Imagine: After days of meeting with private dealers, wiping off the sweat from your brow while leaving dealerships, and test driving what seemed like an endless amount of options, you’ve settled on a car and you’re ready to cut a check and go home. But wait – what about car insurance?
Except after you hand over the check and receive the keys, you can’t drive off yet. You still need to insure your car.
While buying insurance for a car is simple, especially if you already have an insurance provider, it can be a real headache once you see the cost of insurance. Luckily, we've got some tips for you to help save hundreds on your car insurance.
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Avoid Overpaying
Always compare prices.
Even if you’ve been with your insurance provider for years, you might be overpaying for your insurance. You can easily save hundreds every year by comparing insurance packages using a service like Gabi, which looks at information from both consumers and car insurers.
Consider Moving
Did you know your geographic location plays heavily into how much you pay for an insurance policy?
Customers living in high-density population states like California, Texas, New York, and others might pay almost $100 more per month on average because of factors like weather conditions, population, crime rates, number of intersections, and insurance requirements by state law.
If you’re already considered moving across state lines, now might be a good time to think about making the switch so you can lower your monthly insurance payments. Even moving from a downtown area into a suburb can lower your policy by a couple of hundred dollars.
Keep a Clean Driving Record
Insurance companies like it when drivers are proactive and avoid costing them money. By avoiding accidents and moving violations, you’ll show your insurance company that you’re a good investment. You can also enroll in a defensive driving course online to help reduce the number of points you have on your license. Your insurance company may provide you with a discount upon completion of the course.
Drive Safely
Another obvious way to lower your policy rates is to avoid reckless driving. there are tons of insurance companies that use in-car devices to help monitor your driving habits. Those habits are tallied up and used to form a “good driver discount.”
One company, Root, has taken this a step further. While many companies require you to already have a policy to qualify for the discount trial, Root allows you to download an app and take a two-week test drive. This will help with your first insurance quote.
Don’t Drive
Another good way to lower your insurance rates is to drive less and utilize public transportation. If you reserve your vehicle for strictly occasional errands and occasional commutes, not only will you save in car maintenance and fuel, but you’ll also be able to lower your premium.
You can also see if your policy providers have a pay-as-you-drive policy which bases your premium on the number of miles you drive. If you don’t drive much, but your spouse or children do, you can save even more money by bundling your policies.
Keep in mind that mileage isn’t a very large factor in car insurance quotes, so shaving off a few hundred miles during your initial quote won’t matter much.
Don’t Drive SUVs or Sports Cars
Though prices may vary by insurance company, sleek sports cars, and bulky SUVs tend to be more expensive to insure than small, unremarkable commuter sedans. The difference in cost is because SUVs and sports cars are often costly to repair, are more likely to be stolen, and are potentially more damaging in an accident.
Because of these same factors, however, some models may have lower premiums, so don’t just avoid SUVs and sports cars entirely. Look for top safety picks and avoid vehicles listed on the National Insurance Crime Bureau’s annual “Hot Wheels” report.
What should you do if you’re unwilling to budget on the car you’ve chosen?
Look for Discounts
Insurers often offer discounts that can be applied to policies, like having lower annual mileage, installing additional safety features, and showing your membership in affiliate groups like AAA. These often aren’t advertised, so you should directly inquire about them.
You should also leverage the length you’ve been driving. Once you reach the age of 20, you’re no longer considered a high-risk driver, and your premium will drop.
This same rule regarding length, however, doesn’t similarly apply to your years with an insurance company. In fact, you might actually be paying more because insurance companies like to engage in price optimization, according to a 2015 NPR report.
Increase your Deductible
In addition to discount seeking, you can go in a bit more of an aggressive and proactive direction by increasing your deductible. Raising your auto deductible means raising the amount of money you’ll pay if you’re in an accident, but, depending on the amount you save on your lowered premium, it may be more beneficial for you financially and create new savings.
Just be sure you have an amount of money equaling your deductible saved in an emergency fund in case you need it!
Saving on Car Insurance
You’ll be surprised just how much money you can save both monthly and annually by trying out these tips. And thanks to the many digital tools, finding and managing these discounts and being proactive in both your car and insurance search is a breeze. Go into your buying process armed with knowledge on how to make the most out of your discounts and you’re sure to come out on top. Learn about the additional ways you can save.
Lexi Carr is a freelance writer with an interest in financial advice, planning, and travel. Please feel free to contact with any inquiries at lexncarr@gmail.com.