Picking a car insurance plan may not be the most glamorous part of getting a car, but it’s necessary for drivers to have. When choosing a car insurance provider, it’s important to shop around to find the best deals. By knowing the coverage you need, you can avoid overpaying for a policy that doesn’t fit your situation. Let’s learn how to save money on car insurance.
Saving Money on Car Insurance
Saving money on car insurance requires doing your research and learning about available policies. All the time you spend talking to insurance agents and getting quotes is worth it when you find an affordable plan that’s right for you.
Here are a few ways to save on car insurance:
- Get multiple insurance quotes.
- Consider your type of car.
- Choose a higher deductible.
- Bundle multiple types of insurance.
- Improve your credit score.
- Find a plan that fits your driving habits.
Get Multiple Insurance Quotes
When searching for a new car insurance policy, take your time looking for a plan that fits your needs. Every car insurance company uses different algorithms to calculate its rates, so get a minimum of three quotes from a variety of insurance companies. Typically, companies sell plans through their own agents, independent agents, or directly to customers either over the phone or through the internet. According to The College Investor, it’s smart to compare rates for each of these kinds of insurance companies.
To save the most you can, reassess your auto insurance every year. If you find your rate increases, you might want to look for more affordable options. Consider paying your insurance semiannually, so you can compare your rates regularly. Your life is always changing, so make sure your policy makes sense for your current situation.
Consider Your Type of Car
Car insurance companies base your premium on the following factors:
- Price of car
- Repair costs
- Safety record
- Likelihood of theft
Insurance Information Institute says that by choosing a car with more safety features, especially ones that reduce the likelihood of car theft or personal injury, you can lower your auto insurance rates. However, cars with these kinds of features tend to be newer, which also comes with an increased cost.
When receiving quotes, calculate whether it’s cost-effective to have a nicer car. It might be worth paying a little more to get extra safety features. These 12 cars with the best safety ratings are a great place to start your search.
On the other hand, buying a high-end car is going to cost you much more in insurance than a low-cost commuter car would. To get the best value for your money, find a car that is both cost-efficient and offers safety features. Some insurance companies will even offer discounts to drivers with hybrid or alternative fuel vehicles.
If your car is old and beaten up, NerdWallet suggests choosing a plan without collision and comprehensive insurance. Collision covers repair damage to your car if you run into another car or object or if your car flips over in an accident. Comprehensive insurance covers damage from natural disasters, vandalism, theft, or hitting an animal. Paying for these insurances might not be worth it if your car is a clunker. It doesn’t make sense to put a lot of money into a car that doesn’t have much value.
Choose a Higher Deductible
Another way to save money on car insurance, according to Forbes, is by choosing a higher deductible. Having a higher deductible can lower your premium costs significantly. If you do choose a high deductible, make sure you have enough money set aside to pay the deductible. It’s important to be financially prepared in the case of an accident.
Bundle Multiple Types of Insurance
While choosing your auto insurance, consider looking for new plans for other kinds of insurance, as well. Many insurance companies offer lower rates when you bundle multiple types of insurance. This could include bundling homeowners or renters insurance with your auto insurance. They might also give you a discount if you insure multiple vehicles, says Forbes.
Improve Your Credit Score
According to Investopedia, having a good credit history is another way to save on auto insurance. Many insurance companies look at your credit score to determine the price of your policy. Studies have found that those with better credit tend to make fewer claims, which shows the insurance company that you are a lower risk. Check your credit score regularly to ensure you’re making spending decisions that are good for your credit.
If you live in California, Hawaii, or Massachusetts, you don’t need to worry about your credit score when looking for a policy. Insurance companies in these states are prohibited from using credit scores to set rates. However, having a solid credit score can only help you when making large purchases, so it’s still important to make smart spending decisions.
Find a Plan That Fits Your Driving Habits
People who don’t drive often should consider an insurance plan that’s based on how many miles they drive, according to Forbes. Companies such as Allstate, Metromile, Esurance, Mile Auto, and Nationwide offer pay-per-mile insurance plans in select states. State Farm, Safeco, Travelers, and Progressive also have usage-based insurance programs available.
Safe and experienced drivers also tend to save on auto insurance. For instance, select insurance companies give discounts to drivers who have completed an approved defensive driving course. The College Investor reminds drivers that defensive driving courses not only save you money but also improve your driving skills. By knowing what to do in high-risk situations, you can avoid accidents, keeping you and other drivers safe and helping to avoid an expensive accident.
Even if it wasn’t required by law, car insurance is important for all drivers to have. By following these tips, you can save as much as possible on car insurance. Remember, every driver’s situation is different, so shop around to find an auto insurance policy that is right for you.
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