There are a lot of myths surrounding car insurance out there, from the color or sportiness of your car affecting your rates (or not) to the question of accidental coverage for instances when a driver other than the car’s owner is behind the wheel.
To avoid confusion, it’s important to rely on research conducted by credible companies and organizations, such as the big study from Insurance.com on the impact different tickets have on your car insurance rate.
How to Lower Your Car Insurance Premiums
If you want to decrease your auto insurance premiums, then don’t fall for unproven methods and myths in hopes of saving money. Instead, consider these tried-and-true ways for lowering your car insurance bills:
Increase Your Deductible
One of the most popular ways people try to lower their auto insurance premiums is the deductible. Increasing your deductible isn’t always the best approach – it might cost you more than it saved you in monthly payments if you’re involved in a serious accident – but for some people, it can definitely relieve the regular financial burden of insurance payments.
Recent survey findings suggest that raising your deductible from $250 to $500 could result in an average 7% reduction in your auto insurance premiums, while $250 to $1000 results in an average of 9% savings for American drivers in the survey. For drivers who increased their deductible from $500 to $2000 saved an average of 16% on their car insurance premiums. This could be a great way to save money if you’re a safe driver, but be sure to have emergency savings as a backup in case you need to pay the higher deductible later on.
Ask for Available Discounts
There are many different kinds of discounts on auto insurance available. Don’t just assume that because you have a safe driving record or you drive relatively few miles per year that you’ll score lower auto insurance premiums.
In 2015, Consumer Reports’ analysis of 2 billion car insurance quotes found that socioeconomic factors such as credit history, shopping habits, and area of residence played a bigger role in determining quoted auto insurance rates than actual driving habits. Since auto insurance isn’t exactly optional for drivers, this means that you should look for any and all opportunities to save money, even if they seem like they would have no impact on your skills as a driver.
For active members of the military and veterans alike, USAA offers discounted car insurance, which they claim saves their drivers an average of $376 per year compared to other insurers. USAA also offers discounts for folks who have maintained a good driving record for 5+ years, good student drivers and discounts for both young and older drivers who take defensive driving safety courses. Save with USAA Auto Insurance. Get a quote today!
According to the DMV, auto insurance companies offer discounts to students with good grades because studies have shown that students who do well in school are less likely to get into car accidents. Typically these discounts require that the student is younger than 25 years old, enrolled full-time in high school or college, and can prove at least a 3.0 average GPA (usually by providing transcripts to the auto insurer).
Discounts For Your Driving History
Your driving history is a big portion what goes into determining the cost of your car insurance premium. Your driving history is a reflection of how you drive and how much you can potentially cost the insurance company.
Most companies give discounts for great driving histories – meaning no accidents and tickets for a specified period of time. This discount is usually sizeable – about 25% of the total coverage premium.
If you don’t own a car but drive other people’s car frequently, you may also want to consider car insurance. There are many insurance companies that offer non-owner car insurance. While you still may be protected by the car owner’s car insurance policy, it might be prudent to protect yourself as well with additional insurance coverage.
Affiliation Discounts On Your Car Insurance
Many insurance companies give discounts if you are affiliated with a group or organization. For example, students can usually qualify for a good student discount if they maintain a “B” or better grade point average. Also, many companies give discounts to members of the military.
You may also qualify for a discount on your car insurance if you are a member of a club such as AAA. Finally, a lot of insurance companies partner with other corporations and offer discounts to their employees. Check with your company’s HR or benefits manager to see if you qualify for any discounts.
Loyalty Discounts Can Save You Money
Finally, almost every insurance company offers loyalty discounts either for multi-policies or for years of being a customer. If you have multiple policies with one insurance company, check to see if you are getting a discount, or if you qualify.
There are tons of discounts available to you in order to help you save money on your car insurance premiums. Knowing the ones that are available to you is half the battle.
Vehicle Equipment Discounts
These are all discounts that apply to the type of car you drive and the features that car has. The most basic discounts are for airbags and anti-lock brake systems. This is actually being phased out by more and more companies since they are pretty standard equipment on most new cars.
If you have comprehensive car insurance, you can usually receive a 25% discount or more if you have an anti-theft system. The reason is that since it prevents a car from being stolen, companies are more likely to give a discount.
Cost comparisons are important for anything you buy, even legally-mandated things like auto insurance. Rather than taking the first auto insurance quote that sounds reasonable, contact many different companies and compile their responses in a simple Excel spreadsheet.
Include factors such as available discounts, coverage limits, and anything else that might set one insurer apart from the rest. It may take some time, but the money savings will be worth it!
If you tend to rack up only a few thousand miles per year on your odometer, then consider pay-as-you-go insurance. There are generally two different types: one that uses a tracking device in your car to ensure you’re really driving as few miles as you report to your insurer, or telematics-based insurance that automatically reports your mileage to the insurer (through a program like OnStar).
You can find insurance companies that offer pay-as-you-go insurance that account for other factors, like when you drive (during daylight and not during rush hour are the optimal times to score higher insurance discounts).
Eric has covered a device from Nationwide Insurance Company, which is a Smart Ride device.
Improve Your Credit
Car insurance companies oftentimes take their insured customers’ credit scores into account, but nobody really knows how much your credit history works for or against you when it comes to calculating your insurance premiums. By improving your credit score, you could possibly qualify for lower rates on your auto insurance, so be sure to take this into account when strategizing ways to reduce your insurance bills.
Don’t let creative marketing and car insurance myths drive your budget down with hefty insurance premiums. By following the steps above, you’ll be able to save quite a bit of money on your auto insurance next time your premiums are up for repayment.
Do you know how to lower your car insurance? What do you consider the best car insurance discounts? Did I miss any that you are glad that you get? Let us all know in the comments below!