Between payments, maintenance and gas, owning a car can be expensive. One of the biggest costs to hit every driver’s wallet is auto insurance. Insurance is not only required by state law, it also provides peace of mind in that it protects the owner from major financial losses. Nonetheless, many drivers find the cost to be a burden. While you can’t eliminate the need for insurance, you can take steps to lower your rates and save money.
Here are a few simple moves you can make to lower your car insurance rate:
Depending on the value of your vehicle, you might choose to maintain the minimum amount of insurance required by law. A liability policy covers damage you cause to others’ property. It does not cover damage to your own car for which another person is not found responsible. For example, damage you inflict on your own car or damage caused by natural events. Liability-only coverage is only an option if you own your car outright.
Liability-only coverage is especially appropriate for safe drivers who own lower-value cars.
Update your policy
When you sign on for an insurance policy, the insurance company collects information about you that helps to determine your rate. Age is one of the biggest determining factors, as is the number of miles driven each month.
As we all know, a person’s life situation can change in a variety of ways through the years. For example, if you have taken a job that requires less driving, this could lower your insurance rate. Likewise, if you’ve hit a milestone birthday, like 25, 30 or 40, you might qualify for a lower rate. Call the insurer to be sure you’re getting the lowest possible rate for your circumstances.
When we first buy insurance, it makes sense to shop around for the lowest price. Then inertia kicks in. That’s a phenomenon that affects most consumers – we stick with what we have rather than continue to shop around for a better deal. The problem is that things change over time – your circumstances change, the insurance companies’ rate packages change – and the only way to make sure you’re getting the best deal possible is to do the legwork every now and then. Every couple of years, take the time to shop around and compare your policy to others that are available.
Bundle your insurance
If you also buy homeowner’s insurance, renters’ insurance, insurance on other real property, life insurance or any other type of insurance, consider purchasing all of your coverage from a single provider. Many major insurers offer discounted rates for having multiple policies.
Bundled service doesn’t guarantee the cheapest prices, of course. Do your homework and compare the costs of the bundled plan to the cost of separate policies.
Improve your credit score
In most states, the applicant’s credit history is evaluated as one of many factors used to determine premiums because history has shown that people with lower scores tend to incur higher losses. (If you live in California, Massachusetts and Hawaii, the insurer may not use your credit score to determine your rate.) If you really want to get the lowest rates, improving your credit report can help. Start taking steps to build your credit, clear debt and monitor your progress by using a service like Credit Sesame to get a free credit report card.
Take a defensive driving class
A defensive driving course can be a valuable investment. Taking a course on defensive driving tells the insurance company that you have learned how to avoid accidents. In addition, the very fact that you care to take the course says that you are a person concerned with safe driving. These are key indicators that tell the insurer that you are less likely to cause accidents and incur losses.
Most insurance companies offer a range of discounts that may or may not apply to you. That said, agents don’t exactly go out of their way to inform consumers of the existence of these discounts. Some of the many discounts you might qualify for include: military, good student, occupational, good driver, garage parking or anti-theft device.
Request to remove citations from your driving record
Driving citations can increase your premiums. Moving violations are a signal to the insurance company that you may not be a safe driver. However, you might be able to have the violations removed from your driving record, for example by taking a safe driving course, or by avoiding additional citations within a certain time period. Contact your local DMV for information.
Raise your deductible
The deductible on your car insurance policy is the amount of money that you will have to pay out of pocket before the insurance company picks up the rest of the bill. If your deductible is low, your rate will be higher. Increasing the deductible will lower the cost of your premiums.
If you are a safe driver and haven’t made a claim in years or decades, you’re probably safe going with a higher deductible because it’s not likely that you’ll be forced to meet the deductible in the current insurance year. Less experienced drivers and people who have absolutely no emergency fund to fall back on may want the peace of mind that comes with a lower deductible and the knowledge that they won’t have to come up with a large chunk of money in order to follow through with an insurance claim.
Install anti-theft devices
If your coverage includes theft, you might qualify for a discount by installing an anti-theft device. The best discounts are offered to owners of cars that have a geo-locating device installed.
Insurance is an unavoidable part of car ownership. That doesn’t mean that you have to overpay.
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