Part of the solution is understanding how premiums are calculated, what insurers consider to be higher risks, and adapt your behavior accordingly. Other approaches are relatively simple takes on consumer smarts that you probably already use in your everyday life. You don’t need to become an expert on the insurance industry, but a little effort can go a long way when it comes to spending less money on car insurance.
We’ve been digging into the industry to give you a head start. Adopt a few of these measures, take a smart approach to your auto insurance, and within a year you can see some great changes to your premiums.
1. See What’s Out There
The obvious way to save on your insurance premiums is to shop around for the best deal. If you’re not happy with your current provider, take the time to research other options. Get quotes from as many companies as possible. Insurance companies look at your credit score when preparing your quote, but these are soft inquiries. Unlike hard inquiries, they won’t lower your credit score. You have nothing to lose and everything to gain by shopping around.
Every insurer’s website will make it sound like that company is the best. That’s why it’s important to be discerning when looking at online information. Along with getting quotes, it’s wise to do some research on the provider. Look up the company on the Better Business Bureau to see complaints from past customers. The tried-and-true method of asking friends and family members for recommendations works too. Failing that, you can look for consumer reviews online.
2. Check Your Credit Score
A great credit score is necessary to make progress in the modern world. If your credit is suffering, you’re most likely paying more than you should for car insurance. As we mentioned, insurers use a customer’s credit score to determine their premium costs. Research has shown that people with good credit are less likely to file insurance claims.
Fixing bad credit can be a struggle, but it’s worth it. The time will pass either way, so make sure that everything you’re doing can help improve your future credit. Even if you’re already quite responsible, it’s still wise to check your credit report often. Mistakes happen, but if you can correct them quickly, they’ll be less likely to affect your premium.
If you’ve recently improved your credit, congratulations! You’ve accomplished something great. Now is the time to get quotes and ensure that you can save as much as possible.
3. Be Protective
Providers determine premiums based on many factors. One of them is the likelihood that your car will end up stolen. Your insurance company might be willing to lower your premium if you install an anti-theft device in the vehicle. The level of discount is often determined by the type of device you have. Immobilizers are extremely attractive to insurers because they actively disable the vehicle, therefore unless the thief has access to a transporter, your car’s going nowhere. Many insurers also look favorably upon GPS trackers, as these can assist in the recovery of the vehicle following a theft.
Likewise, you also may be able to get a discount for demonstrating that you’re a safe driver. It is common for insurers to lower your premium after you’ve gone a certain amount of time without filing any claims. While you can’t control the behavior of other drivers, you can make yourself a more attractive risk to insurers by putting effort into improving your own abilities. Most policy providers will provide discounts to drivers who have completed a state-approved defensive driving course. Often there are options to take a purely online course, but it is best to check with your insurer what their requirements are before booking lessons.
4. Drive Less Often
This option isn’t for everyone. If you work from home or otherwise don’t get out much, take advantage of the low-mileage discounts offered by many providers. Less time on the road means less risk of an accident or theft. Your premium should reflect the number of miles driven in a year. The threshold for a low-mileage discount can vary, but usually this clocks in at less than 7,500 miles per year. It may be the case that you’ve spent years only taking occasional journeys, but your carrier will not be aware of you average driving distances unless you let them know. Give them a call to discuss your usage, and inquire about the possibility of this discount.
5. Consider a Higher Deductible
This idea might seem counter intuitive at first, but by requesting a higher deductible, you can often save on your premium. You’ll be taking a risk that could result in owing more in the event of an accident. It’s also possible that you’ll never have an accident at all. This is really a case of spending some time carefully assessing the amount of risk you’re comfortable with. Look at the crime rates in any areas your car is usually parked for significant periods of time. Do you tend to drive on roads with higher accident rates? Honestly assess your own driving skill too — are you confident that you behave in a risk-averse manner? If you feel that there is a markedly lower chance of you making a claim, it may be time to raise that deductible.
6. Drop Full Coverage
There's a misconception that it's best to keep all vehicles insured with a full-coverage policy. This isn’t always true. If you have an older car, you could consider switching to the minimum amount of liability coverage required by your state. When the value of the car is so low that it will be totaled in the event of an accident, a full-coverage policy is unlikely to be worth the cost.
If you currently have a high-priced comprehensive policy, and are reluctant to take your coverage down to the minimum required liability, it’s worth considering a point in between these poles. Many insurers also offer collision cover as an option. This doesn’t go as far as your full fire and theft cover, but it protects you in the case of damage caused by collisions with other vehicles and objects. It also provides cover for damage caused by hitting potholes.
As you can see, it’s possible to lower your insurance premium. The more you can improve your financial situation and track record in life, the more benefits you’ll receive. Insurance companies want to work with responsible, safe drivers who create as little risk as possible. Be on your best behavior and stay safe on the road, and if you don’t like your current insurance provider, don’t be afraid to look elsewhere.