Saving money on car insurance can be a double-edged sword. You need to maintain enough coverage to ensure you’re fully protected if you’re in an accident. At the same time, you don’t want to spend more than necessary.
Many people buy car insurance once and don’t think about it again unless they’re in an accident. But it’s a good idea to review your policy to ensure you have the best car insurance and check for a better price every six to 12 months, depending on when your policy renews. It can be a great way to ensure you’re not paying for coverage you don’t need.
There’s no guarantee that you’ll save hundreds of dollars by switching companies, but there are some things you can do to save money on car insurance.
Factors that determine car insurance rates
Almost every state requires drivers to maintain a certain type and amount of coverage so that people have some financial protection after an accident. Carrying more insurance than your state’s minimum requirements is generally recommended since accidents can get expensive, especially if someone is seriously injured or has a lot of property damage.
The price for car insurance can vary from company to company, but several factors can influence your rates, no matter which insurance company you choose. These factors include:
- Your driving history
- The type of coverage you need
- Your age and gender
- Where you live
- The kind of car you drive
- How much and how far you drive
- Your credit history
If you’re looking for ways to save money on car insurance, spend an afternoon researching multiple companies and comparing the types of coverage and pricing they offer.
The best ways to save money on car insurance
While you may not be able to change some of the factors that affect your car insurance rates, there are ways to avoid paying more than you need to.
Reevaluate your current coverage.
Before requesting quotes from new companies, look at your current coverage. Understanding the coverage types and dollar limits on your current policy can help you ask informed questions and compare insurance companies one-to-one.
If recent factors might affect your car insurance rates, like moving to a new city or state, getting a new car or driving less than you are used to, contact your current insurance company and ask if you qualify for a better rate.
Compare quotes to save money on car insurance.
Getting at least three quotes for car insurance is generally considered best practice. You can often request and compare quotes online, although some insurance companies may require you to speak with an agent before they provide a quote.
You’ll likely need to supply personal information like your name, email, phone number, driver’s license and vehicle information and your current insurance policy details.
Try to request quotes from different types of insurance companies, like those that sell directly to consumers, those that only sell policies through their own agents, and those that sell through independent agents.
Ensure you get the same types and levels of coverage in each quote to make a direct comparison. And don’t automatically select the lowest price. Customer service and the ability to pay claims quickly and easily should also factor into your decision—not just how much money you can save on your car insurance.
Before selecting an insurance company, ensure they are reputable and have a good financial standing. Pay attention to recommendations (or warnings) from friends and family members, and read online reviews about the company’s responsiveness to claims and customer service issues.
Raise your deductible.
A deductible is the portion of the repair or medical bills you are responsible for paying if you are found at fault in an accident. Once you pay this amount, the insurance company covers the rest of the costs up to the policy limits.
Raising your deductible can lower your monthly insurance premium since you assume more financial risk if you’re in an accident. While this can lower your monthly car insurance bill, it is vital that you have enough money to cover the full deductible amount in your emergency fund or other savings.
Save money on car insurance by bundling policies.
Insurance companies often provide discounts for buying two or more policies from the same company. The classic bundle option is a home and auto policy purchased together, but you may be able to bundle other types of insurance with your auto policy if your insurance company offers it.
Some insurance providers will also give you a discount if you insure two or more vehicles with them. Work with your agent to see if you qualify for a bundle or multi-vehicle discount, and compare bundling options from other companies to help you make the best choice.
Keep a clean driving record.
Your driving record is one of the biggest factors in the amount you pay for car insurance. Accidents, speeding tickets and moving violations can raise car insurance rates significantly.
Review your driving record occasionally by contacting your state’s Department of Motor Vehicles (DMV) and check the report for potential errors. If you find a mistake, file a dispute to remove the error and clean up your record. Doing so can help you save money on car insurance.
Work on your credit history.
Depending on where you live, insurance companies may factor your credit report into the price you pay for insurance. While it isn’t the reason you might pay more, your credit report is factored into a credit-based insurance score that helps insurance companies determine the likelihood of an insurance claim in the future.
Review your credit report regularly with the three major credit bureaus for mistakes or inaccurate information. If you find errors, contact the credit bureau to start a dispute and work with them to resolve it.
To help you get the highest score and save the most money on car insurance, pay your bills on time every month and try to keep your credit card balance as low as possible.
Take advantage of every car insurance discount to save money.
Companies offer many discounts to help people save money and entice them to switch to their car insurance policies. Depending on the company you select, there may be multiple discount options that you qualify for.
For example, one of the largest insurance companies in the U.S., Allstate, offers the following discounts to customers, though you may only qualify for some of them.
- A new car discount
- Multi-policy discount
- Smart student discount
- Anti-lock brake discount
- Anti-theft device discount
- EZ plan discount
- eSmart discount
- Early signing discount
- Full pay discount
- Responsible payer discount
- Safe driver discount
Other insurance companies may offer additional or different discount options. While you may not qualify for every option available, adding multiple discounts to your policy can be a great way to save some money. Use the available options to help you decide between companies as part of your research.
Bottom line
Finding the right car insurance for your family can take time and effort. Although you must ensure you’re covered in an accident, you don’t want to pay more than you need to.
Take an afternoon to review your coverage, and get quotes once or twice a year to see if you qualify for better rates with another auto insurance company. Even if you don’t save a lot of money every time you check your car insurance policy, you’ll at least know you’re getting the right coverage at the best price, giving you peace of mind.
Photo by Krakenimages.com/Shutterstock
