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.
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?