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If you have a car, you most likely need auto insurance. Auto insurance can save you big-time if you're involved in an accident, but hefty premium payments can easily take a toll on your budget. Luckily, there are many ways to cut down your bill.
When shopping for a new policy, you can save money by making a few conscious decisions. Take time to consider your needs and find the company that offers the best price on coverage you'd be happy with. And if you're happy with your current insurer, there are ways to save without ditching them for a new one.
Read on to learn what you can do to save on your existing or new auto insurance plan.
Figure Out What Coverage You Need
Insurance costs can add up quickly once you start piling on the coverage. If you're looking to save, one of the best ways to do so is to make sure you're paying for the right level of coverage. The right amount of coverage for you depends on a few factors, including what's required legally, what coverage you expect to need someday and your personal risk tolerance.
If you already have insurance, go over your current coverage and decide which aspects are essential and which you could live without. Instead of paying for add-ons you don't use, consider abandoning them when it's time to renew your coverage (or sooner).
Before you start your search for a new insurance policy, make a list of all the features you want, and identify which are critical and which you may be able to live without. Do you really need comprehensive coverage (which covers things like fire, theft and vandalism to your car)? If not, leaving that feature out could help shave down your bill. Keep in mind, however, that cutting coverage could leave you in a lurch if something happens.
Consider all of the following questions when choosing your insurance policy and its features:
- How much liability coverage do I need?
- How much collision coverage do I need?
- Do I need comprehensive coverage?
- Do I want additional rental car coverage?
Once you have an idea of what you need in a policy, finding the right provider and plan should be much easier.
Consider a Usage-Based Policy
If you rarely use your car, consider insurance policies that take into account how often or far you drive. Usage-based policies, like pay-per-mile plans, allow you to pay according to how much you drive, saving you for the times your car stays at home. Some plans even place a device into your vehicle to see how far you've gone, and what your driving behavior was like.
If you feel you could benefit from this type of plan, contact your insurer to see if switching to such a plan could help you save over time.
Shop Around Providers and Policy Offerings
Depending on the state you call home, you likely have many options when it comes to auto insurance. Coverage and prices vary widely based on which insurer you choose, so it's important to shop around for the best car insurance rates. Doing so will not only help you pick a provider you feel comfortable with, but can help you find the company that offers the best price for the plan you're looking for.
If you're happy with your current insurer but would like a more competitive rate, talk to them after you shop around to see if they can match the offers you've gotten elsewhere. Insurers, like any business, want to retain clients and may negotiate with you to keep you as a customer. Sticking with your existing insurer also saves you some hassle. Unless you're unhappy with your service, your current provider could be an easy first stop to see what's available without actually having to change insurers.
When comparing your coverage options, pay attention to the following things:
- What do the experts have to say? Auto insurers are carefully studied by experts that want to point consumers in the right direction. Look at these reviews, as well as those from actual customers, before settling on an insurer. Hearing another person's opinion can go a long way in protecting you from making a poor choice. To get started, look at these ratings by J.D. Power.
- Does the provider have many consumer complaints? Check with your state's department of insurance to see how many complaints have been logged against the insurer you're considering. To easily view the number of complaints against a provider, you can use this tool from the National Association of Insurance Commissioners.
- Does the provider offer the options you're looking for? You want the provider you choose to offer the insurance options you're looking for. If you feel strongly about a certain aspect of your policy—like the option for free car rentals during repairs or personalized customer service—make sure to find a provider that services that need.
Look for Discount Opportunities
Auto insurers tend to offer discounts to drivers that meet certain qualifications. If you're a student with good grades, for example, or if you've taken a defensive driving class, your insurance provider may consider you a lower-risk driver and offer you a discount as a result.
Discounts will vary by insurer, but there are several common ones to look out for. If you think you're eligible for any of these discounts, contact your provider to see if they offer any of these savings opportunities.
- Safe driver discount: You may be eligible for a discount if you have a record of safe driving. You might also qualify if you've taken certain defensive driving or driver education courses.
- Affiliation discount: You may be eligible for a discount if you're affiliated with certain groups like the AARP or if you're active military, among other memberships.
- Policy bundling discount: You could get a discount if you have multiple cars insured with the same provider, or if you wrap other insurance policies (like home or life) under one provider.
- Good student discount: Some providers offer discounts for students whose grades meet or exceed a certain level.
- Retirement age discount: If you're over a certain age and accident-free for a period of time, you may be eligible for a special retirement age discount.
Remember that the type of car you drive may also have an impact on your insurance premium. Cars with advanced safety technology could result in a lower insurance rate. Sports cars, on the other hand, could cost you more to insure due to their increased horsepower. Before buying a new car, get insurance estimates you can consider when looking at cars to purchase.
Consider Improving Credit for Better Deal
Insurance companies in many states consider your credit score (or a credit-based insurance score) when calculating your premium. Raising your scores before applying for a new insurance policy could help you lock in a lower premium and save you money over time.
Knowing where you stand with your credit can help an insurer to evaluate the likelihood that you'll file a claim, but it's a practice that's banned in several states (California, Massachusetts, Washington, Hawaii and Michigan).
If you don't know where your credit stands, get a free copy of your credit reports and credit scores from Experian. Look for inaccurate information or fraud in your reports, and dispute any as soon as possible. If you need to increase your score quickly, look at your credit utilization to see if this is an area where you can make a change. It's ideal to keep your utilization ratio under 30%, and you may be able to increase your score quickly by paying down your credit card balances.
Finally, if you're looking for a quick way to increase your scores, try Experian Boost®ø, which gives you credit for past on-time cellphone, utility and other payments. Experian Boost is one of the few ways you can increase your scores instantly. On average, users who saw a score increase with Experian Boost raised the FICO® 8 score based on their Experian credit report by 13 points.