The cost of auto insurance premiums can differ by several hundreds of dollars, depending on the type of car you drive, how you insured it, and who insured it.
That’s why you could be mesmerized by how high your premiums are yet your neighbor next door pays hundreds of dollars less.
It’s important to note that car insurance is a legal requirement in most U.S. states, and you’ll be subjected to hefty fines by the state’s law enforcement agencies if drive without a minimum coverage that differs from state to state.
Now, before you even attempt to walk that path, you need to do comparison shopping and find an affordable insurance coverage that suits your budget while giving you all the important protection you desire. Enter your zip code into our free comparison tool above!
If you feel like your auto insurance is too high, there are some factors you should consider to get affordable insurance for your car. You wouldn’t want to spend more than necessary on insurance, but you also shouldn’t end up without enough auto insurance coverage.
Here are some of the ways you can reduce your auto insurance premiums:
Auto insurance prices differ from one carrier to the next, so comparison shopping pays! Get at least three different quotes before you settle on which policy to purchase.
If your premiums are higher than your colleagues driving similar cars, it’s possible you just bumped into the first insurance company and made your purchase without first looking around.
You can do your own search online or use an agent, most of who offer varying policies from different insurance providers.
When doing comparison shopping, don’t be swayed by price alone. Ask for recommendations from your family and friends to know which insurance provider has a good reputation for honoring claims.
You may as well ask your state insurance department for information about consumer complaints by company.
Buy Your Auto Insurance and Homeowners Insurance from the same Carrier
Many insurance companies offer breaks if you “bundle” all your insurance covers with them. Additionally, you can enjoy some lucrative discounts as a loyal client. If you have more than one car, you can have them all insured with the same company.
But still, it’s good to shop around and compare multi-policy discounts from different insurers.
Establishing a solid credit record come with several benefits, including reduced auto insurance premiums. Most insurance providers use credit history to determine the premiums you’ll pay on your auto insurance.
Additionally, research has indicated that people who manage their credit effectively can stay away from trouble and will less likely make claims. Always track your credit records to be sure all the information is accurate.
Insurers offer a wide range of discounts, but chances are that you won’t get them unless you ask for them. For instance, if you cover less than the average mileage throughout the year, you can ask for a low-mileage discount from your insurer. This also applies if you carpool to work. Other discounts can be offered to policyholders who:
- Have not been involved in any accidents or traffic violation for a specified period.
- Have undertaken a defensive driving course.
- Is a student who performs well in school.
Consider Dropping Some Coverages
As much as it is a must to insure a car, it is good to realize when your car is over-insured to avoid spending beyond your means.
One of the ways you can lower auto insurance costs is by dropping comprehensive and collision coverage from your policy.
According to the California Insurance Information Network, if the value of the vehicle is $1,000 or less, the chances are that comprehensive and collision coverages are not worth the cost.
As its name suggests, collision coverage protects your vehicle in case it gets involved in a crash. On the other hand, comprehensive insurance pays for damages that occur in non-collision circumstances such as theft, natural disasters, fire, and collision with animals.
Many people tend to spend money on the two types of insurance unnecessarily. Remember, after a theft or an accident, you will only be paid up to the value of your car, minus the deductible.
For instance, if your car is worth $4,000, it doesn’t make any sense paying $500 a year for comprehensive and collision. As a rule of thumb, drop coverage if its annual premium exceeds 10 percent of the value of your car.
Another important consideration is that as long as the cost of collision insurance is 25 percent of the car’s value every six months, then you should stop paying for it. In a period of two years, you will have literally saved enough cash to offset the cost of your car’s total loss.
Don’t Rush Things
You should weigh your savings and cost with the risk of wiping out this coverage. However, if you are leasing your vehicle, then dropping collision coverage might not be an option for you.
But if you are the one who drives your car and it doesn’t have a very high value, then it definitely pays to question whether the annual premiums are worthwhile.
Also, before you drop coverage on your vehicle, ensure you understand how much you will need to replace it. In some instances, it makes sense to retain coverage on a vehicle that has maintained its high value.
If the value of your car is higher compared to what you intend to spend out of pocket for its replacement, you might want to think twice before dropping any coverage. You can get an estimated value of your car using various online platforms.
If you decide to maintain this coverage, it is advisable that you take a higher deductible to lower your premium.
Don’t Be Skimpy with Liability Insurance
Even the cheapest vehicle can cause a lot of destruction to people or other vehicles. So, you will need liability insurance to cover such eventualities.
Liability insurance incorporates bodily injury liability, which caters for expenses incurred by other individuals in an accident, and property damage liability, which takes care of destruction to property owned by another person.
Bodily injury coverage will cover any injury caused by your car to another person. It will also cover your legal fees if the other person in the crash decided to sue. Be reminded that this coverage does not protect against damage to vehicles.
Also, it only protects the other person in the crash—not you or any of your family members on your cover.
Property damage will cover damages to another vehicle or property. Skimping on this coverage could put you at a financial risk in case you are sued for destroying another person’s property.
Your insurance provider might convince you to take on some extras which will raise your premiums.
Insurance extras like tow coverage or rental car reimbursement are not necessary, especially if you have reliable friends or family who can offer you a lift to the place of work in case your car is unavailable due to an accident or repairs.
Is the car among the most stolen ones?
You should not assume that you will save money on insurance with an old car. Some particular vehicles are still magnets for car thieves even after losing their new-car smell a long time ago. Certain car models are highly targeted because of the demand for their parts.
Regardless of its age, having a vehicle that is prone to car theft can increase your insurance costs.
Even though it is not as important in determining the cost of your insurance as your geographic location or your driving record, your vehicle’s rate of theft is something insurers will consider when giving their quotes.
The National Insurance Crime Bureau releases a yearly list of the ten most stolen motor vehicles in the United States.
Pursue Every Avenue
The amount of premium you’ll pay for your car insurance will depend on several other factors including:
- your driving record
- your net worth
- the value of your vehicle
It is important to keep a clean driving record and a good credit history even with a low income to attract some discounts.
Always shop around and compare several quotes before settling on the most suitable cover at affordable costs. Enter your zip code to compare today!