Being mindful about your spending habits is an important part of living a financially healthy lifestyle. However, some expenses, like auto insurance, shouldn’t be eliminated from your budget altogether but they can often be reduced.
Below are some tips on how to save on car insurance costs.
1. Improve your credit.
Believe it or not, one of the most effective ways to potentially save on auto insurance is to work on improving your credit. Mark Huntley, co-founder of Credit Knocks, explains. “Many people don't know this, but your auto premiums are primarily determined by your credit score…A recent ‘Consumer Reports’ study showed that poor credit drivers paid as much as $3,000 more for their auto premiums as excellent credit drivers in Nevada. If you want to save money on auto insurance, improve your credit score.”
2. Ask about discounts.
Another strategy that might reduce the cost of your auto insurance premium is simply asking for a discount. Igor Mitic, co-founder of Fortunly.com, shares some advice that might tip the odds in your favor. “If you have a good driving history and low-risk lifestyle, you are more likely to be eligible for a discount,” Mitic says. Most car insurance companies offer driver discounts. By not asking what is available, you could be leaving lower rates on the table.
3. Shop around when it’s time to renew.
Policy renewal time is the perfect opportunity to potentially save on car insurance. Phillip Scott highly recommends the following approach. “With so many price comparison websites to choose from now,” says Scott, “it is easier than ever before to get a good deal on your car insurance. Never just stick with your current provider. It is a known fact nowadays that you don't necessarily get rewarded for loyalty, so it pays to shop around for the best deal when it is time for renewal.”
4. Ask for a recommendation.
When you’re shopping for new insurance, it’s not a bad idea to ask your friends and family for their recommendations. If your loved one has found a great deal, he or she will likely share the details. Mitic explains, “Insurance policies can vary greatly between different companies. Don’t stay with the first choice that you see. If you want to be sure you’re choosing the best option, try asking your friends for their experience. Referral recommendations are usually the safest option.”
5. Compare rates when you’re adding a new teenage driver to your policy.
Is your teenager ready to get behind the wheel? Joel Ohman, CFP and MBA, points out that you might save on car insurance if you consider moving to a different insurance provider.
“When adding a new teen driver to a policy,” Ohman says, “it's smart to compare the rate that your current provider is offering you to the rates that other companies will offer your new cadre of drivers. Some companies go out of their way to price families with teenage drivers very affordably, even including things like discounts for good grades…”
6. Raise your deductible.
Getting into an auto accident with a high auto insurance deductible isn’t much fun. However, there’s no denying that opting for a higher deductible has the potential to save you money.
Gary Weiner, personal finance blogger at Super Savings Tips says, “Raising your deductibles on liability and comprehensive insurance will save money on your premiums. By raising your deductible to a higher amount, say to $1,000 from $250, you may be increasing your payments after an accident, but the risk saves on premiums.”
Wiener does caution that if you increase your deductible to save on auto insurance, it’s crucial to have emergency funds set aside in case of an accident.
7. Try pay-as-you-go insurance.
Did you know that certain insurance policies allow you to pay for coverage based on how often (or how well) you drive? Roslyn McKenna with Finder.com explains how these out-of-the-box insurance policies work:
“If you’re a safe driver but have higher rates because of your age, credit score, or location usage-based car insurance could be the answer. A telematics device will track your driving and mileage. It will then decide your rate based on how much and how well you drive. You can prove to insurers that you’re a safe bet and possibly save up to half off your current rates,” McKenna explains.
8. Avoid filing unnecessary collision claims.
When your vehicle is damaged, your first reaction is to try to repair the problem. However, Ava Lynch with The Zebra recommends not filing a claim if the repairs to a damaged set of wheels will cost you more than what you originally paid for the vehicle.
“If the repairs to a damaged vehicle will cost you more than what you originally paid for it, it’s probably not worth the time and money to fix. Furthermore, most drivers don’t realize your insurance company could continue to increase your rates up to 3 to 5 years after you file a claim. You can end up wasting thousands of dollars in the moment, and hundreds over the next few years. Before you file a claim, be sure to get a repair estimate with a trusted mechanic prior to contacting your insurance provider.”
9. Be a good driver.
It goes without saying that driving cautiously can reduce the cost of your auto insurance premium. How much money can simply being a good driver save you? Kacie Saxer-Taul, a data scientist with Insurify, breaks down the possibilities:
“Insurify's data shows that insurance premiums increase an average of 34 percent after a speeding ticket, 38 percent after an at-fault accident, and 89 percent following a DUI,” explains Saxer-Taul.
Want to save even more? Many insurers like Geico and Allstate offer discounts to drivers willing to take a defensive driving course. While the amount of money you save likely won't be huge, most courses are available online and only take a few hours.
10. Take advantage of employee perks.
Your job might have more perks than you realize. Licensed Senior Realtor Chantay Bridges advises people to take advantage of employee-related insurance discounts that many employers make available to their teams.
“[Many] companies have numerous products and services at discount prices, including auto insurance. When you want to save on auto insurance, see what your job has to offer. It may be much more than what you think.”
11. Check the insurance cost before you buy a vehicle.
When you shop for a new or used vehicle, you probably consider a lot of factors before making your purchase. Yet while you’re searching for the perfect vehicle that has the features that matter most to you, there’s another factor you should consider before you make your final decision — how much the auto insurance policy will cost.
Insurance Agent Tony Arevalo of Carusrance.net says, “In case you want to buy a car or another vehicle, check the insurance costs before the purchase. This information might inform your decision about whether to buy the car or not. Also, check out multiple insurance companies for the best deal.”
12. Shop for discounts.
Did you know that most insurance companies have their own set of discounts for auto insurance? Weiner recommends the following approach. “Find out which [discounts] your insurance company offers and take advantage of as many discounts as possible.”
Per Weiner, your insurance company might offer discounts on safe driving, completion of a safe driver course, driving a low number of miles per year, anti-theft systems, safety features like anti-lock brakes, good student discounts, or even having a newer or a “green” vehicle. There are also discounts for being a member of the military or other special groups.
“The point,” Weiner says, “is to always ask your carrier what discounts are available and take advantage of them.”
13. Bundle multiple policies together.
If you have multiple types of insurance policies, for example auto insurance and homeowner’s insurance, there’s a chance you might be able to bundle those policies together under one provider. Doing so could save you some money. Katie Tu with QuoteWizard provides insight into how this money-saving strategy works. “You can obtain significant savings when you bundle several types of insurance together. You'll save 10% to 15% and simplify your insurance bills.”
How to Save on Car Insurance: The Bottom Line
When it comes to saving you have options. Shop around at multiple providers for the best policy at the best price and then negotiate to get a better deal. By taking a few minutes to ask about discounts, bundling your policy, or getting a safe driver deal, you can lower premiums and save a lot of money in the long run.