Saving money on car insurance isn’t rocket science, but it does take a bit of know-how. Whether you’re tired of high premiums or just want to trim some fat from your budget, we’ve got the lowdown on how to keep more cash in your pocket. Let’s apply these tips to lower car insurance costs without sacrificing coverage.
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11 ways to lower your car insurance
If you want to learn how to lower your car insurance premiums, you might start with these eleven tips. You’d be surprised at how everything from your driving record to your credit score and age can influence your car insurance cost.
1. Review your current policy
First things first, take a good, hard look at your current policy. Are you paying for coverage you don’t need? Is it time to switch providers for better rates? Understanding what you’re paying for can highlight unnecessary expenses and help you decide if it’s time for a change.
2. Improve your credit score
Auto insurance companies use your credit score when factoring in your car insurance premium. Their logic is that a better credit score will result in your making timely payments and being a safer, more responsible driver. If your credit score is in the 690-850 range, that should be high enough for you to get preferred rates. If your credit score is in the 689 or lower range (which industry experts would say is average at best), try boosting your score for a lower rate.
You can try improving your credit score by doing the following:
- Pay all your bills on or before the due date
- Don’t close any credit cards
- Address any collection accounts
- Apply for a Credit Builder Loan
Once you raise your credit score, shop around for car insurance and see if you can beat your current premium.
MoneyLion offers a free and convenient way to find offers from our trusted partners to help you improve your credit — such as credit monitoring, credit report disputes, and getting credit by paying bills. A good credit score can lead to lower interest rates and increased borrowing power on loans and credit cards.
3. Bundle your policies
Consider adding your car insurance to an existing homeowner’s or other policy to potentially save through bundling. Insurance companies usually offer anywhere from 10%-25% savings for bundling your products. If you have one, you can bundle your car with another vehicle, your home, or a rental property. Check with your agent how you can bundle policies to save.
4. Install an anti-theft device
Some insurance companies charge you a lower premium for having an anti-theft device in or on your car because it will make it harder for your vehicle to be stolen, thus lowering your risk as a driver. Lower risk = lower premium.
Some examples of anti-theft devices you can install:
- Alarms
- Tire locks
- Wheel locks
- GPS tracking systems
5. Check insurance before you buy
If you’re in the market for a new vehicle or trading in your old one, get an insurance quote before you buy it. Get auto insurance quotes from multiple companies on the exact vehicle you are looking at. This action will help determine if you can afford the monthly bills (car payment, insurance, parking, fuel) associated with the vehicle before purchasing.
6. Ask for discounts
Auto insurers offer a variety of car insurance discounts available, and you might qualify for some. Check to see if your company offers discounts and contact your agent about applying for them. Some common car insurance discounts are:
- Good student: Students who maintain a specific GPA are eligible for this discount
- Claims free: Requires no claims filed
- Military: Military personnel past and present qualify for this discount.
- Senior: 65+ years and older
- Loyalty: Clients who maintain coverage with the company for a certain time frame and continue coverage
- Pay in full: Pay your auto insurance premium for the year at once and get a discount
- E-pay: Sign up for monthly automatic payments to unlock this discount
- Bundling: Insure another vehicle or your home to qualify for a bundling discount
- Safety features: Discounts for vehicles with airbags, anti-lock brakes, and other safety features
- Low-mileage: Discounts for drivers who log fewer miles than average annually
7. Get pay-as-you-go insurance
This tactic can save on car insurance if you don’t have a long daily commute and use your vehicle sparingly. This type of insurance creates a custom rate based on your mileage. Your insurance company will keep track of your miles through a GPS or installed device on your vehicle. Your car insurance premium will likely change month to month, so plan accordingly. You can do this by averaging up a few months’ payments and determining how much you usually spend.
8. Increase your deductible
Depending on your car insurer, you may be able to lock in a lower car insurance rate by raising your deductible. You’ll pay more out of pocket in the event of an accident, but you may save more money long-term.
9. Take a defensive driving course
If you complete a defensive driving course, your car insurance company may offer discounts on your liability insurance (or other policies). These courses demonstrate safe driving habits, which make you less of a liability, thus lowering your car insurance premiums.
10. Drive fewer miles
Ask your auto insurance company about discounts based on mileage. For instance, your insurer may extend a low-mileage discount if you have a short commute or don’t take many road trips.
11. Consider your car’s make and model
The make and model of your car significantly impact your insurance costs. Generally, luxury cars, sports cars, and vehicles with high theft rates cost more to insure. Before buying a car, consider insurance costs and opt for models known for their safety and reliability.
Drive down your insurance costs
You can significantly reduce your car insurance premiums by taking a few proactive steps. There are multiple ways to save, from reviewing your current policy and improving your credit score to bundling policies and asking for discounts. Consider your car’s make and model, and always get insurance quotes before purchasing a new vehicle.
FAQ
Will my car insurance premium decrease as my car depreciates?
Yes, as your car’s value decreases, your insurance premium may also decrease since the cost to replace it is lower. This is not guaranteed; other factors like your driving record and location will also impact your premium.
Can I lower my premium by reducing my coverage?
Yes, reducing your coverage can lower your premium. However, it’s important to ensure you still have adequate protection. Dropping essential coverage types like liability or collision could leave you vulnerable to significant out-of-pocket expenses.
Can I negotiate my car insurance premium with my insurer?
While you can’t typically negotiate the rate itself, you can discuss available discounts or make changes to your policy that could reduce your premium. Comparing quotes from different insurers can also help you find a better rate.
