The average monthly cost of car insurance is $143, according to the ReliableInsurance rate study. But this does not imply that you will pay this price.
Companies calculate your premium based on a range of factors, including the type of automobile you drive and how long you’ve been insured. Understanding what affects your auto insurance premiums allows you to receive good coverage without breaking the bank.
Here are eight tips to help you save money on car insurance.
1. Shop around
Although auto insurers utilize identical characteristics such as age, driving history, and geography to compute your vehicle insurance premiums, they weigh them differently. This is why it’s critical to compare pricing.
To demonstrate the value of shopping around, ReliableInsurance analyzed costs for 35-year-old drivers purchasing full coverage insurance from the nation’s major insurers. We discovered that costs range by hundreds of dollars each year. Note: Despite being one of the largest insurers in the country, Liberty Mutual is not included in our research since it does not offer rate information.
In fact, switching from the most to the least expensive carrier among the nation’s biggest insurers can reduce average monthly premiums for good drivers with good credit from $215 to $107. And savings might be much greater for drivers with a recent at-fault collision or low credit, with average monthly premiums dropping from $342 to $158 and $594 to $156, respectively.
However, these rates apply countrywide and only take into account nine of the country’s top insurers. Your cost will vary based on your location. For example, the firm with the lowest rates in one state may not be the cheapest in another. And the cheapest company for a good driver with good credit may not be the cheapest for someone who has a DUI or has just been in an accident.
2. Take advantage of car insurance discounts
Every insurance provider offers unique techniques to reduce your automobile insurance premium. Check out your insurer’s discounts page and ask your agent to go over your potential savings to ensure you’re getting everything you’re eligible for.
Our car insurance discounts page provides more information on which insurers offer different savings. However, keep in mind that you should compare quotations according to your own circumstances. Just because an insurer provides several discounts does not imply that it has the lowest overall price.
3. Drive safely
Speeding citations, accidents, and other traffic infractions raise car insurance rates. If you receive a citation, you may be offered the opportunity to attend traffic school to have it dropped or to minimize the number of penalty points on your driving record.
4. Drop car insurance you don’t need
If your automobile is a clunker, you may want to consider dropping collision and comprehensive insurance, which cover car damage. Collision insurance pays to repair the damage to your automobile if it collides with another vehicle or object or flips over. Comprehensive insurance covers theft, storm damage, vandalism, and collisions with animals such as deer.
If your automobile is worth less than your deductible plus the cost of annual coverage, it’s time to cancel them. Collision and comprehensive coverage never pay more than the car is worth.
Consider if it is worthwhile to pay for coverage that may only reimburse you in modest amounts, if at all.
However, if you choose not to get collision and comprehensive coverage, remember to set away the money you would have spent. When your clunker fails, put it in a fund for car repairs or as a down payment on a newer vehicle.
5. Drive a car that’s cheap to insure
Before you purchase your next vehicle, research auto insurance prices for the models you’re considering. The vehicle you drive influences your auto insurance cost, especially if you get collision and comprehensive coverage. Small SUVs and other safe and reasonably priced vehicles are typically less expensive to insure than flashy and pricey cars.
6. Increase the deductible
You can save money on collision and comprehensive insurance by increasing your deductible, which is the amount the insurance company does not cover while paying for repairs. For example, if you have a $500 deductible and a $2,000 repair expense, the insurer will reimburse $1,500 after you pay the $500.
Savings vary per company, so check rates with different deductibles before making a decision.
7. Improve your credit
Your credit score can play a significant role in how much car insurance providers charge. It can sometimes count more than your driving record. However, in California, Hawaii, Massachusetts, and Michigan, insurers are not allowed to consider credit when calculating prices.
To improve your credit, follow these three steps:
- Make your loan and credit card payments on time.
- Maintain credit card balances well below your credit limit.
- Open new credit accounts just as needed. Applying for too many credit cards will lower your credit score.
8. Don’t drive a lot? Consider usage-based insurance
If you don’t mind having your driving habits tracked, look into usage-based or pay-per-mile insurance to save money on auto insurance. To join, download an app or install a small gadget in your vehicle that sends data to the insurance company.
Metromile, Allstate, Nationwide, and Mile Auto all provide pay-per-mile insurance in select states. With this coverage, you usually pay a basic charge plus a per-mile rate. So, if you don’t drive vast distances or commute frequently, it could be a viable option.
Several additional insurers, including State Farm, Progressive, Safeco, and Travelers, provide usage-based insurance plans that monitor actions such as car speeding and harsh braking. They provide discounts or reduced charges for safe driving.
Some of these programs may appear to be a no-brainer because you can receive a discount simply by signing up. However, if you are judged a hazardous driver, your insurance costs may rise. Before joining, make sure you understand what activities are tracked and how they affect your rate.
