Car insurance is a necessity for anyone who owns or drives a vehicle. It protects you from financial losses in case of an accident, theft, or damage to your car or others. However, car insurance can also be a significant expense that can strain your budget. According to the National Association of Insurance Commissioners, the average annual cost of car insurance in the United States was $1,134 in 2019, but it can vary widely depending on where you live, what company you choose, and what coverage you need.
Fortunately, there are ways to lower your car insurance costs without compromising your protection or peace of mind. In this article, we will share with you some of the best tips for saving money on car insurance. By following these tips, you can find the best deal for your needs and budget and enjoy the benefits of having car insurance.
Tip 1: Shop around and compare quotes from different insurers
One of the easiest and most effective ways to save money on car insurance is to shop around and compare quotes from different insurers. Car insurance rates are determined by various factors such as your driving history, vehicle type, location, and credit score. Different insurers may use different formulas and criteria to calculate your premium, so you may get different offers from different companies for the same policy.
To get the best deal, you should use online tools or contact independent agents to get free car insurance quotes from multiple companies. You should compare identical policy coverage and limits to ensure an apples-to-apples comparison. You should also check the reputation and customer service of each company before making a decision. By shopping around and comparing quotes, you can save hundreds or even thousands of dollars per year on car insurance. For example, according to The Zebra, a car insurance comparison website, the average annual savings for drivers who switch car insurance companies is $368.
Tip 2: Bundle your insurance policies with the same company
Another way to save money on car insurance is to bundle your insurance policies with the same company. A multi-policy discount or a bundling discount is a common incentive that insurers offer to customers who buy more than one type of insurance policy from them. For example, you can bundle your car insurance with your home, renters, condo, motorcycle, or life insurance.
By bundling your insurance policies with the same company, you can enjoy several benefits such as convenience, simplicity, and loyalty rewards. However, the main benefit is that you can save money on your premiums. Depending on the company and the type of policies you bundle, you can save up to 25% on your car insurance. For example, according to NerdWallet, a personal finance website, the average annual savings for drivers who bundle their car and home insurance is $235.
Tip 3: Look for discounts that you may qualify for
Another way to save money on car insurance is to look for discounts that you may qualify for. Car insurance discounts are reductions in your premium that insurers offer to customers who meet certain criteria or perform certain actions. There are many types of car insurance discounts available such as good driver, good student, low-mileage, anti-theft device, paperless billing, and pay-in-full discounts.
To get these discounts, you need to apply for them and provide proof of eligibility. You should also check with your insurer regularly to see if there are any new discounts or changes in the existing ones. By taking advantage of these discounts, you can lower your car insurance costs significantly. Depending on the company and the type of discounts you qualify for, you can save up to 40% on your car insurance. For example, according to ValuePenguin, a personal finance website, the average annual savings for drivers who get a good driver discount is $371.
Tip 4: Choose a car that is cheaper to insure
Another way to save money on car insurance is to choose a car that is cheaper to insure. The type of vehicle you drive affects your car insurance rate because it reflects your risk level and potential claim amount. Some factors that make a car more or less expensive to insure are its age, make, model, safety features, repair costs, and theft rates.
To find out how much a car costs to insure before buying it, you can use online tools or contact insurers to get quotes for different vehicles. You should also check the safety ratings and crash test results of each vehicle from reputable sources such as the Insurance Institute for Highway Safety (IIHS) or the National Highway Traffic Safety Administration (NHTSA). By choosing a car that is cheaper to insure, you can save money on your premium and avoid paying extra fees or surcharges. Depending on the vehicle you choose, you can save up to 50% on your car insurance. For example, according to Insure.com, a car insurance comparison website, the cheapest car to insure in 2020 was the Mazda CX-3 Sport, with an average annual premium of $1,324, while the most expensive car to insure was the Mercedes-Benz S65 AMG, with an average annual premium of $3,911.
Tip 5: Raise your deductible or reduce your coverage for older vehicles
Another way to save money on car insurance is to raise your deductible or reduce your coverage for older vehicles. A deductible is the amount of money you have to pay out of your pocket before your insurer pays for the rest of the claim. Your deductible affects your car insurance premium and your out-of-pocket expenses in case of an accident. A higher deductible means a lower premium, but also a higher risk of paying more in case of a claim. A lower deductible means a higher premium, but also a lower risk of paying more in case of a claim.
To save money on car insurance, you can increase your deductible if you have enough savings to cover it in case of a claim. However, you should not raise your deductible beyond what you can afford to pay. By increasing your deductible from $500 to $1,000 or more, you can save up to 15% on your car insurance. For example, according to CarInsurance.com, a car insurance comparison website, the average annual savings for drivers who raise their deductible from $500 to $1,000 is $200.
Another way to save money on car insurance is to reduce or drop optional coverage for older vehicles that have low value or are paid off. Optional coverage is the part of your policy that covers damage to your own vehicle such as collision and comprehensive insurance. Collision insurance covers damage to your vehicle caused by a collision with another vehicle or object. Comprehensive insurance covers damage to your vehicle caused by events other than a collision such as fire, theft, vandalism, or natural disasters. Optional coverage is not required by law, but it may be required by your lender if you have a loan or lease on your vehicle.
To save money on car insurance, you can reduce or drop optional coverage for older vehicles that have low value or are paid off. However, you should not reduce or drop optional coverage if you cannot afford to repair or replace your vehicle in case of a total loss. By reducing or dropping optional coverage for older vehicles, you can save up to 40% on your car insurance. For example, according to The Balance, a personal finance website, the average annual savings for drivers who drop collision and comprehensive insurance for vehicles worth less than $4,000 is $660.
Tip 6: Take a defensive driving course or improve your driving habits
Another way to save money on car insurance is to take a defensive driving course or improve your driving habits. A defensive driving course is a training program that teaches you how to drive safely and avoid accidents. It covers topics such as traffic laws, road hazards, emergency situations, and crash prevention techniques. A defensive driving course can help you improve your driving skills and reduce your risk of getting into an accident.
To save money on car insurance, you can take an approved defensive driving course if you are eligible for a discount from your insurer or if you have a poor driving record. However, you should check with your insurer before taking the course to see how much you can save and what are the requirements for taking the course. By taking a defensive driving course, you can save up to 10% on your car insurance. For example, according to DMV.org, a driver’s education website, the average annual savings for drivers who take a defensive driving course is $100.
Another way to save money on car insurance is to improve your driving habits by following traffic rules, avoiding distractions, driving less, and maintaining your vehicle properly. Your driving habits affect your car insurance rate because they reflect your risk level and potential claim frequency. Poor driving habits such as speeding, running red lights, texting while driving, driving under the influence, and driving without a seat belt can increase your chances of getting into an accident and raise your premium. Good driving habits such as obeying speed limits, stopping at stop signs, using hands-free devices, driving soberly, and wearing seat belts can decrease your chances of getting into an accident and lower your premium.
To save money on car insurance, you should improve your driving habits by following traffic rules, avoiding distractions, driving less, and maintaining your vehicle properly. By improving your driving habits, you can save up to 30% on your car insurance. For example, according to Esurance, a car insurance company, the average annual savings for drivers who get a good driver discount is $336.
Conclusion
Car insurance is a necessity for anyone who owns or drives a vehicle. It protects you from financial losses in case of an accident, theft, or damage to your car or others. However, car insurance can also be a significant expense that can strain your budget. Fortunately, there are ways to lower your car insurance costs without compromising your protection or peace of mind. In this article, we have shared with you some of the best tips for saving money on car insurance. By following these tips, you can find the best deal for your needs and budget and enjoy the benefits of having car insurance.
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