Car insurance is a requirement of owning a car. While it does cost money to pay for that coverage, there are great benefits if you were to get into an accident.
Since most people hope that they will never be in an accident, having car insurance is usually just a necessity. Fortunately, there are a few ways that you can save money on your car insurance to lower your monthly payments.
Here are a few tips to cut your auto insurance.
Shop Around for Car Insurance
If you feel that your car insurance is too high, you are likely paying more money than you need. In this case, it doesn’t hurt to ask your current insurance agency to lower your premiums. However, most will not be able to drastically lower your insurance costs.
To really save money on auto insurance, you will need to be willing to change to a new insurance agency. Switching companies will provide you with the leverage to start fresh and get the best rates.
Many companies offer initial discounts for new customers, which will help for the first year. After that, keep an eye on your premiums to make sure they don’t creep up too high. By switching insurance providers, you can often save several hundred dollars.
Start Car Insurance Shopping Early
Do you plan to shop for auto insurance in the next few months? Rating structures are consistently changing which is why comparison shopping is so beneficial if done periodically.
Now you’ve probably already heard of all the discounts offered through TV commercials and radio. I’ve found that some of these discounts can be very helpful while others are not as great as they appear to be. I will expand a bit on these discounts below.
So let’s say it’s early January and your policy expires in early February. You’re tired of the problematic company you’re currently insured with. When is the best time to start shopping?
The answer is today. Many companies have what is called a future effective discount. If you pay today for your policy to start next month, there’s a really nice chance you’ll save more. Shopping in advance shows responsibility and guess what, insurance companies love insuring responsible individuals.
It will also be assumed that you are not the type of Insured who will be late on payments or lapse a policy. By shopping in advance you get on the companies good side early on.
Look for Common Car Insurance Discounts
Many auto insurance companies will offer discounts to drivers that meet certain criteria. These discounts can drastically impact the amount you have to pay, so they are worth exploring.
When you are shopping for car insurance, take advantage of any offers and deals they might have. Fill out your profile completely so that the insurance agency has a complete picture of your background.
By knowing if you have multiple cars, are a safe driver, or are not commuting regularly, you can save money on your auto insurance.
Here are some of the most common discounts that you can get on your car insurance.
Multi-Policy Discount
When you shop for auto insurance, consider combining your home with your auto insurance carrier. Companies may offer up to 15% off your auto insurance premium.
If your annual auto insurance premium is several thousand, this could really pay off. However, it’s not uncommon for an auto policy with Company “A” and a homeowner’s policy with company “B” be less expensive than a package policy with Company “C”.
For the best bottom line, It helps to ask for three quotes, one package policy, one stand-alone homeowner’s policy and one stand-alone auto policy. If you ask for an Independent Agent to do this you may end up with a package policy with Metlife, a stand-alone homeowner’s policy with Travelers and a stand-alone auto quote with Progressive.
Shopping this way can take some time but you may save a couple hundred a year.
Multiple Driver and Multiple Car Discount
The multi-car discount is given when you insure two or more cars with the same insurance company. Now, when I started out as an agent I thought this was always the cheapest way to go with auto insurance, but it isn’t.
If you have multiple Drivers this definitely isn’t going to be the best way to go. Once again, Company ‘A’ may have their rating structure set up well for younger drivers while Company ‘B’ may work well with Drivers in their late 60s early 70s.
Now, if one driver is 20 while the other driver is 80, putting both drivers and both vehicles on the same policy could possibly be much more costly than that of two separate stand-alone auto policies.
Safe Driver Discount
Being a safe driver all the time will help you save money on your car insurance. Insurance agencies are able to see your driving record, including speeding tickets, traffic violations, and other official citations. They can also see how many accidents you have had and how many insurance claims you have made in the past.
All of this adds up to create a profile of how safe you are as a driver. The more tickets and accidents you have, the less safe of a driver you are.
To an insurance agency, less safe drivers have to pay more money because there is a greater chance of an accident. Having an accident or speeding ticket may increase your premium by several hundred dollars.
One of the best ways to lower your car insurance is to drive safely consistently for many years. Do this by driving slower, obeying the laws, and being careful in situations that may increase the chance for accidents, like in the rain.
Smart Shopping Discounts
Did you know higher limits of liability can increase your “insurance score”? Like a credit score, an insurance score is used by insurance companies to help determine your rate.
Liability coverage covers the other Driver in the event you are negligent in an auto accident. While some drivers opt for the state minimum requirement, others are more concerned about protecting themselves from the loss of assets.
These drivers often opt for much more coverage. A few examples of higher limits of coverage include limits of 100/300/100 or 250/500/100. The first set 250 represents $250,000 of (BI) or bodily injury coverage for each person you may injure in an auto accident. 500 represents $500,000 of total (BI) Bodily Injury coverage for all injuries caused in an auto accident. The last digits represents coverage for property damage (in thousands).
Now that you know more about this coverage this is how it will affect your quote. During the quote process when you shop for auto insurance, the company will ask how much prior coverage you have.
You will find that all Drivers currently insured will see a lower rate quote compared to those without prior coverage. Also, a Driver who currently has higher limits of coverage will see a lower rate quote while shopping, compared to if he or she had the state minimum liability or lower limits of coverage. In short, the higher your current limits, the better insurance score you will have which will result in a better rate quote.
Get a Beater Car for Commuting
New cars are the most expensive to insure because they have a higher overall value. Same goes for larger trucks and luxury vehicles that cost more upfront. Generally, the higher the sticker price of a vehicle, the more your car insurance will cost.
If you are commuting daily, it may make sense to get a second car just for commuting. This can help you save money on gas by getting better gas mileage. Plus, smaller and cheaper cars will cost less for insurance, so you can save even more money.
The good thing about getting a beater car specifically for commuting is that they often are less expensive than a brand-new vehicle. Instead of buying a fancy new truck or large SUV, consider getting a used sedan that is less expensive.
Update Your Driving Profile
For many of us, we are driving less post-pandemic than we did previously. If you are no longer commuting regularly because you are working virtually, you can save money on your car insurance.
To do this, make sure that you update your auto insurance provider with how you are using your vehicles. Your premium rates can be drastically affected by how many miles per week you drive, if you are commuting, and if you use your vehicle for business.
Especially if you have had changes to how much you are driving, make sure that you let your insurance agency know.
Final Thoughts
I hope these auto insurance discounts and tips help you save more on your next policy when you shop for auto insurance.
Whether you’re shopping for a basic liability policy or a policy with higher limits, these tips should help you get the coverage you need at the most competitive price.
