11 Ways to Cut Your Car Insurance

It’s often said that the only two things that are certain in life are death and taxes, and while that’s true enough, if you own a car you can add car insurance to that short list. Car insurance is virtually mandated in most of the Western world, and since you have to pay it, it helps to keep it is inexpensive as possible. You’ll probably need to cut your car insurance in order to do that.

How do you do that? There may be 100 ways, but I’ve identified at least eleven.

1) Carefully chose the car you buy. Much of the cost of car insurance is set when you purchase your vehicle. Higher priced vehicles, certain model types as well as newer cars generally cost more to insure. Before buying your next car, you might want to get insurance quotes to see what it is you’re setting yourself up for. Once you own the car, it will be too late.

11 Ways to Cut Your Car Insurance
11 Ways to Cut Your Car Insurance

2) Keep your mileage down. Some insurance companies may offer discounts for lower mileage. Reduce your driving as much as is practical, keeping in mind that not only will lower mileage save on insurance premiums, but it will also lower your auto expenses across the board. This can also be a real incentive to set up a work-at-home arrangement; just removing a daily commute can have a major positive affect on premiums.

3) Raise your deductible. We’re often tempted to keep our insurance deductibles to a minimum so that we don’t see large, unpleasant bills when it comes time to file a claim. But if you have a good driving record, raising the deductible can lower your premium substantially. One way to do this without increasing your exposure is to add the increase in your deductible to your emergency savings, that way you’ll have the funds available in case of an accident. For example, if you increase your deductible from $500 to $1,000, add $500 to your emergency fund to have it ready if necessary. If you never have a claim, you’ll be $500 richer.

4) Keep your driving record clean. This is the single best step toward keeping your insurance premiums down. The premium penalties for accident claims and traffic citations is substantial, so make a habit of driving conservatively. If you have some driving events in your recent past, it’s crucial that you stay clean from now on. Most jurisdictions will clear your record after three years, and the insurance savings for doing so will make it well worth it.

5) Keep your credit rating clean. There is apparently some correlation between driving habits and credit ratings! Keep your credit as clean as possible, especially if your driving record isn’t. Be sure to pay all of your bills on time, and if your credit report reveals any discrepancies, collections or charge-offs, do what you can to clean those up. Many old creditors will accept pennies on the dollar to settle old debts, and cleaning them out can have a substantial affect on your credit rating—and your insurance premiums.

6) Take defensive driving courses. Many insurance companies offer discounts if you’ve recently completed a defensive driving course. But before you rush out and sign up to take a course, make sure that the cost of the course won’t exceed the discount you’ll receive on your car insurance premium for taking it.

7) Look for discounts. There are all kinds of discounts available depending on the insurance company. Discounts are often available if you have a college degree or for certain employment affiliations, such as unions, government jobs, affiliate companies or the military. Some offer discounts if you have a garage, if you’re a member of AAA or even for multiple discounts. Never assume that an insurance company will automatically disclose what discounts they offer—be bold and ask.

8 ) Safety equipment. Having certain equipment in a vehicle can have a positive affect on insurance premiums. Security systems, passenger and back seat air bags, anti-lock brakes, and automatic seat belts can all lower your premium. Check with the insurance company to see which systems and equipment will lower the premium and see how your vehicle stacks up.

9) Bundle with other insurance policies. This is a time honored insurance saving technique but it’s worth re-emphasizing. You can often get a break on your car insurance premium by adding homeowner’s coverage or some other type of policy to your package. Insurance companies do this as a way of both attracting and retaining customers.

10) Shop, shop, shop! Shopping for car insurance can be a bit of a pain so you may be tempted to avoid it, but don’t! Rates are moving all the time, and if you stay with the same carrier for many years you may miss out on lower premiums. An insurance carrier may cut their premiums in order to attract business from their competitors, and by actively shopping you’ll be in a position to take advantage of the cost savings.

