When you drive, having auto insurance protects you financially in the event of an accident. Whether you only have basic liability insurance or full auto coverage, it is essential to make certain that you are getting the best value possible on your policy. This holds true regardless of the type of coverage you have. Here is a list of 15 different ways to cut costs associated with auto insurance.
If you insure many vehicles and drivers under the same policy, you may be eligible for a discounted bulk rate for your auto insurance. This could help you save money.
You can be eligible for lower rates on your auto insurance policy if you have other types of insurance coverage with the same company.
Keeping a clean driving record is one of the most important things you can do to bring down the cost of your auto insurance.
How Much Does Car Insurance Cost?
The cost of auto insurance can vary greatly from one driver to the next due to factors such as the state in which they reside, the insurance companies they opt to work with, and the level of coverage they purchase.
According to the most recent statistics made available by the National Association of Insurance Commissioners (NAIC), the average cost of auto insurance for a single driver in the year 2020 was $1,176. According to the data provided by the NAIC, premiums will be 2.4% lower in 2020 compared to 2019.
According to data provided by the AAA, the yearly average cost of car insurance for brand new vehicles is projected to be somewhat higher, coming in at $1,202. The numbers are rather close to one another, which suggests that you may need to include an amount roughly equivalent to $100 per month for auto insurance in your budget for the purchase of a new car.
Note: You have control over some of the factors that determine the cost of your auto insurance, such as your driving record; however, the state’s regulations and the number of accidents that occur in that state can also have an impact.
How to Get a Discount on Your Car Insurance
You can reduce the cost of your monthly rates for auto insurance in a number of different ways.
1. Make the Most of Discounts Offered to Customers With Multiple Cars
If you only insure one vehicle with a certain provider, you could end up paying more overall for coverage than if you insured multiple vehicles with that provider. Because they desire your business, insurance firms frequently provide customers with what might be equated to a bulk rate.
In most cases, multiple drivers must share a single household and be linked to one another either by blood or by marriage. It is also possible for two people who are not connected to each other to earn a discount; however, in most cases, they will need to own the vehicle jointly.
If one of your drivers is a teenager, you may anticipate paying a higher premium for their insurance. However, you may be eligible for a good student discount if the teen maintains a grade point average of B or higher, or if they place in the top 20 percent of their class.
In most cases, your child will be eligible for this discount until they reach the age of 25. Because they can be as low as 1% or as high as 39%, it is imperative that you provide evidence of your teen’s academic success to the insurance agent representing your family.
If you have multiple insurance policies with the same provider, such as vehicle and house insurance, you may be eligible for a discount on your auto insurance premium. When you combine your homeowners insurance and auto insurance with Allstate, you might save up to 25% off your total premium.
2. Remain Alert While You’re Driving
Drive in a responsible manner. The more aware you are of your surroundings, the fewer accidents and moving infractions you will have, both of which are factors that contribute to an increase in your insurance premiums. Travellers provides discounts for safe drivers, the amount of which is dependent on the customer’s driving history.
When a driver commits a moving offence, they may receive points on their driving record. Accumulating more points may result in higher insurance costs.
3. Enrol in a course that teaches defensive driving
Drivers who successfully complete an approved defensive driving course may be eligible for reductions from their auto insurance providers. Taking a course on defensive driving or accident avoidance can be another way for drivers to lower the total number of points listed on their licences.
It is vital that the work that is expended and the expense of the course translate into sufficient insurance savings, so when you sign up for a class, make sure to contact your agent or insurance provider about this discount.
It is essential that you enrol in a class that has been granted accreditation. Accreditation is governed in a manner that is unique to each jurisdiction. On its website, GEICO gives you the option to examine what the requirements are in each state.
4. Do Your Research to Find the Best Deals on Auto Insurance
If your policy is ready to be renewed and the annual price has significantly increased, you may want to look into other options and get estimates from a number of different insurance providers. It is in your best interest to shop around for insurance every year or two and get quotes from many providers in the event that you may find a better deal elsewhere.
