Need to lower your auto insurance? Here is how to do it
If you’ve ever had a sticker shock when opening your auto insurance bill, you’re not alone. Auto insurance payments can go up for a variety of reasons – a low credit score, damage to your driving record like accidents or movement violations, or even just an increase in property crime in your area.
However, you don’t have to take these rising costs in slow motion. There are several strategies you can use to lower your auto insurance cost and save money, often considerably too. The first step is to compare your current rate to that offered by other auto insurance companies. Tools like Credible make this easy; just fill out a quick form and see personalized rates within minutes. Sometimes comparing options can save you hundreds or even more per year.
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Beyond shopping around for insurance coverage, you can also use the following strategies to lower your insurance premiums:
Improve Your Credit Score
“Your credit history and score can play a huge role in helping insurance companies determine your rate,” said Vadim Verdyan, advice manager for the Albert personal finance app.
Unlike a mortgage company or a lender, auto insurers ignore your debts and balances.
“Instead, they want to know how you are behaving as a borrower,” Verdyan said. “Your credit history will let the insurance company know how financially reliable you are. If they see a lot of missed payments or collection items or liens on your report, then they may view you as irresponsible. and give you a higher rate.On the other hand, if you’ve never missed a payment and have a flawless credit history, they’ll consider you reliable and may give you a lower premium. “
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The bottom line? Good credit can often equal a higher score than if you have bad credit or fair credit. So if yours is at the bottom of the scale (think 740 or less), consider working to build credit before applying for a new policy.
Don’t know what your credit rating is? Visit Credible to verify yours without negatively impacting it.
Group your fonts
Obtaining multiple policies from the same insurer can also lead to a lower premium. With Progressive, for example, you can get about 5% off your costs by bundling two or more policies, such as your home and auto insurance or your car and motorhome insurance.
Again, it is important to compare insurers here, as the discounts vary greatly from one auto insurance company to another. Progressive offers up to 25% off on some plans, so shopping around for insurance quotes can ensure you get the best possible rate on your policy. Use Credible to see the discounts and bonuses you can claim with just one form.
Drive safely – or get a safer car
Being a safe driver or having a safe car are great ways to lower your risk as an insured and take advantage of lower rates. On the driving side, going for long periods without an accident or traffic ticket can earn you lower premiums, just like taking a defensive driving course.
You can also choose to use your insurer’s safe driving app. These track your driving habits on the road and reward you with discounts for driving your vehicle safely.
Choosing a car with excellent safety features can also help your case. These can include airbags, anti-lock brakes and an anti-theft device.
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“These vehicles are statistically less likely to be damaged or stolen than those without these features,” said William Miller, senior consultant at Allstate.
Consider usage-based insurance
Another option is usage-based insurance. This allows you to pay by the mile rather than a flat rate based on estimates.
This type of policy has become more popular since the start of the pandemic, when many Americans started working from home. Just be careful, usage-based insurance isn’t for everyone.
“Some insurance companies will track exactly how many kilometers you drive per month and base your rate on that number,” Verdyan said. “While this can be great for those who drive less than 10,000 miles per year, it can be costly for those who drive above that number every year.”
There are other strategies that can work to help you save on auto insurance as well. Choosing a higher deductible is a common option. By increasing the amount you pay out of pocket in the event of a claim, you can significantly reduce the cost of your premiums.
Another option? Pay your premium up front rather than spreading it out over the year. In many cases, insurers will offer auto insurance discounts to customers who do.
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Finally, consider setting up automatic payment or paperless billing, as these features often come with small discounts. Just make sure you’ve set up email notifications if you choose the latter option. You don’t want to miss an invoice and owe late fees.
The bottom line
Auto insurance premiums tend to increase over time. If your current insurance payment has gotten out of hand, take the first step and see what other options are available. Head over to Credible and compare auto insurance options from several top rated companies at once.
Have a finance-related question, but don’t know who to ask? Email the Credible Money Expert at [email protected] and your question could be answered by Credible in our Money Expert column.