Car Expenses Wearing You Down? Top Ways to Save on Auto Insurance Premiums

• Author: Jacob Greene
• Posted: 2024-10-09

Owning a car is often an expensive enterprise. In addition to car payments and regular maintenance, many car owners feel crushed under the burden of auto insurance. Although car insurance is a compulsory expense, it does not have to strip you of your livelihood. A look at the top five ways to save money on auto insurance premiums can provide tips on effectively lowering this portion of your monthly budget.

Obtain Multiple Auto Insurance Quotes

Some factors that influence car insurance rates are variables that you cannot easily change. These variables can include your age and the average insurance rate of your location. Other cost factors, however, remain within your control. The first step in lowering your premiums is to obtain multiple quotes on your insurance for the year. To receive an objective quote, consider contacting an independent agent or broker company to report rates from numerous carriers. Examples of insurance brokers include companies like The Zebra or Policygenius. You can also use free online comparison tools like the ones found on USNews.com or Insurify. Alternatively, auto insurance companies often provide general estimates over the phone. But keep in mind that to receive an exact quote from the insurance company itself, you would need to provide your driver's license number as well as the car's vehicle identification number (VIN).

Ask for Bundling Discounts

If you already pay for another type of insurance from a major carrier, ask about bundling an auto insurance policy. The most common type of bundle combines home insurance with automotive plans. However, some companies will even bundle business insurance or pet insurance. Although savings can vary, research from the Insurance Information Institute shows that bundles can lower costs up to 25% annually. In addition to bundling programs, some carriers refer to these packages as multi-policy, multi-product, or multi-line discounts.

Opt to Increase the Deductible

A deductible is the amount you must legally pay before an insurance company covers the remainder of a claim. There are two types of auto insurance that usually require deductibles: collision insurance and comprehensive insurance. Collision insurance covers losses after your car's impact with an object. Comprehensive insurance covers accidents as well as theft and vandalism. In addition to the two main types of auto insurance, there are other plans like personal injury coverage and uninsured motorist protection. These plans almost always require deductibles. In order to save on monthly premiums, you can select the largest deductible that you could comfortably afford in the event of an automotive incident. For example, if you have a lot of money in savings, consider earmarking 20% of that amount for your deductible. A higher deductible reduces the cost of your premium each month. Some drivers have used this strategy to save up to $250 every year.

Request Usage-Based Insurance

If you need car insurance and have a simple driving routine, consider asking about usage-based insurance. These policies use telematic software to determine how often and how well the individual can operate a vehicle. Although conventional insurance policies already use statistical data to gauge habits, telematics record your actual driving and then use that data to calculate your premium. If you do not feel comfortable switching to this new technology, many insurance providers offer a one-time discount or cash rebate in exchange for downloading a telematics smartphone app for a trial period. Following your trial period, you can compare premium rates and determine if usage-based insurance is the best choice for you. Drivers who maintain low mileage as well as low acceleration and deceleration rates tend to save money on usage-based policies.

Take Safety Precautions and Complete a Driving Course

Along with age and location, your driving record can also impact the cost of your premiums. If you have multiple accidents and traffic tickets on your record, you may find yourself paying a higher rate each year. Fortunately, there are steps you can take to help resolve these issues. Ask whether your jurisdiction will dismiss your ticket or remove negative points in exchange for enrolling in a driving safety course. In addition, some insurers lower premiums in exchange for taking an accredited driver's education course. As long as your jurisdiction approves the measure, you can complete these courses entirely online. Finally, you can consider switching to a smaller and "safer" vehicle in exchange for lower premiums. Many insurers instantly lower premiums on car models with safety features since the liability is lower. Review the official Insurance Institute Highway Safety Analysis to determine which vehicles rank safest this year.

Auto insurance can carve a hefty chunk out of your budget. But with the right planning and habits, you can reduce costs and relegate these funds to your other financial needs.