However, quality does not always come at a higher price. The creditworthiness of the insurer is another factor that should be evaluated. What good is a policy if the company does not have the financial strength to pay its insurance claims when those claims are made? Think about looking into websites that provide ratings of the financial stability of different insurance firms.
It is crucial that your firm has a strong financial foundation, but it is also essential that you fully comprehend the terms of the contract you have entered into. Standard and Poor’s provides the information that the website Insure.com uses as the foundation for its assessments of various insurance companies.
The less miles you travel in a given year with your car, the more probable it is that your annual insurance premium will be reduced. Always make sure to enquire about the mileage thresholds of a corporation.
5. Take Public Transportation.
When you sign up for vehicle insurance with a company, you will typically be required to fill out a questionnaire about yourself. One of the questions that you can anticipate being asked by the insurance company is the annual mileage that you put on the vehicle that is insured.
If you drive less than one mile per day, your insurance rates will be lower than if you use your car to travel three hours each way to work each day; yet, if you use your car to travel three hours each way to work each day, your premiums will be higher than if you drive just one mile per day.
However, you should be aware that in order to qualify for a discount, you will probably have to considerably cut down on your miles first. In order to ensure that your efforts are not lost, you should enquire with your insurance company about the various mileage criteria that the firm observes.
6. Reduce the Size of Your Vehicle
Insuring a 5,000-pound, top-of-the-line vehicle can be more expensive than insuring a smaller, safer commuter car that costs less overall. A large SUV may sound like a fun ride, but it can be more expensive to insure. If you buy a hybrid or a car that runs on an alternative fuel, you may be eligible for a discount from some insurance companies. These categories of automobiles are eligible for a discount of 5% with Farmers Insurance.
7. Raise the amount of your insurance deductible.
When shopping for auto insurance, you will often have the option to select the deductible amount that works best for you. In the event of an accident or another form of claim, this is the amount of money that you will be responsible for paying out of pocket before your insurance company begins picking up the tab for the remaining balance.
Depending on the coverage, the deductible amount might range anywhere from $250 all the way up to $1,000. The catch is that the annual premium will often increase in proportion to the decrease in the deductible amount. On the other hand, the premium will be lower if you choose a greater deductible.
If you want to know how raising your deductible can influence your rate, talk to your insurance representative. It is possible that your annual premium will be reduced by an improved amount of a few percentage points, or the savings may be minor.
If you want to minimise the possibility of your premium being raised as a result of filing lesser claims, increasing the deductible may be a good strategy for you to consider.
8. Work on raising your credit score.
Your history behind the wheel is taken into serious consideration when calculating the cost of your vehicle insurance policy. This is due to the fact that a driver who has been involved in a number of collisions may end up costing the insurance provider a significant amount of money.
However, while setting insurance prices, some insurance firms take a customer’s credit rating into consideration as well. Put another way, according to Michael Barry, senior vice president and head of media relations at the Insurance Information Institute:
“Many insurance companies employ insurance scores that are based on credit. It is a controversial topic in the legislatures of certain states…[but] insurers will explain that their studies demonstrate that if you are responsible in your personal life, you are less likely to file claims.”
It’s possible that your credit card provider or bank will provide you with free access to your credit score. AnnualCreditReport.com is another website that allows you to see your credit reports without cost.
9. Take the Location Into Account
It is highly improbable that you will relocate to a different state just due to the fact that the prices of vehicle insurance are lower there. However, if you are considering a move, you should include the possibility of a change in the premium you pay for your auto insurance in your financial planning.
10. Evaluate Your Current Coverage
Because you can’t know for sure if or when an accident will happen, dropping some types of coverage can put you on a precarious financial footing. If you are driving an older vehicle that is on its final legs, however, it may make sense to omit collision or comprehensive coverage from your auto insurance policy.
In this scenario, the car would most likely be considered a total loss by the insurance company in the event that it was involved in an accident. If the vehicle is only worth $1,000 and the cost of the collision coverage is $500 per year, it is possible that purchasing the policy is not financially prudent.
