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Facts & Figures

10 Tips to Save on Auto Insurance

It's not surprising that many people complain about the cost of their auto insurance quote, given that policies typically cost at least several hundred dollars a year. Factors such as age and driving record can drive annual premiums even higher. How can you lower your auto insurance premium and save money?

Going without insurance is generally not an option. In most states, you are required by law to purchase a minimum amount of liability coverage for the car you own and drive. Also, you should probably have more than just the bare minimum if you want to provide yourself with adequate protection. There are steps you can take, however, to reduce your auto insurance costs without having to cancel your policy. Some or all of these steps may be appropriate for you, depending on your circumstances.

Specific ways to lower your auto insurance rate:

1) Shop around.
By comparing multiple auto insurance quotes, you could discover hundreds of dollars of savings. A particularly good time to investigate your alternatives is when your current policy is about to be up for renewal, especially if you find that your premium has gone up. You may be surprised to learn that auto insurance premiums for the exact same coverage on the same car can vary widely (by hundreds of dollars) between different insurers, even in states that regulate auto insurance rates.

 

2) Increase your deductible.
Raising the deductible on your auto insurance can sometimes be a good way to cut the cost of the policy. Sometimes you can reduce your annual premium by 10 percent or more if you increase your deductible from, say, $250 to $500. If you do increase your deductible, make sure that you have the financial resources to handle the larger deductible when the time comes.

3) Keep an eye on your credit report.
Your credit history is an important factor for most auto insurance companies. Many studies have shown a correlation between your credit history and the risk to an insurance company. Paying your bills on time and maintaining a good credit history will allow you to enjoy lower auto insurance rates.

4) Drive less.
If you drive less than a certain number of miles in a year (e.g., 7,500), you may qualify for a low-mileage discount. If your insurer offers this discount, try to limit your driving as much as possible. If you commute to work, use public transportation instead of driving. When you go away on vacation, fly or take the train.

5) Drive more safely.
You may be eligible for a price break on your policy if you maintain a clean driving record for a specified period (usually three years). A clean driving record generally means no accidents, moving violations, drunk driving convictions, etc., during that period. The best way to qualify for the applicable discount is to drive carefully and defensively at all times.

6) Buy a low-profile car.
Cars are rated on a risk scale for auto insurance purposes. In general, sports cars and other high-performance, flashy vehicles are classified as higher risks because they are common targets for thieves and vandals, and because statistically, the people who own them tend to drive more recklessly. If you own such a vehicle, you will likely pay a higher premium than if you owned a station wagon, sedan, or other low-risk vehicle.

7) Keep your car in a garage.
Cars parked in garages are less likely to be stolen, vandalized, or struck by other vehicles. Using a garage to store your car may entitle you to a slight premium reduction.

8) Have safety/anti-theft devices installed.
There's a good chance that you may receive discounts on your insurance if your car is equipped with one or more of the following options: anti-lock brakes, automatic seat belts, and airbags. Similarly, anti-theft devices such as car alarms and tracking systems (e.g., Lojack) may also get you a discount because they reduce the chances of your car being stolen or vandalized.

9) Inquire about multifamily/multipolicy discounts.
Sometimes you may receive a discount from your insurance company if you buy more than one type of insurance through that same company (e.g., auto and homeowner's). A discount may also apply to your auto insurance if you insure multiple cars under the same policy or with the same company.

10) Other discounts
Examples may include discounts for taking a defensive driving course, being a AAA member or staying with the same auto insurance company for a number of years. These discounts vary by company.