11) If all else fails, relocate… I’m not suggesting that you relocate to take advantage of lower insurance rates, but depending on which country you live in, car insurance can vary significantly based on geographic location. In the U.S. for example, car insurance rates can vary substantially from one state to another. And what you typically find is that the same areas that have high car insurance rates often have higher than normal rates for health insurance, property taxes, rents, property values and a host of other expenses and fees. So if you’re planning to relocate to lower your cost of living, lower car insurance rates may be another factor weighing in favor of the move.

What are you doing to keep your car insurance expense under control?

( Photo from Flickr by Uriel 1998 )

17 Responses to 11 Ways to Cut Your Car Insurance

  1. There’s one additional discount that is often overlooked and that is the life insurance discount. Some insurance companies will provide a car insurance discount when you when you package yoyr life insurance and your automobile insurance with the same company.

  2. Hi Jack–That’s excellent advice. The homeowners insurance packaging is more common, but if life insurance draws a discount it will be a benefit even to those who don’t own a house. Thanks for weighing in.

  3. Nice post, the best option i would go with is shop around it pays to shop multiple companies when looking to buy auto insurance. In many case, in addition to the variable rates offered by different carriers, some carriers may be trying to break into your market and offer substantial discounts in order to attract clients. It could have you driving a better bargain in the end.

  4. JP–I couldn’t agree more. We might think that car insurance rates are “pretty much the same” accross the industry, and while that may be true in the most general sense, companies are making business decisions all the time. Since nearly all insurance companies have different lines–health, homeowners, life, commercial, liablity, etc–they can make a decision to reduce exposure in car insurance by raising rates, or to increase market share by lowering rates. The latter is the insurance company we need to locate, and that changes all the time.

  5. These are all great, and I’ve used most of them to save money on my car insurance. However, I’ve never found much savings from increasing my deductible. For instance, when I look at how much I save on auto insurance premiums when my deductible is $500 compared to $1,000 the additional risk isn’t worth it. I believe last time I checked, my premiums may have dropped about $10 a month. That’s not enough. I’d have to avoid damaging my vehicle (or someone else’s) for over 4 years to make it worthwhile.

  6. That’s true Shawanda, you always have to balance out cost-vs-benefit in anything financial that you do. It may also matter what state you live in, raising the deductible could have a greater impact in some states than in others.

    The other things to consider are savings level and driving history. If you normally keep several thousand dollars in an emergency fund, increasing your deductible by $500 may be worth a $10/month savings because you have the worst case covered. Also, if you haven’t had any claims in years or in all the time you’ve been driving, it might still be worth justifying. But you always have to weigh it out.

  7. Push your kids to get good grades in high school and college – 3.0 GPA or higher. Insurance companies will give discounts for this as well.

  8. Hi Brian–Yes, student discounts for good grades. These are really important because rates for 16- and 17-year old drivers are so high. It can make a real difference.

  9. Nice!

    I like this is list, not too much info and not too little. I did have a chuckle at #11, its a bet drastic but true.

    Cheers!

  10. Some great advice. Personally I think the first point out of the list will have the greatest impact on the price of the insurance.

  11. A nice list, I agree with previous commenter’s that the first point on the list will have the greatest impact.

  12. I think these are awesome tips to cutting down the insurance costs. I only wish I had known about it sooner.

    thanks

  13. Thanks Kevin for your advise. I agree with most of your points but 1,2,11 are not applicable to me and maybe a number of other readers. I definitely wont be moving to cut my car insurance cost, reducing the cost of the car to buy or buying a second car instead is not very practical.
    I totally agree with the rest

  14. Hi Mark – The 11 suggestions aren’t meant to be across the board and for everyone. Instead it’s a list of suggested strategies for a different people under a variety of circumstances. 1, 2 and 11 may not work for you, but they may be a glove fit for others.

  15. These all companies are money minded and they all want more and more profit. When car company gives you insurance, they reduce your mileage

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