Buying an automobile requires significant investment. And as all responsible car owners know, the investment doesn’t stop once you pay the retail price. One of the considerable running expenses associated with owning an automobile comes in the form of car insurance.
Car insurance allows you to pay regular premiums, and in return, the insurance company covers all or a portion of the damages resulting from an accident. While these bills seem like minor annoyances in the short term, they can save you thousands of dollars should the rainy day come.
Ideally, your car insurance plan should pay for car repairs, towing, medical expenses, and other costs associated with an accident. If the fault was your own, it also covers the costs for the person you harmed.
Unfortunately, many car owners don’t have robust automobile insurance coverage. They are either uninsured or underinsured. And most of these individuals don’t buy better insurance policies because they assume they have to pay more for car insurance than they actually do.
The good news is that there are ways to enjoy the benefits of the best car insurance and save money by lowering your premium at the same time.
Have a look at 7 ways you can lower your car insurance premiums so you stay protected without having to break the bank.
1. Be a Responsible Driver
It goes without saying, but I’ll mention it anyway – don’t be a reckless driver. Insurance companies determine the risk involved with offering you a plan before setting the rate. The more likely they are to pay up, as would be the case for someone who has multiple accidents and driving tickets on their record, the higher their liability.
To make it profitable to offer such customer insurance, car insurance companies charge higher premiums from individuals with bad driving records than someone with a clean slate.
So, cross your t’s and dot your i’s – wear a seatbelt, drive within the speed limit, avoid texting and driving, etc. By doing so, your insurance company will cut your premium, and you’ll save money.
2. Don’t Drive a Car You Can’t Afford to Insure
When buying a car, everyone considers it’s starting price, but very few extrapolate the cost of owning the vehicle. No, this doesn’t just mean the mileage on the thing. You may be able to afford a $40,000 car, but can you pay $3,000yearly for its insurance? You may be better off with a $20,000 car with a $1,000 annual premium!
In addition to the car’s price, it is a good idea to do your research about its maintenance because that can also affect your insurance premium.
3. Why Buy More Insurance than You Need?
If you pay 20 dollars for a buffet and eat 40 dollars’ worth of food, it’s a bargain. But what if you can’t eat more than 10 dollars’ worth? Does it not then make sense to buy a la cart? If you don’t drive very often, why pay for a buffet worth of insurance?
Luckily, several companies offer per-mile insurance plans. All you’re required to do is install a small device in your car that will record and transmit your mileage to your policy provider. The lesser you travel, the lower your premiums. And if you drive slowly and avoid hard braking, the device registers it, making you eligible for discounted rates.
4. Keep a Clean Credit History
Another method that car insurance providers use to evaluate risks is by looking at your credit history. This helps them determine whether a customer can pay for the plan they signed up for.
A bad credit score alone could cause your annual premiums to soar by over 1,500 dollars. To maintain a respectable credit score, keep your balance safely below the credit limit, make all your credit and loan payments on time, and avoid opening more credit accounts than you need.
5. Increase Your Deductible
The deductible is a predetermined amount that your insurance won’t cover in the case of an accident. Let’s say you were involved in a car crash, and the bill came out to be 3,000 dollars. If your deductible is set at zero, your insurance covers the entire bill, but your premiums are obviously higher.
But if you increase your deductible, let’s say to 1,000 dollars, the insurance pays 1,000 dollars less on the bill (i.e., 2,000 dollars) while charging you lower premiums.
So, to save money on car insurance long term, you should have a ‘rainy-day’ fund and leverage it to max out your deductible. You could save nearly 10% annually using this method.
6. Explore the Market
The beauty of capitalism and a free market is that corporations have to compete to gain an edge. The undisputed winner in this race is always the customer.
Before setting your sights on an auto insurance plan, do extensive research on all the options available out there and pick the one that costs the least.
Make sure to explore the market once every year, so you know the latest and most incredible deals. Some people have literally cut their insurance expenditure in half by doing their due diligence.
It also makes sense to see if car insurance companies are offering any policy discounts. Many companies offer cheaper rates if you buy multiple plans in one go, such as for two cars or car and home, etc.
Others may give you incentives to pay for six months or an entire year in one lump sum. Student, Affinity, and paperless are a few more discounts you may want to consider. These can add up to quite sizable savings.
7. Trim Your Coverage
We all know the benefits of insurance. So, why don’t you insure a 10-dollar pen or 40-dollar shoes? Well, you can buy a new pen if you were you to the first one and have your shoe repaired if it gets nicked-up. Similarly, you may afford to pay for small repairs for your car in case of damage without the need for insurance.
For instance, if you drive a car that’s 15 years old at this point, its repairs likely cost much lesser than they did back in the day. If the cost of repairs is safely going to be below your deductible, you can opt-out of the lion’s share of your coverage, such as collision and comprehensive insurance. Just make sure accidental healthcare is covered and save the rest for potential repairs or a new car altogether.
