Being a safe driver and having a good driving record absent of at-fault car insurance claims are the best ways to ensure you get the lowest price possible on your car insurance policies. But there are other steps you can take to lower your premiums. Here are 10 steps you can take to lower the cost of your auto insurance.
Obtain quotes before you buy
Every car will have a slightly different rate for insurance based on a number of attributes. These include the value, size, weight, and the cost of replacement parts. Insurers compile statistical data which allows them to know which automobiles will be more likely to be in an accident, what to expect in terms of damage, overall repair costs, and the theft rates of each.
The smaller and lighter a car is, the more likely it will be considered a higher risk to your insurer. Additionally, if you’re looking exclusively at high-performance or sports models, you should know they are considered higher risk vehicles and will cost more to insure.
Consumers that lease are more likely to get a car with a higher insurance rate than they expect, since leasing is often cheaper and can put you in a much more expensive car at a lower price. Regardless of how you obtain a car, you should always obtain insurance quotes before you make a decision on which car you’re going to buy, so you can factor in the insurance costs in your decision.
Select a car with basic safety features
Beyond the other data insurance companies compile on particular automobiles, they also look at the specific safety features that are on a car. While size is of course a consideration, you should select a car with these following basic safety features: Frontal, side curtain and knee airbags, anti-lock brakes, and the most recent standard feature, electronic stability control.
In the United States, two organizations conduct safety testing on automobiles, one government and one private. The National Highway Transportation Safety Administration (NHTSA) crash-tests cars for safety, and rates them on a star ranking, with five stars being the best. The Insurance Institute for Highway Safety (IIHS) is a private organization funded by insurance companies. The IIHS ranks cars on safety, although their testing is a little different than that of the NHTSA. Selecting a car that gets a five star safety rating from the NHTSA or that is an IIHS top safety pick can lead to lower rates. A car must have electronic stability control to become an IIHS top safety pick.
Ask your insurer for discounts
There are a number of discounts available from most insurance companies. These can include:
- Multi-car policy
- Low mileage discounts
- Good driver discounts
- Good student discounts
- Driving schools or courses, such as defensive driving
- Anti-theft measures and devices installed on your car, such as alarms and VIN etching
- Air-bags, daytime running lights, electronic stability control and other safety features
- Customer milestones – length of time with your insurer
- No claims for three or more years
- Hybrid-car discounts
Your insurer may have discounts that go beyond this listing, but don’t allow yourself to become wrapped up in the number of discounts, however. Because every insurer is a bit different, one that offers you less in terms of discounts may possibly offer you the lowest price for you policy.
Raise the amount of your deductible
Insurance industry statistics have shown that drivers that select a higher deductible on their policies are less likely to file claims. Your deductible amount also represents the investment you’re willing to risk on the odds of you being involved in an auto accident.
The deductible amount is what a policyholder will pay in the event of an auto policy claim before the insurer pays the rest of the claim. Generally speaking, the higher the deductible amounts, the lower the cost of car insurance premiums.
Combine policies with single insurer
Most insurance companies provide substantial discounts for carrying multiple policies with them, such as having both auto insurance and homeowners or renters insurance from the same company. Some even combine auto, life and homeowners or renters insurance.
While you may lose some flexibility, this approach can often lead to the lowest pricing possible. Keep in mind that not all insurers offer a comprehensive grouping of these policies, and for some, auto insurance is the only product they provide.
Reduce coverage on older cars
There’s no reason to have coverage that is overkill. If you’re driving an older car that’s worth less than $2,500, you may be able to forgo things like collision insurance as well as comprehensive coverage. A consumer must own the car an it must be free of liens, as lien holders would demand their collateral be protected with collision and/or comprehensive policies.
Other insurance products you may not need or that may be redundant can include things like: funeral insurance, personal injury protection (PIP), and rental reimbursement or roadside assistance. Don’t pay for coverage you already have from other sources.
Drive fewer miles each year
Statistical data suggests that the more miles you drive, the higher your risk of being involved in an auto accident. Thus, policies are priced on how you use your car and the number of miles you drive annually. Beyond the discount in pricing lower miles will provide, there is also a trend towards offering policies by the mile, although these types of auto policies are in their infancy in the United States.
Ask your insurer about lower mileage discounts. Explore possible solutions to allow you to drive less like car-pooling, ride sharing and public transportation offerings you may be able to take advantage of and use.
Maintain your credit and pay on time
According to insurance industry statistics, those with lower credit ratings or who have a history of not paying insurance premiums in a timely manner are more likely to file claims. Thus, they will typically pay higher insurance rates. The less likely you are to pay your premiums, the greater risk the insurance company is taking in insuring you.
Insurers wrap credit data into what’s termed an insurance score. The calculations involved are more complex than simple credit history however, and they’re not attempting to measure a customer’s creditworthiness. Instead, insurers are looking at how a customer manages their finances and the decisions they make. Every insurer that uses them has their own undisclosed formula of how each part of a credit history can identify underwriting issues.
Inquire about group or professional plans
It is possible that you may have group or professional plans available to you that you are not taking advantage of. These include group plans offered through your place of work, professional or business groups you belong to, alumni groups/associations and more.
Research your professional, business and group memberships to see if they offer these types of coverage, and if they offer discounts over your current auto policy.
Get quotes from multiple insurers
Because every insurer is different, the prices they offer can vary widely for the same person. Thus, you should shop around and explore what your options are. CarInsurance.org offers a quick and easy way to compare prices with our online quote tool. Not only can it save you money, it can also save you time by giving you multiple quotes from a single point of contact. And you won't sacrifice anything by doing your search online: extent of coverage and customer service quality from shopping online is just as responsive and efficient as that of a brick-and-mortar local car insurance agent.
If time is not of the essence, you can also explore traditional forms of shopping for car insurance, such as calling insurers or visiting agents in your local community. You may be happy with your current provider, but another may be able to offer you identical coverage amounts for a much lower price without sacrificing the level of service you've come to expect and enjoy.
This article is also available as a PDF for download.
