The cost of auto insurance is another recurring expense you face in maintaining your vehicle on the road. There are many tricks to getting small discounts on your vehicle insurance premiums.
“Careful driving is undoubtedly the best manner to pay the least for your auto insurance,” said Eric Howard, insurance senior analyst at USAA.
Bankrate’s comparison site states that the average annual rate for automobile insurance is $1,674 for full protection[1]. If you pick the minimum coverage, the rate is $565 annually. As you can imagine, a speeding fine, an accident or a DUI will make those numbers jump. And if you possess a clean driving record, you may have to deal with higher premiums. Insurance prices have risen recently, surging 5% between 2017 and 2018.
Premiums are not the same depending on your location, vehicle, mileage, etc. Regardless of all this variability, you can take steps to reduce the cost of your car insurance. By following these best practices, you will find yourself on the right track to obtaining the most affordable rate.
“Premiums are not the same depending on your location, vehicle, mileage,” said Howard. “Regardless of all this variability, you can take steps to reduce the cost of your car insurance. By following these best practices, you will find yourself on the right track to obtaining the most affordable rate.”
Safe Driving
Speeding violations, accidents and impaired driving will significantly increase your premiums. By how much? Based on Bankrate, a speeding violation rises by approximately 23% on the price of full coverage[2]. In case of an accident, the penalty is about 38%, while drunk driving increases the cost of premiums by about 87%.
On the other hand, if you drive safely, you may receive a lower rate from your insurer. These are usually achieved by installing a “telematics” device in the vehicle. This device records your speed, driving behaviour, and kilometers you go. You will be entitled to a discount if you comply with the set limits. However, exceeding these limits may deprive you of these benefits, and some providers will even jack up your rates[3]. This situation can occur if you claim to drive less than a certain number of kilometers, but the meter shows otherwise. It also happens if you drive dangerously.
Registering for Defensive Driving Courses
Attending a defensive driving course can reduce your automobile insurance costs. Those who take such courses have the opportunity to receive a discount on their coverage[4]. This training is optional and only entitles you to one rebate.
“An excellent place to start is to check with your provider to see if they allow such a rebate and how much it is, ” said Mike Degasse, driving teacher at Florida Driving School. “You may realize that the cost of the course outweighs or even negates the savings from moving. Moving to the suburbs or a less populated city could save them a lot of money.”
Combining Your Plans
To keep costs down on your auto insurance premium, it’s easy to combine coverage. It mainly means choosing a single insurance company to carry all your policies. You likely have one or more other insurers, although you may not be the owner of a home or multiple cars. If you do, you may want to ask your insurer for a discount for bundling.
Combining multiple policies will definitely get you a discount on your vehicle insurance. However, the discount amount can vary from one insurer to another, ranging from 5% to 25%[5]. Note that the savings from this discount are not guaranteed. The offering company may charge you more for coverage, thus eliminating the reduced costs. With bundling, it’s best to figure it out and see if you’ll really save money.
Incorporate the Cost of Insurance into Your Moving Plan
First and foremost, you should never consider a move based solely on your car insurance costs. Nevertheless, this consideration should be included in those with high-rate calculations. Insurers generally give better rates to rural and suburban residents than to city dwellers[6]. It occurs because the risks are higher for driving and parking in large cities.
City dwellers with DUI or accident records should think twice be
Opt For a More Reliable Car
In other words, driving a commonplace automobile can save you money on your insurance. ValuePenguin, a financial review site, has determined that the three best cars to insure are Chrysler Pacifica, Honda CR-V and Honda Odyssey[7].
Generally speaking, the cheapest cars to insure are minivans and compact trucks. Large sedans are the most expensive. Sports cars are likely to be at the top of the list. If your automobile insurance costs are too high, consider changing your vehicle.
Striking Out Your Driving Record
If you have a poor driving record, it may be worthwhile to try to strike it off[8]. It can be an expensive process, as it may require the assistance of a lawyer. Depending on your location, it may be impossible for you to strike out your driving history.
Whether it is appropriate to cross out your record depends greatly on what is on it. Sometimes, it may be more logical to “wait” for your record to be cleared. Insurers can only go back a certain number of years to assess your risk.
Improving Your Credit
Some states prohibit insurers from considering the creditworthiness of policyholders in determining car insurance rates. So poor credit could result in more costly coverage if you don’t live in California, Hawaii, Massachusetts or Michigan[9].
“As you build up your credit, watch your rate as well,” Howard said. “You’ll need to consider changing your coverage if it doesn’t go down accordingly.”
Spot Unusual Discounts
Insurers offer a handful of rebates, but they are not promoted. Some of the most accessible hidden savings are those offered by some insurers to married couples[10]. Then, there are unusual ones, such as the one by Geico to Mensa members[11].
Some companies offer discounts to sorority and fraternity students. Finally, doctors, teachers and firefighters are among the professionals who receive discounted rates from some providers. Speak to an agent to find out what you qualify for regarding rebates.
Considering Insurance by the Kilometre
The concept is pretty new but easy to understand. Insurers provide coverage at a prime rate and then charge a premium based on the number of miles driven monthly. A person who drives little typically saves several hundred dollars a year[12].
Of course, the amount of these savings varies from company to company and is bound by strict mileage restrictions. In fact, most insurers that apply this concept target people driving less than 10,000 miles annually. Note that some providers will expect you to equip your vehicle with a telematics device to receive this coverage[13]. In other cases, you will need to send a photo of your mileage or use an application. In any case, you’ll need to show that you drive as you say.
Discounts for Multiple Cars
If you own several cars, you should naturally combine them for insurance. Multi-car coverage policies usually carry a discount, and some states even allow you to stack them together[14].
Combining coverage means you can stack the advantages of both policies into one. For instance, if the policies provide $25,000 of coverage in the event of an uninsured automobile accident, the total coverage would be $50,000.
Review Your Protection and Deductible
If you rarely hit the road, reviewing your coverage may be a good idea. Removing “full” coverage, which protects you from robbery, vandalism and “natural disasters,” could potentially save you money[15].
Also, by raising your deductible, you may be able to reduce your premium. However, it is a trade-off because a bigger deductible means that you will have to pay more in case of an accident. If your vehicle is old, you may consider removing the collision section of your policy. That way, your insurance won’t cover the cost of repairing your car, chances are it’s not worth repairing if your auto is that old.
Investing in an Anti-Theft System for Your Car
Putting an anti-theft system on your car is suitable for everyone. You will enjoy greater ease of mind, and your insurance company may also give you a lower rate on your coverage. In fact, some states require them by law to offer you a cheaper rate[16].
The rebate varies between companies and devices, and most providers insist on evidence of installation. Before purchasing a state-of-the-art system, consider checking with your insurer, as the “Club” can also save you money.
Closing Remarks
Car insurance doesn’t necessarily have to be your most enormous monthly bill. You can greatly reduce your vehicle insurance rate with some investigation, time, and money. These practices will help you find better coverage when you renew your insurance or compare it to others.
