Save Money on Car Insurance: Proven Strategies & Tips

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How can you save money on car insurance? It may seem like navigating the wide world of auto insurance can be an expensive and tricky proposition. Happily though, as it turns out, there are many ways to recognize immediate savings and lower your overall annual costs. Better yet, many are equally accessible to drivers no matter their age, experience or location. Simply read on to learn more about our top tips for lowering your monthly bills and expenses by learning how to save money on car insurance.

What Is Car Insurance And Why Is It Important To Have?

Car insurance (also known as auto insurance or vehicle insurance) is a form of financial safeguard that helps to cover your costs in the event that damage is caused to your vehicle. It can also help protect your pocketbook should auto theft, vandalism, or other unwelcome incidents occur.

Cemented with a legal contract between an applicant (the insured) and insurance provider (the insurer), car insurance also frequently offers some measure of financial protection if you should become liable for injuries or damages to others while driving. Although it won’t commonly cover expenses related to maintenance or everyday wear and tear on a vehicle, some auto insurance providers may also offer roadside assistance if you need a jumpstart or new tire.

Just a few types of the common financial concerns that car insurance can help you pay for in part or full include:

• Vehicle repairs
• Medical expenses
• Automobile theft
• Damages or injuries
• Issues caused by uninsured drivers

Think of car insurance as a financial safety net that guards against common roadside hazards and concerns, or forms of liability related to the operation of a motor vehicle. Bearing this in mind, it’s no surprise that virtually all states in America (save for Virginia and New Hampshire, which still obligate drivers to take financial responsibility for causing an accident) require you to have car insurance. Getting behind the wheel without it can subject uninsured drivers to a variety of penalties ranging from tickets and fines to license suspension or even jail time. The bottom line: Don’t leave home without it.

Average Cost Of Car Insurance In The US

According to various financial pundits, the average cost of full coverage car insurance in the United States sits somewhere between $1592 – $1674 per year, or $133 – $139.50 per month. Actual out-of-pocket expenses can also vary widely between locations, and depend on your age, driving history and credit score. As a general rule though, the better your credit history and driving record, and the older you are (up to senior citizen age), the better your auto insurance rates will tend to be.

Ways To Save On Car Insurance

Finding practical ways to save on auto insurance does not have to be as time-consuming or difficult as you might suspect. Here are our top tips for saving money on car insurance.

Shop Around

The first, and simplest, way to secure vehicle insurance savings is to make a point to shop around and secure quotes from different companies.

As you go about evaluating potential auto insurers, remember that no two firms will offer the same quote – and that car insurance costs can vary widely (up to hundreds of dollars annually) for similar levels of coverage between providers. Moreover, the same insurance company that may offer highly affordable plans in one state may not be the most practical or cost-conscious supplier of insurance plans in another. Many firms will also offer special discounts and signing incentives to new applicants or provide reduced rates for existing customers willing to bundle auto coverage with other forms of insurance (like homeowners or renter’s insurance).

Regardless of who ultimately offers the best price or insurance plans as a business, also remember to factor any added-value services and solutions that these providers offer into your cost equation as well. For example: Paying $10 – 20 extra a month to do business with a firm that provides complementary roadside assistance wherever you travel may seem like an unnecessary expense. However, it may ultimately help you save big in the end if you should pop a tire or your car battery suddenly ends up dying while you’re in the middle of a road trip.

As you compare rates between auto insurers, also note that savings can be significant for drivers with a strong credit history, but even more pronounced for those with lower credit scores or a recent accident on their driving record.

Take Advantage Of Discounts

Virtually all major car insurance companies offer special programs and discounts that can help you keep auto insurance premiums to a minimum. As you go about considering insurance providers, be sure to ask insurance brokers or company agents to review your individual situation and make you aware of any special offers that you may qualify for.

