Over the last few years, auto insurance rates have been on the rise and the trend is expected to continue throughout 2019.
Whether you currently have a policy or you're shopping around, there are ways to negotiate a lower premium. To keep more of your hard-earned cash in your pocket, here are tips to save money on your car insurance.
Don't fall into the trap of assuming certain insurance companies offer the cheapest policies. Major companies spend a lot of money in an attempt to convince you that they offer the lowest rates.
Maybe you've taken it a step further and asked friends and family who they use. Keep in mind that due to a variety of factors, everyone's insurance premiums are different, and there's a good chance that your premium won't match what others pay.
There's only one surefire way to get the best price. You have to shop around and get multiple insurance quotes. For the best results, look into nationwide, regional and local insurance companies.
Take a Defensive Driving Course
Assuming your driving record is clean, taking a defensive driving course could mean a discount of up to 15 percent on liability and collision coverage for up to three years (though results may vary depending on your insurance company and where you live). Sometimes, all drivers of the insured vehicle must take the course, or you may have to be older than 25 years old to qualify.
If you have points from minor traffic violations on your record, a defensive driving course may remove the violation from your record, but you won't qualify for the discount.
The exception is if you live in New York. Taking a DMV-approved, accident-prevention course may save you up to 10 percent on liability and comprehensive insurance and lower your point total by up to four points.
Raise Your Deductible
If you're willing to raise your deductible, you should see your premium drop. Bumping your deductible up to $500 from $200 could result in up to a 30-percent discount on your premiums while raising the deductible up to $1,000 could lower your premium by 40 percent. The exact savings depends on many factors, including your location, driving record, existing policy discounts and the cost to replace or repair your vehicle. Before raising your deductible, it's a good idea to reach out to your insurance agent to find out exactly how much you'll save.
If you do this, keep in mind that you're basically betting that you won't get in an accident. It can save you money in the short term but could end up costing you more if and when you do get in an accident.
Before you raise your deductible, do some basic math to see how much you'd save each year with lower premiums and make sure the savings outweigh the potential deductible you'd have to pay in the event of a crash.
Monitor Your Credit Report
Auto insurers often look at your credit report to determine what your premium should be. Your credit report will give a good idea of how responsible you are when it comes to paying back debts. If your insurance company sees a high score and good report, you'll likely be eligible for savings. Nationwide, drivers with fair and good credit saw premiums that were an average of 17 percent lower. Drivers with poor credit can pay up to 67 percent more for premiums than drivers with good credit.
Bundle Policies Together
If you use multiple companies for auto, home and life insurance, you may be leaving a lot of money on the table. Bundling renter's insurance and auto insurance together typically results in a five to ten-percent discount on your premium.
Getting homeowner's insurance and auto insurance from the same company could lower your car insurance rates by up to eight percent. Even better, you may see your homeowner's insurance premium drop by up to 20 percent.
Pay Your Policy in Full
Sometimes it's tempting to opt for monthly payments since they're lower individually and easier to manage and plan for. However, you'll receive a discount if you elect to pay your policy ahead of time in larger increments.
Generally, most auto insurance companies give you the choice of paying up-front for a six-month policy. Some companies may even let you pre-pay a 12-month policy. Paying the full premium typically results in a five to ten percent reduction.
Consider Dropping Comprehensive and Collision Coverage
You don't have to have collision and comprehensive coverage. Collision coverage offers financial compensation if you're in an accident, regardless of who's at fault. Comprehensive coverage pays you for various damage, including fire, flooding, vandalism and hail.
This isn't a decision to take lightly, as dropping your coverage could result in costly repairs. If you have an expensive or classic vehicle, it's probably a good idea to keep collision and comprehensive coverage. On the other hand, if your car's worth less than $3,000 or older than ten years, you're probably better off with just liability coverage. On average, collision coverage costs $488 a year and comprehensive coverage costs $172 a year, according to the Insurance Information Institute.
Take Advantage of Discounts
There are many discounts available, but your insurance company often won't come out and tell you about them. Ask your insurance agent about all the available discounts they offer and see which ones you qualify for. Some of the more common discounts include:
- Insuring multiple cars under one policy
- Agreeing to receive electronic statements instead of paper statements
- Reduced rates if your car has specific safety or anti-theft features
- Members of certain organizations, such as AAA, often receive insurance discounts
- Clean driving record discount
- Insurance bundling discount
Look Into Pay-per-mile or Usage-based Insurance
The average American drives a bit over 1,000 miles a month. If you drive less than that, then you may qualify for a lower insurance premium.
Ask your insurance provider if you qualify for a reduced premium due to your driving habits. Sometimes, the insurer requests that you take pictures of your odometer or install a device in your car to verify your mileage. If you install a device in your vehicle, it may also track your average speed and braking frequency, so if you're a safe driver, you'll likely qualify for additional discounts.
Drive a Safe Vehicle
This tip usually only applies if you're shopping for a new car. Your insurance company considers your vehicle and even its particular features when calculating your premium.
If you're a young person driving a high-powered sports car, expect a high premium. Conversely, if you own a low-horsepower commuter car with top-of-the-line safety features, your premium will be lower.
Even if you're not planning on buying a new car, adding safety features, such as a car alarm, could result in reduced rates.
Typically insurers look for items like airbags, anti-lock brakes, high crash test scores and advanced safety features like pre-collision warning and braking, blind-spot monitoring and backup camera.