Insurance

13 Tips and Ideas for Cutting Car Insurance Costs


13 Tips and Ideas for Cutting Car Insurance Costs 29.07.20191 Comment
13 Tips and Ideas for Cutting Car Insurance Costs

When you are planning to buy a car, you primarily focus on its technical characteristics, purpose and price, often forgetting such an important thing as auto insurance.

Owing to the auto insurance system you get an opportunity to drive without any fear of paying lots of money in case you get into a traffic accident, serious damage to your car or yourself occurs or your car is stolen.

Of course, as a rule, the price of a car significantly exceeds insurers’ rates, but there are exceptions. Besides, you will have to pay for your policy regularly, say, once per month or year. Such non-scheduled costs often impose a serious burden on your wallet.

According to a number of reputable sources, the average vehicle insurance rate in the United States is currently $3,717 per year.

Even if you have a considerable sum of money that allows you to easily pay for both your new car and your policy it doesn’t make sense to overpay for all these things, but it is a rare case. In most cases, you are bound to be happy to cut your costs just because your saved money will be useful for your other important purchases.

Anyway, here are a number of useful tips that are sure to help you cut down your costs.

Deductibles

Increasing your deductible, which means the amount of money you are ready to pay on your own in case an accident or any damage to your car occurs, is a brilliant way to lower your coverage costs.

The deductible is inversely proportional to the cost of auto insurance and tends to vary anywhere from $200-$250 to $1,000. When the deductible increases in cost the insurer pays you out less sum of money that is your premiums decrease in case you get into an accident and vice versa, when the deductible decreases in cost the insurer pays you out more sum of money that is your premiums increase.

Suppose, your deductible costs $500 and the damage to your car is estimated at $5,000. In this case your insurer pays you just $4,500 and the rest of the damage is covered with your deductible.

deductible

Before raising your deductible first of all ask your insurer to show you the dependencies between deductible costs and premiums. This way, you can choose the most appropriate deductible for yourself.

If you are not sure to cover the damage when having an accident, create an emergency fund. It is certain to help you out when you are in financial trouble!

The pay-as-you-drive option may be what you need

Don’t ignore breaks on your premiums offered by a number of insurers when you allow them to monitor your driving behavior! What does it ordinarily include?

  • The time you tend to drive
  • Your daily, monthly and annual mileage
  • How often you use the breaks
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This factor can be especially effective if you are an exemplary driver, rarely drive, leave your car for the night and drive it mostly in safe areas where car accidents, thefts and damages to cars rarely occur.

Monitor changes

In our life, everything changes and insurers’ policies are not exception to this rule. Keeping up with times and finding out the latest news about insurers and their policies and changes is another brilliant way to get lower insurance rates.

It is quite possible that today the chosen company totally meets your expectations concerning its price policy, breaks on premiums, variety of rates and other important factors, but in some time this company may be in financial trouble resulting in increasing its rates.

You should be prepared for such an unexpected turn of events in advance and getting the freshest information about other insurers’ policies is a good way to easily overcome any temporary difficulties.

It is a common knowledge that vehicle insurance requirements vary greatly from state to state. If you are planning to move to another state, it is quite possible that you can find there a local insurer with more favorable rates.

zebra

Monitoring and comparing rates from different companies is the key factor here. Lower prices do not always imply service of good quality. Compare what you have now with what other companies offer and find the best solution for yourself.

According to a number of reputable reports based on statistical studies conducted in 2019 the list of the cheapest vehicle insurance companies in the United States currently include USAA, Geico, State Farm, American Family, Travelers and a number of others.

If you choose one of the above companies the policy will cost you anywhere from $2,500 to $4,500 per year depending primarily on the type of auto you use and your personal data and your behavior when driving a car.

Multi-policy discount vs. different insurers

If you are going to buy a few policies at once in the same company, you have a few vehicles or are going to buy policies not only for yourself, but also for, say, your family members you can count on good discounts from insurers and take advantage of this opportunity.