A few examples of possible savings opportunities here include:

• Discounts for paying your bills in lump sums annually or every 6 months, as opposed to making monthly auto insurance payments.
• Savings offers provided for enrollment in automatic bill payment plans.
• Customer loyalty programs for existing clients who use a variety of insurance services.
• Group discounts for membership with specific organizations or employers.
• Programs which reward drivers for good driving habits and use technology to allow companies to verify and track safe driving behavior.
• Coupons for military members and employees of federal government agencies.
• Lower premiums for cars that are driven only a limited number of miles each year.
• Multi-car discounts if you enroll multiple household vehicles in insurance plans.
• Student, retiree, or senior citizen discounts.

Drop The Features You Don’t Use

You can also enjoy immediate car insurance savings by cutting features and insurance coverage that you don’t need.

By way of example, if you do not travel frequently, you may wish to drop car rental coverage from your plan to decrease costs.

Likewise, if your vehicle is older and easier to replace than repair, you may wish to lower the amount of collision insurance coverage (which pays to repair damage to your vehicle) that you hold accordingly. Under similar circumstances, comprehensive insurance – which covers unexpected events such as weather damage and vandalism – can also be reduced to produce rapid savings.

Of course, in the event that you’d like to cut the proverbial cord entirely, you could also drop all insurance coverage and instead rely on walking, bicycling, public transportation, or ride-sharing options instead – especially if you’re in an urban setting where alternate forms of transportation are plentiful.

Drive A Car That’s Cheaper To Insure

Not all cars are insured at the same rates. It’s no stretch to consider that the more a vehicle is worth, the higher the sales price it tends to hold, and the newer it is, the more it will generally command in insurance premiums. Along similar lines, cars designed for leisure scenarios or for performance use will also require insuring at higher cost than those designed for more everyday commutes (insuring a sports car will cost more than a suburban-friendly sedan). You can cut car insurance costs by comparing rates on different makes and models of vehicle and adjusting your preferred auto to match.

Increase Your Deductible

A car insurance deductible is defined as how much money you can expect to pay out of pocket toward any given accident or claim. Depending on your specific auto insurance plan, various deductible amounts may be applicable to different types of coverages such as collision, comprehensive, and personal injury protection. This deductible may be paid out at the time you file your claim. As you might imagine, the higher your deductible is (the less an insurer has to pay themselves, and the less risk they take on as a result), the less you can expect to pay in car insurance premiums.

Improve Your Credit

Your credit score is a number that is assigned to you based on your credit history and prior financial activity that lenders use as a way to measure and assess the risks associated with taking you on as a client. Many insurance companies (including home, personal and car insurance firms) use your credit score as a point of reference when determining whether to work with you – and the rate at which they’re willing to extend their services. As a result, the higher your credit score goes (which you can improve by taking on credit and paying bills in a timely fashion over an extended period of time), the lower your auto insurance premiums will go. In other words: A higher credit score can help you reduce your car insurance rate.

Consider Switching To Usage-Based Insurance

Usage-based car insurance essentially charges you based on your individual driving needs and habits. By way of illustration, if you drive less frequently, travel fewer miles, and practice safer driving habits (reducing your risk of getting into accidents and filing expensive insurance claims), companies are often happy to reward you with reduced insurance rates. Registration for a usage-based insurance program typically involves placing a tracking device – which sends information on driving patterns and habits back to the insurer – inside of your vehicle. Using these tools, the car insurance company then monitors your driving habits on the road and, after an initial testing and observation period, may knock a significant amount of money off your insurance premiums.

Conclusion

Discovering how to save big on car insurance doesn’t have to be a long, drawn-out, or exhaustive process. You don’t need to possess a great deal of driving experience or perfect credit score either, for that matter. It just takes a little upfront planning and research, and a willingness to shop around and compare rates and discount programs from various auto insurance providers. In addition, the more flexible that you can be when it comes to deductibles, plan features and coverage options, the bigger plan savings that you also stand to enjoy. To learn more about possible ways to save big on insurance and put more money back in your pocket each month, be sure to visit our Learning Center frequently.