If you drive a car, you need auto insurance – it’s the law. But auto insurance can get expensive fast if you don’t know what you’re doing.
US drivers pay an average of $1,771 per year for full coverage car insurance. That’s about $148 per month!
But the truth is, you don’t need to break the bank to get reliable coverage. So here are nine ways you can reduce your auto insurance payment today:
- Compare auto insurance rates
Before your current auto insurance policy renews, shop around to see if you can get a quote for a better rate.
You can easily compare policies online through sites like Policygenius.com. Most experts recommend getting at least 3 quotes before making a decision.
Keep in mind that insurance companies change their rates all the time. So while you may have gotten the best rate when you started your policy, it may not be the best one now.
- Get an insurance-friendly car
The type of car you drive has a big impact on your auto insurance rate. For example, smaller and safer vehicles cost less to insure, while bigger and more expensive vehicles (like luxury and sports cars) cost more to insure.
If you want a lower rate, consider switching to a more insurance-friendly car.
- Show that you’re a safe driver
Having a clean driving record will lower your car insurance premiums. It shows that you’re a safe driver and are in less risk of getting into an accident.
So stay clear of accidents and traffic violations. If you already have an accident on your record, try to clear it by taking an accredited driver’s safety class. In some states, this will be enough to wipe your record clear.
- Drive less
Anytime you take out an auto insurance policy, you’ll be asked to estimate how many miles you expect to drive per year. This is to help insurance companies gauge the chances of you getting into a car accident. The fewer miles you drive, the lower the risk.
That means if you drive less, you’ll also pay a lower car insurance premium. So try walking, riding your bike, or using public transportation to commute to work. Or opt to have a pay-as-you-go auto insurance plan track your mileage.
Keep in mind that you’ll have to show a significant decrease in mileage to incur a discount.
- Raise your deductible
Another way to lower your auto insurance premium is to simply increase your deductible. The higher the deductible, the lower your premium.
Just make sure to ask your auto insurer exactly how much you’ll save on your premium before raising your deductible. That way, you know if the change is worth it to you or not.
- Improve your credit score
Did you know that auto insurance companies look at your credit score to determine your rate? That’s right. Though it may seem totally unrelated, your credit score shows how responsible you are. In fact, studies show that those with higher credit scores tend to file fewer auto accident claims.
That means you might lower your auto insurance rate by improving your credit score. You can do this by paying off your debts on time, having mistakes removed from your report, maintaining a healthy debt-to-income (DTI) ratio, and more!
- Look for discounts
Many auto insurance companies offer policy discounts. In fact, you’d be surprised at all the reasons you might qualify for one. You might get a discount for any of the following:
- Having multiple related drivers under one policy
- Having multiple vehicles under one policy holder
- Having a B point grade average or higher as a student under 25 (if you’re still working on your license, consider getting learner driver’s insurance)
- Bundling auto insurance with another type of insurance offered by the same company (like home insurance)
- Taking an accredited defensive driving course
- Having a hybrid or alternative fuel vehicle
- Having safety features like antilock brakes
- Installing anti-theft devices like car alarms
- Being in the military or part of a certain company or organization
- Paying the entire annual premium amount upfront
- Going paperless with insurance documents
- Setting up automated payments
That’s not an exhaustive list, but it’s a good start. Call your auto insurance company to ask them what kind insurance rate discounts they offer.
- Get rid of unnecessary coverage
Auto insurance agents like to upsell you on the most comprehensive coverage. But the truth is you probably don’t need it all.
For example, you may not need roadside assistance or rental car insurance. In fact, you may already be covered for some of these things through other insurance policies.
Or your car may simply not be worth much coverage. Say it’s an old car that’s only worth $1,000. Is it really worth paying $1,000 per year for collision coverage? Probably not. You’re better off just replacing the car if it ever gets totaled.
Ultimately, you only want to pay for the auto coverage you need. Nothing more.
- Move to another location
You’re unlikely to move just to save on auto insurance. However, if you’re already planning to change locations, you might as well factor in how geography impacts your auto insurance rate:
Areas that are less densely populated, have less crime, and have fewer natural disasters will have lower auto insurance costs. Why? It means you’re less likely to collide with other cars, less likely to have your car broken into, and less likely to have your car damaged by natural causes.
Final thoughts
At the end of the day, there are many ways to lower your car insurance premium. Not every one will work in every instance, but you’re bound to find at least one way that will work for you from the list above.
Saving even just a few dollars on your premium can add up to a lot in the long run. So don’t ignore these tips. Try one out and see for yourself!