Car insurance is a requirement in most states to register and drive a vehicle on public roads legally. Because it is mandatory, most of us approach selecting a car insurance provider and planning with dread, and often rush through it. We may simply opt for an offer we saw on TV recently or go with a plan that friends or family happen to recommend.
However, this often means that we fail to shop around and compare plans and providers and leave a lot of potential discounts on the table. This can lead to paying hundreds of dollars more each year than is necessary to receive the level of insurance we need. In this article, we’ll explore several things that could save you money on your car insurance plan.
Shop Around and Compare
The first mistake many of us make is failing to shop around and compare providers and plans. A second related mistake is to fall for marketing campaigns designed to make us think that a particular company is the cheapest or will save us the most on car insurance. We’ve all seen the commercials, heard the radio jingles, and see the pop-up or social media ads. We may inadvertently internalize these ideas, and then accept them as true.
When selecting insurance, it is key to do your homework and check the claims of these companies against actual offers from a wide variety of competitors. It is possible that even if a particular company may be cheaper for your friend or family member, they may not be cheaper for you. This is because insurance pricing is dynamic rather than static. It is calculated when your quote is issued, based on a wide variety of personalized factors, such as your driving history, the type of car you have, the city or state you live in, and even your credit score.
Search for State, Local or Regional Providers
Internet searches to compare rates from various providers often bring up big and well-known names like Allstate, Progressive, State Farm, and Geico. We might check other names like Farmers, Esurance, General, etc. as well because we saw them on TV or in an ad somewhere.
However, many smaller insurance providers operate at more local levels and can sometimes provide better customer support and personalization simply by their smaller customer base and company size. They may even offer better rates as well. You may not hear about these companies on TV or see ads for them because they often lack the massive marketing budgets that their larger competitors have. Some of these smaller providers garner higher customer satisfaction ratings than their larger competitors as well, which is another potential upside to consider.
Find Out About Discounts
Most insurance companies provide an array of discounts for various things, some of which you can control and some of which you cannot. Possible ways of receiving a discount include:
- Putting multiple cars on your policy
- Maintaining a clean driving record
- Join a professional organization or affiliate group such as AAA
- Choosing automatic payment
- Paying the whole policy premium upfront rather than in monthly installments
- Installing certain theft prevention technologies or products in your car
- Bundling your car insurance with homeowner’s or renter’s insurance
Even after evaluating all the discounts, be sure to check whether the final quote you receive is lower than those you get from competing companies. In some cases, other companies may still be cheaper even without discounts, depending on which other factors are involved.
Evaluate the Cost of Insurance When Selecting Your Car
Many of us will consider things like fuel economy or battery range, safety features, or repair costs when buying a car. Then we allow insurance premiums to be an afterthought. In some cases, there can be quite extreme variances in insurance premiums between vehicles. For instance, a standard, midsize SUV, station wagon, or crossover will tend to have much lower insurance premiums than a souped-up exotic sports car or luxury import.
Consider Liability Only on Older Cars
When you register a car, you are generally required to have liability coverage insurance. However, many people opt for collision and comprehensive insurance as well. These coverages can be useful as they do provide coverage for collisions with other vehicles and objects (collision coverage) and things like weather, theft, and vandalism (comprehensive coverage). However, they do raise your premiums substantially, and if your car is older and isn’t worth a lot, it may not be worth it to keep paying those steep premiums when you could simply establish your car replacement fund instead.
Choose a Higher Deductible for Lower Premiums
If you have a newer car and need to purchase collision and comprehensive coverage (for example, because your car is expensive, not fully paid off, or is on a lease), consider upping your deductible to reduce your premiums. Sometimes it can be better to pay a single larger sum in the event of a possible claim than to pay more each month for years.
Consider Limited Mileage or Pay-As-You-Drive Insurance
Some insurance companies, especially in today’s age of urban living and low mileage leases, are coming out with low mileage insurance options that take into consideration reductions in annual vehicle usage and account for it with reduced premiums.
Some of these plans track your driving distance with a transmitter or other form of monitor and directly report mileage to the insurer. Check with the insurance providers you are looking at to see if they offer usage-based or low-mileage policy options.
Hopefully, these tips and suggestions prove useful to you, and you can save some money on your insurance premiums. Do you have any tips to share that have helped you to pay less for insurance? Feel free to share them with others in the comments below!