11. Secure Your Property with Anti-theft Devices
If you install anti-theft equipment in your vehicle, you may be eligible for a rate discount from your insurer. If your vehicle is equipped with an anti-theft device, GEICO estimates that you could have “potential savings” of 23%.
Your insurance provider ought to be able to provide you with particular information regarding the kinds of tools that can lower your prices. You could wish to find out more information regarding car alarms and LoJacks, two different types of gadgets.
Consider whether the cost of adding the device will result in savings that are big enough to make it worthwhile to go to the trouble and expense of doing so.
12. Communicate with Your Agent.
There is a possibility that, in addition to the cost savings that are indicated above, there are more savings attainable. It is common sense to enquire about whether or not a company provides any special discounts for certain groups of people, such as members of the armed forces or employees of a particular corporation. You never know what kinds of price reductions might be applicable to your situation until you look into them.
13. Consider a Pay-As-You-Go Insurance Plan Instead
If you are a cautious motorist who drives a relatively modest number of miles each year, you could qualify for a usage-based programme called black box insurance. One example of such a programme is Allstate’s Drivewise. You will get a discount just for signing up, and then another discount every six months for maintaining your good driving record.
You are required to give your insurance company permission to monitor your driving behaviour by means of a telemetric device that is installed in your vehicle. This will allow the company to determine how often you drive, when you drive, and how safely you drive. If you drive less than 10,000 miles per year, you can be eligible for a discount on your insurance premium by enrolling in this kind of programme.
14. Conduct research into available additional discounts.
You should also check to see if there are any reductions available, such as deals that let you to pay the whole annual or six-month subscription all at once. It is possible to reduce your expenses by entering into agreements to get electronic invoices and documents as well as by becoming a member of specific organisations or groups that provide discounts.
However, you shouldn’t let a big list of potential discounts impact your decision. Compare the discounted and the standard premiums offered by various insurance providers.
15. Discard Any Insurance That You Possibly Won’t Need
You may not require all of the bells and whistles that are included in an insurance policy, such as coverage for roadside assistance and rental car reimbursement. Go through your insurance policy clause by clause and see if there is anything you can get rid of that will save you money.
Check with the customer service department of the credit card business you use to determine whether or not it provides cardholders with advantages such as roadside assistance. Because of this, you might be able to remove this component from the auto insurance coverage you have.
Which Auto Insurance Provider Is Known for Offering the Most Competitive Premiums?
According to a report from CNBC that was published in April 2023, Geico offered the most cost-effective insurance with annual rates that ranged on average from $373 for minimal coverage to $1,353 for full coverage.
What Kinds of Coverage Are Available to Me?
You have access to a wide variety of coverage options; however, not all of them can be considered “optional.” Nearly all states mandate that drivers have liability insurance that covers both injuries to people and damage to their property.
This protects you financially in the event that you inflict bodily harm to another person or property damage to their car while operating a motor vehicle.
Medical payment coverage protects you and your passengers in the event that you are engaged in an accident with someone who does not have insurance. Uninsured motorist coverage protects you in the event that you are involved in an accident with someone who does not have insurance.
It is often up to you whether or not you carry collision and/or comprehensive coverage on your vehicle; but, if you are financing your vehicle, your lender may force you to do so. These choices cover damage to your own vehicle in the event of an accident.
Is There Anything That Your Car Insurance Won’t Cover?
Mechanical failure and general wear and tear are almost never covered by insurance policies. Damages experienced or incurred while driving for commercial purposes are typically not covered either.
Neither are damages sustained or incurred while driving for personal reasons. Consider the delivery of food or other items, as well as ridesharing options such as Lyft and Uber.
You are only protected for personal driving, however this does include commuting to and from work. However, you are only covered for personal driving.
Institute of Insurance and Risk Management. “The Fundamentals of Auto Insurance: Comprehending Your Coverage.”
The Crux of the Matter
There is a good chance that the cost of auto insurance will continue to go up, but there are a few things that you can do to alleviate some of the financial burden. You should be able to find your way forwards with the help of these 15 pointers. Make it a habit to evaluate multiple top auto insurance providers so that you can select the policy that satisfies your financial and coverage requirements to the greatest extent.