Ask your agent to tell you whether his company offers any multi-policy discounts. But even if it does first it makes sense to shop around. Prices charged by companies tend to vary greatly.

It’s quite possible that you can find a company whose services without multi-policy discounts cost less than the services with discounts in your company. Of course, in both case you save your money, but your saved amounts of money can differ. It may happen that it will be more profitable for you to buy the auto insurance policies in different companies, not in the same one.

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Common car insurance discounts
Common car insurance discounts

Keep in mind that if you are planning to buy the policy for a teenager you will hardly minimize your costs for the following reason: according to a number of reputable sources, the average car insurance rate in the United States for a single 17-year-old male is currently $8,506 per year and a single 17-year-old female – $7,107 per year.

Nevertheless, there is an acceptable way out! You can count on a discount for one of the following reasons:

  • Your teenager is an exemplary student
  • Your teenager is a student who goes to school located far (more than 100 miles) away from his/her home without taking any car
  • Your teenager has completed driver classes

Besides, you can cut your costs by re-garaging a car in case your teenager takes his/her car to get to school located in a town where insurance rates tend to be low.

Ask your agent whether his company provides the above discounts and which of them.

A large vehicle vs. a small vehicle

Of course, you can be pride of buying a large car, but in this case insuring this car is most likely to cost you a considerable amount of money. Are you ready to pay for it? This question should be raised by you before you buy a vehicle.

Small cars are usually considered by insurers as safe vehicles and their insurance will cost you less. So, decide whether it makes sense to get a large car or maybe prefer a car whose insurance will not impose a severe burden on your wallet.

average-cost

Besides, a number of companies offer discounts on alternative fuel vehicles and hybrids. Buying such an unusual car is beneficial to both you and the nature, since you not only save your money, but also protect the environment.

Carpool

Carpooling is another effective way to minimize your costs. The matter is your mileage is directly proportional to your car insurance policy: the more miles you drive the higher your car insurance costs.

carpool.com
carpool.com

By means of carpooling you reduce your mileage and, therefore, you cut your auto insurance costs. Besides, you help other people get to the place where you are going; you extend the life of your car by reducing tear and wear on your vehicle as well as fuel consumption.

Long-time customer discount

Also, some companies lower their rates for long-time clients. Should you take advantage of this? It also depends on the prices charged by different companies.

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Time runs. Everything is changing. New companies appear with their new rates. Long-loved companies change their rates as well. Shop around and try to compare prices in different insurance companies. Then you will certainly answer this question on your own.

Parking the car in a garage

Of course, parking your car in a garage is considered by insurers to be a safe place reducing the likelihood that the car would be stolen or damaged. So, you can use this factor to get an additional discount and lower the total sum of money spent on your policy.

Check with your insurance provider whether it has this discount is on its list. If so, ask it to add the discount to your insurance agreement.

Prices depend on the model of a car

When buying a car you primarily focus on its model, technical characteristics and price. It’s good, but keep in mind that insurers ordinarily have different rates depending on the models of cars.

In other words, before buying a car first it makes sense to find out whether the model of a car you are choosing is considered by your insurer as a safe one. If so, you are most likely to get an opportunity to increase your savings when buying a policy. Otherwise, you will get higher rates from the insurers.

Most Stolen Cars in America
Most Stolen Cars in America

It is not profitable for insurers to set equal prices for all models of car. In fact, all insurers tend to keep detailed statistics on types of cars and raise prices for those of them that are often stolen, damaged and get into traffic accidents.

That can be easily understood based on the fact that premiums are significantly increasing for such models of cars and their owners are more likely to file claims in courts over the damages caused to their cars.

Don’t pay your bill monthly!

