How to Save Money on Auto Insurance

Written by Karen Bryan

When it comes to thinking about auto insurance most people would probably prefer to not think about it at all – like a trip to the dentist or cleaning out that back closet. To make matters worse is the fact that if you want to drive you will need coverage and this often leads people to get the first policy they can find without even thinking about how they can save money. However, it shouldn’t be like this. Yes, you might be required to have it, but here are some tips on how to save money on auto insurance.

Tip 1: Shop Around

As mentioned, many people don’t even bother to compare quotes when they are renewing their auto insurance, and this often means that they are paying too much for too little in terms of coverage. In fact, some reports estimate that the average American driver is overpaying by about $400 per year – this is money that could be used for better purposes but instead is wasted on car insurance.

Besides the perceived convenience of renewing with their insurance carrier another reason why people don’t shop around is that it can be complex to figure out how insurance companies measure risk as there are few industry standards.

Sure, your driving record and the age and condition of your car come into play, but insurance companies also look at variables such as where you live, how much you earn, and even your credit score.

Given that the weighting of these inputs can change from company-to-company, it is highly likely that a rate quote for the same driver can vary by hundreds of dollars per year for the same coverage level – if not more. But this is where you can save money and as such it pays to shop around before deciding which auto insurance carrier to sign on with.

Tip 2: Hunt for Discounts

Did you know that you can take advantage of discounts on your auto insurance? This might sound too good to be true, it is – the only thing is to know where to find the discounts as most insurance companies won’t advertise these special offers.

Examples of potential discounts include lower rates for students who have good grades as well as special offers for those in active duty military service. In addition, if you have an exemplary driving record, then you want to ask your insurance company of choice what they can do for you.

In some cases, you can also lower your rate if your car has special safety features installed, these could include airbags, sensors, and other devices which can risk the of injury in an accident.

Tip 3: Bundlerama

Another way to save money on auto insurance is to bundle your coverage with your homeowner’s or renter’s insurance. The reason is simple in that insurance companies like the idea of ‘owning’ a larger percent of your policy portfolio.

In fact, this has become so important for insurance companies that just about every carrier is offering some sort of special rate for policyholders who have more than one insurance policy with the same company. Granted bundling policies mean that you might be less likely to shop around but if your insurance company is willing to offer you an exceptional rate, then it makes sense to take advantage of it.

Tip 4: Drive Less

Here’s the deal, the more often you are behind the wheel, the more likely you are to be involved in an accident. As such, if you can limit your driving to less than 12,000 miles per year, then you might be able to take advantage of ‘low-mileage’ discounts.

Ways to reduce the miles you drive each year include riding a bike (especially when the weather is good), walking, or to take public transportation. Not only will these alternative forms of transportation reduce the miles you drive each year, but they will also force you to become more active, which might even help to lower your health insurance costs

Tip 5: Take Care of Your Credit

It wasn’t always like this, but these days car insurance companies are bound to check your credit score before deciding whether to offer you a policy. The thinking behind this is that people with good credit are more likely to make responsible choices than those without good credit.

Whilst this isn’t always the case; it is true that at a minimum, people with good credit do tend to pay their bills on time and that means that the insurance company will be able to collect their policy payments when they are due. So, if you want to take full advantage of the other tips listed above, then make sure you take care of your credit.