Ways To Lower Your Auto Insurance Costs

 

Ways To Lower Your Auto Insurance Costs

2020/11/04

If you are looking out for ways on how to reduce your auto insurance costs, you will be glad to know that there are plenty of options available out there. You just have to be a little careful in your approach and implement the right strategies at the right time.

The payment toward your car insurance is a major factor to consider in your budget plan. You can boost your savings by cutting down your expenses regarding this. Car insurance is something that nobody wants to spend for, but everybody needs it. In fact, in most states, it is legally mandatory for all drivers to be thoroughly insured. Following are 12 proven ways that can help you get insurance protection without damaging your wallet.

Protect Your Vehicle

The safer your vehicle, the lower your auto insurance costs will be. For example, most insurers will be more than willing to offer you a low rate premium provided you have an anti-theft device installed in your vehicle.

Likewise, you can also qualify for better deals by parking your car in a garage. Vehicles that are parked in open are susceptible to damage, such as because of bad weather; this makes you a high-risk applicant. When an insurance company is convinced that your vehicle is well protected and that they have to cover very little risk, they will charge you less.

Drive Safe

A safe driving record also helps you qualify for low-rate insurance premiums. Therefore, while you are working on your strategies to reduce your auto insurance costs, you must also try to build a safe driving record.

It is very important for you to keep in mind that the premiums are usually raised significantly by insurers after any auto accident, where you are found to be at fault. This increased premium is likely to haunt you for many years to come. You can avoid such unpleasant experiences by driving safely.

If you have not had any accident in the last six months or longer, you can contact your insurance agent and ask if you can qualify for a special discount for this. Most of the times, the answer will be a ‘yes’. If your current insurer does not consider you for a safe-driving discount, you can contact other companies. But, you must keep in mind that safe-driving discount is not the only factor to consider when it comes to switching to a new insurance company.

Buy Multiple Insurance Policies From The Same Company

Multiple-policy discount can also play an important role in reducing your auto insurance costs. There are several types of policies that a person has to buy, such as home insurance, health insurance and others. If you are purchasing all these policies from different insurers, it will cost you more.

On the other hand, if you purchase multiple policies from the same company, you can save a great deal of money. Almost every insurance company these days offer multi-policy discount. This strategy is helpful not only in saving money but also in making things easily manageable. You can manage all your policies through just one account.

Arrange Some Extra Cash To Pay As Deductible

When it comes to reducing auto insurance costs, there is a general rule – the higher deductible you offer, the lower your premium rates will be. This strategy can save you a lot of money.

However, before you increase the deductible, it is very important for you to make sure that you can afford the same. Besides that, you must also note that raising the deductibles may reduce your premiums, but you will have to pay more from your pocket in case of accidents.

For example, as compared to a $250 deductible, a $1000 deductible can cut down your premium rates by 10% or even more, but it also means that you will have to pay $750 more form your wallet in case of an accident. So, you are advised to do your calculations thoroughly before you raise your deductibles.

Do Not Buy Coverage That You Do Not Need

Your auto insurance costs also depend on the types of coverage you are opting for. The more coverage you have, the higher rates you will have to pay. Many consumers opt for certain coverage options that they find attractive but do not really need. What they fail to realize is that it is only increasing their cost without any benefit.

It does not make financial sense to purchase coverage that you will never use. So, spend some quality time in your research and decide about the coverage carefully. Buy only as much coverage as you need. But here again, buying less coverage than you actually need can also turn out to be costly for you.

Though it will lower your premiums, but it will not provide you enough monetary protection in case of accidents. So, you are advised to do thorough brain storming before you finalize anything on this aspect.

Get Your Insurance Policy Renewed Before It Expires

Very few people realize that allowing their policies to lapse even for a couple of weeks results in increased auto insurance costs. Therefore, you must also be aware of when your policy is going to expire. Make sure you renew the same before the expiration date. Most insurance companies tend to treat consumers who let their policy expire as higher-risk applicants, and so, they charge extra for this.

Though this strategy does not help you lower the cost, but it ensures that the cost does not increase; this is indirect saving. Saving money is not only about reducing the cost, but also about implementing strategies that help you avoid the possibilities of an increase in the cost.

Pay Annually Instead Of Monthly Installments

You can also save a lot of money by choosing to pay annually instead of monthly installments. Most companies offer a substantial amount of discount to those who pay annually upfront. The only problem here is that this strategy requires you to pay a large sum of money at a time. So, you will also have to see if you can afford it.

Increase Your Policy Term

Auto insurance costs can also be reduced by purchasing a longer policy. If you are buying a 6-month policy, you are very much likely to be charged a price penalty. On the other hand, longer policies come with special discounts. As a general rule, the longer your policy term is, the lower rates you are likely to be offered.

Driver Training Course

Taking a driver training course also makes you a low-risk applicant. Most companies offer special discounts to those who pursue these courses, especially the teenagers and those above 55 years of age.

Follow Traffic Rules

Violation of traffic rules, such as issue of speeding tickets, is another major factor that results in increased auto insurance costs. Such violations are very much likely to push your rates up substantially.

Maintain A Good Credit Report

Your credit score is one of the major factors that are taken into account to determine the rate of premiums for you. Obviously, the higher the credit score, the lower rates you can qualify for. Therefore, you are also advised to work on strategies that can help you improve your credit health.

If your FICO score has increased by several points in the last few months, you can contact your agent and ask if that can help in lowering the rates. Following are some of the things you can do to boost your credit.

• Pay off all your bills and debts in a timely manner. Do not default. Timely bill payments contribute to 35% of your credit score. Therefore, if you do not make any default, it will significantly increase your score.

• You are also advised to keep your debt to credit ratio low, not more than 40%. It means you must not borrow more than 40% of the total credit limit available to you.

Comparison Shopping

Since the car insurance market is a highly competitive one, it always pays to do a thorough comparison shopping. Therefore, last, but not the least, when it comes to lowering your auto insurance costs, you must also shop around. You are advised never to accept the first offer that comes your way regardless of how lucrative it sounds.

A better strategy is to request detailed, free, no-obligation quotes from at least 3-4 reputable companies. This way, you will be in a better position to compare the types of coverage they are offering, the rates they are charging, the types of discounts you can qualify for, and other provisions that apply to their policies.

A thorough comparison will make things much easier for you and you will be able to choose the best policy that provides you the highest amount of coverage but charges you the lowest price.

There can be plenty of other ways also that can help in reducing your auto insurance costs. For example, if you drive less, you can also qualify for low-mileage discount. If you are driving your vehicle less than the average number of miles a year, it makes you a low-risk applicant.

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