Just like death and taxes, there is no way that you can get around auto insurance (legally, of course). Just because you’re required by law to have auto insurance, doesn’t mean that you have to pay a small fortune to get the coverage that you need. There are millions of Americans are overpaying for their auto insurance. There are several ways that you can save money on your auto insurance and still get quality protection.
Every insurance company is different, and all of them have different algorithms for calculating their insurance premiums. If you’re looking to save money on auto insurance, then you’ll need to compare the rates from dozens of insurance companies before you choose the one that works best for you.
If you’ve held your auto insurance policy for several years, it’s time that you reviewed your auto insurance to ensure that you’re not paying too much for your protection. Maybe there has been some changes in your life, or new companies have become available since you’ve bought your policy. By simply switching insurance carriers, you could save hundreds of dollars every year on your plan.
Look to Bundle
Just about every car insurance company gives discounts to clients that have more than one policy with their company. If you have a life insurance policy or homeowner’s insurance policy with a different company, ask them how much you would save by having all of the policies at one single company. In some cases, bundling all of your policies at one company can save you 10% or more on all of your coverage.
Just because your insurance company offers a car insurance bundle discount, doesn’t mean they are automatically the best option for you. You will still want to ensure that whichever company you already hold policies with, is going to be the most affordable option for your car insurance.
Because new insurance companies are always entering the market and the insurance industry is always changing, you’ll want to review your insurance policy ever few years to ensure that you still have the best coverage available. You could be spending hundreds of dollars too much on your policy.
For a great place to start, look at our guide to renters insurance and see how you can bundle it with your car insurance to save on both.
Take Defensive Driving
Another simple way to save money on your car insurance coverage is to take a defensive driving class. Insurance providers will give you a monthly discount if you complete and show proof of a defensive driving course. This is a quick and simple way to save $100 every year or more.
Additionally, those defensive driving classes could help you avoid an accident in the future, which will save you even more money. The classes teach drivers how to react in certain high-risk situations that could end up in a collision and major damage to your car or yourself. Saving money every year for taking a simple course, why wouldn’t you do it?
For all of the lead foot drivers out there, it’s time to slow down. If you get a speeding ticket, it could raise your insurance premiums for several years. If you want to get the most affordable insurance possible, it’s time to get your foot off the gas and put the car in cruise.
Drivers who constantly speed are at a much higher risk of having an accident. The more you speed, the more likely you are to get a speeding ticket. The more speeding tickets that you have, the more risk you’re going to pose to an insurance company. They are going to offset this risk by charging your more every month for coverage.
Sell the Sports Car
Maybe it’s time to get a car that is less expensive to insure. Insurance companies have different rating classes depending on the type of car that you drive. Those rating classes are going to significantly impact how much you pay for your automobile insurance. Reasonably priced SUVs and minivans are going to be the cheapest vehicles to get insurance for, which means that it could be time to get a new automobile. Sure, that shiny sports car is nice but is it worth the extra thousands of dollars that you’ll pay in monthly premiums.
Raise Your Deductible
One of the easiest ways that you can lower your monthly premiums is to raise your policy deductible. Most policyholders have $500 deductibles on their accounts if you want to lower how monthly rates, increase your deductible to $1,000. This is a quick way to lower your monthly premiums by a couple of bucks and save yourself a couple of hundred bucks every year.
If you ever have to file a claim after an accident, you will have to pay $500 more out-of-pocket until your coverage kicks in. You will be paying more in this situation, but more than likely, you’ll save more money in the long run.
Raise your Credit Score
One tip that most people don’t know is to raise your credit score, and it can lower your auto insurance premiums. In fact, your credit score plays a major role in how much you have to pay for your car insurance. If you want to save more money on your insurance coverage, you’ll need to raise your credit score.
Luckily, there are several easy ways that you can raise your credit score, it won’t happen overnight, but it could have a huge impact on your insurance policies. The best way to do that is by simply paying all of your bills on time without missing any payments or defaulting on any loans.
Getting the Best Auto Insurance Coverage
Because government laws require that you have auto insurance, you might as well get the most affordable coverage that you can. You shouldn’t have to break your bank every month. There are dozens of ways that you can save money on your policy without sacrificing the quality of your coverage. Don’t let one little automobile accident drain your savings account because you didn’t have the protection that you needed.
Check out our list of where to get the cheapest car insurance here.
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.