Almost all insurers will willingly offer you a discount in case you are ready to pay your policy all at once. It is profitable for companies to receive the full amount of money at once, not in installments, so they offer you good discounts. It’s a widespread practice all over the world.

progressive

If you want to save your money never pay your bills in installments! If you are short of money, first get the required sum of money by saving it and then pay your bill. Difference between paying your bill in installments and all at once can be substantial.

Pay for only what you really need

Insurers usually offer a variety of coverages most of which you are very unlikely to need. Say, you have an old car worth just $1,000. In this case you can considerably lower your costs by dropping a number of coverages including even such as collision and comprehensive ones that are considered to be very important. Note that if you drop these two coverages you will have to fully cover all damages on your own in case you get into an accident.

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Read your insurance policy attentively and think whether you really need all the coverages your insurer offers. Try to select only what you really need. As a rule, the insurer provides a great number of services and tries to include as many of them as possible in your policy.

Some of them are really important, but you can easily drop such services as, say, car rental coverage or roadside assistance. After all, the coverages are for you and you decide which of them is worth buying.

Try to maintain your credit rating

It is well-known that insurers consider not only driver’s records, but also credit ratings when figuring premiums. The fact that driver’s records play a major role in determining premiums by insurers is obvious, but why do they consider persons’ credit ratings?

The matter is according to a number of scientific studies person’s credit rating correlates with personal responsibility. The less responsible a person is in his personal life the greater the likelihood of filing claims. Based on this fact insurance companies prefer dealing with responsible individuals. So, with a good credit rating you can count on lowing coverage costs.

Keep in mind that according to a number of reputable sources the average automobile insurance rate for good drivers in the United States is currently $2,940 per year, whereas for drivers with one accident is $3,866, those with one speeding ticket – $3,443 and those with one DUI – $4,620.

Ask for price breaks

A number of insurers tend not to notify you of all their discounts. So, do not hesitate to ask company employees to tell you about all the discounts their company provides.

Keep in mind that the insurer as a general rule has lots of price breaks including those you are most unlikely to qualify for. Check together with your agent whether you are getting all of those the company can offer you.

Let’s consider the most popular of them in short.

– Mileage

It’s usually available in companies as the number of miles you usually cover is directly proportional to the likelihood of being involved in a traffic accident. In other words, the more miles you cover, the greater this likelihood. Low mileage shows that you rarely drive, so you are unlikely to get into an accident.

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– Air bags, auto seat belts and other similar devices

Your car can have all or at least one device of these devices. These devices are currently widespread all over the United States. They protect you from any damages in case you have a traffic accident. The devices increase the likelihood of being safe whatever happens on the road.

– Devices preventing car thefts including alarm

This is another group of useful device that protect your vehicle from theft. Thanks to them the likelihood of losing your car because of its theft decreases. So, all insurers willingly offer their clients discounts believing fairly that a car equipped with these devices is unlikely to be stolen.

– Driver course

If you have completed a driver course you can count on this type of discount, because insurers consider you as a competent driver who knows the theory of driving a car. Such drivers less often get info traffic accidents.

– Membership

This group of breaks is not always available. As a member of certain associations you can count on a number of breaks from not only your insurer, but also from your associations.

Of course, in real life you don’t always have enough free time to thoroughly understand all the nuances of an insurer and its rates on your own. So, you can ask insurance agents for help as well as use sites that specialize in providing this kind of useful information.

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Andrei Shilkov

Blog author. I am well versed in Finance and Digital Marketing. I have two bachelors degrees in Finance. Born in Russia, but later moved to the USA, to western Pennsylvania, the city of Pittsburgh. I have a Certified Public Finance Officer (CPFO) certificate. I also worked at IRS and Microsoft.

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One comment

  1. I’m moving to North Carolina soon and I am thinking about finding a new car insurance company so that I can save some money. I appreciate you explaining that insurance companies will give you discounts based on the way you drive or courses you may have completed. I have done a driver course before and installed some extra security measures in my car so I’m glad this can help me get lower rates.

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