a little bit better, but you’re not kidding charged more. If you have multiple cars, you can do multiple car discounts. If you’re going to know your parents, if you’re young, there’s a lot of different discounts that you can qualify for, even being part of credit unions and banks and ARP and all those different things that you can apply for. There are tons of discounts. Now remember, at the end of the video, I am gonna go through, I’m gonna list the top 15 discounts. Also, if you are interested, I did do a video somewhere up here, I’ll link it, that does go over the top 10 or 15 discounts in car insurance as well.
- Assess the Need for Comprehensive and Collision Coverage
if you have a clunker car, it might not be worth it to have comp and collision on that. Cuts comprehensive and collision. The calculation I personally came up with is figure four years. If you add up the cost that you’re paying, if you look at your policy, it’ll say comprehensive, there will be a price that you’re paying. It’ll say collision, there will be a price that you’re paying. Now, what you do is you add those up, multiply that by four. So four years, just assume you have no claims, no tickets, no accidents, no nothing, right? And we paid that amount for four years, assuming the price never changed. Is that worth more or less than the value of your car? If your car is worth less than that, then it’s probably a good idea to remove that coverage altogether.
And that leads into tip number seven, and that’s raise your deductibles. If you are paying too much and the prices just getting outrageous, it may be worth it to put a higher deductible to your policy. If you look at that same line where you’re looking at how much you’re paying for comprehensive and collision, what would it be if you did a £500, a £1,000, or a £1,500 deductible? If you have a really high-end car, you can go £2,500 if you want, but typically, it doesn’t make a big price difference past that £1,000 or £1,500 mark.
make sense, make sure that you put enough money away. So if I have a $1,000 deductible set up, open a savings account, try to get $1,000 in there. Maybe you pay $20 a month, $100 a month, whatever it takes, but try to get that $1,000 in that account. That way, in the case of an emergency, you’re not gonna have to come out of pocket. It’s already saved up and it’s ready to go. And then you just continuously save that extra cost that you were paying in your insurance every year.
- Adjust Deductibles to Lower Premiums
If you are paying too much and the price is just getting outrageous, it may be worth it to put a higher deductible on your policy. If you look at that same line where you’re looking at how much you’re paying for comprehensive and collision, what would it be if you did a £500, a £1,000, or a £1,500 deductible? If you have a really high-end car, you can go £2,500 if you want, but typically it doesn’t make a big price difference past that £1,000 or £1,500 mark. If it does make sense, make sure that you put enough money away. So if I have a £1,000 deductible set up, open a savings account, try to get £1,000 in there. Maybe you pay £20 a month, £100 a month, whatever it takes, but try to get that £1,000 in that account. That way, in the case of an emergency, you’re not gonna have to come out of pocket. It’s already saved up and it’s ready to go. And then you just continuously save that extra cost that you were paying in your insurance every year.
- Utilize Usage-Based Insurance Programs
Consider usage-based insurance. This is very beneficial for those who don’t drive a lot. Root Insurance is one company offering usage-based insurance, but availability varies by state. Additionally, companies like AAA provide discounts for lower mileage through programs like AAA Drive. Progressive offers Snapshot, and Safeco or Citizens offer similar systems where you can receive a discount, typically ranging from ten to twenty-five percent, if you can prove that you’re a good driver. These programs track your driving habits, but most of them assure that they don’t share your information. While there may be concerns about privacy, companies are required to disclose this information, and the risk of losing credibility keeps them honest. Ultimately, you have to trust them to some extent.
- Consider Location as a Factor
Location matters. Where you live makes a significant difference in your insurance premiums. If you’re planning to move, it’s essential to contact your insurance company to inquire about the price differences. I’ve encountered situations where individuals moved, updated their address with the insurance company, and ended up paying ten to twenty dollars more per month. While this may be frustrating, it’s a factor beyond your control. Insurance companies assess the risk associated with each location by considering factors such as crime rates, traffic patterns, and historical claim data. So, before relocating, it’s wise to understand how it might impact your insurance costs.
- Maintain a Clean Driving Record
Maintaining a clean driving record is crucial, but it’s not always easy. Some factors are beyond your control, like not-at-fault claims, which some states still count against you. Additionally, many states consider partial claims, where you’re only partially at fault, resulting in a rate increase.
It’s essential to be mindful of when to file a claim. Filing claims unnecessarily can place you in a higher-risk category, impacting your premiums. For minor issues like a windshield chip costing twenty or twenty-five dollars to repair, it might be more economical to cover the cost out of pocket.
Despite frustrations with comprehensive claims affecting your rates, insurance serves as a collective risk-sharing mechanism. When you make a claim, especially for at-fault accidents, it affects the entire pool of insured individuals. Your premiums reflect the level of risk you contribute to this collective pool.
- Optimize Payment Methods
The amount you pay. So, if you pay more upfront, and I’ll explain what I mean, you’re gonna get a better deal. If you pay monthly, that’s fine. If you’re on a credit card, you’re gonna pay a fee. If you’re on an EFT, electronic funds transfer, comes right out of your savings or your checking account, they’re usually gonna waive that fee. If you pay quarterly, not all but a lot of companies will give you a discount. If you pay every six months, it’s less. If you pay every year, it’s even less. I’ve got a company that I work with that knocks off almost two hundred, three hundred, I’ve seen them knock off close to $400 a year if they’re willing to just pay the whole thing upfront. It’s kind of like investing. So instead of you getting money back from the stock market, you’re just not paying more for the insurance. When you’re paying monthly, you’re paying an extra cost. There’s fees involved with that.
Conclusion
Lowering your car insurance costs doesn’t have to be complicated. By implementing these top 11 strategies, you can take control of your insurance expenses and save money in the long run. Remember to regularly review your coverage options and explore all available discounts to ensure you’re getting the best possible rate.
FAQs
- How can I find the best car insurance rates?
Finding the best car insurance rates involves comparing quotes from multiple insurers and considering factors like coverage options, discounts, and customer service. - Does my credit score really affect my insurance rates?
Yes, in most states, your credit score can impact your insurance premiums. Maintaining a good credit score can lead to lower insurance rates over time. - Are there discounts available for safe drivers?
Many insurance companies offer discounts for safe drivers through programs like usage-based insurance or incentives for maintaining a clean driving record. - What factors determine insurance rates?
Insurance rates are influenced by factors such as driving history, location, type of vehicle, coverage options, and discounts eligibility. - How often should I review my car insurance policy?
It’s recommended to review your car insurance policy annually or whenever significant life changes occur, such as moving to a new location, buying a new vehicle, or experiencing changes in driving habits.
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