Auto insurance is one of those necessary expenses that most drivers would probably prefer to to skip altogether—until they are involved in an accident and realize that their auto insurance policy saved them thousands of dollars and helped to put them behind the wheel of a replacement vehicle.
Resenting annual or monthly premiums is understandable—they can be expensive, with the average rate at more than $900 per year, according to the DMV. However, while you probably cannot avoid paying for auto insurance (most states require it), there are things that you can do to reduce your rates:
1. Shop Around
There is no shortage of insurance carriers or agencies, so don't be afraid to shop around for the best rate. Just because your parents used ABC Insurance Agency doesn't mean that you have a lifetime commitment to do the same. In addition, before you go car shopping, consider potential insurance costs before deciding on a vehicle. The cost of an insurance premium is partially based on:
- The vehicle make and model
- The safety record of the vehicle
- The probability of the vehicle being stolen
- The cost to repair damages
Newer, sportier, more expensive vehicles will obviously cost more to insure due to their higher repair costs and higher probability of theft when compared to less expensive, more non-conspicuous vehicles. Think about it: which is more likely to catch the eye of a car thief: a Range Rover® or a Hyundai?
2. Take Advantage of Discounts
Insurance carriers offer a number of discounts—everything from military to safe driver—so when you are making policy decisions with your agent, leave no discount-stone unturned. Ask if they offer group discounts for being a member of certain organizations, working for particular companies, being a teacher, etc. Additionally, some carriers offer discounts to seniors, college graduates, low-mileage drivers, and students with good grades. There are also multi-policy discounts available for bundling your auto insurance with other insurance needs such as homeowners, renters, and life, so consider that avenue as well.
3. Consider Upfront Payments
Paying for your entire insurance premium in one installment can be a hard hit for your wallet. Parting with $900+ dollars, all at once hurts, and it can be tempting to opt for monthly payments that are less than $100 and much easier to contend with, but if you are truly looking to save money in the long run, consider annual or bi-annual payments. There are typically fees associated with monthly payments that ultimately end up costing you more. Additionally, most carriers offer an extra discount to policyholders that take care of their bill in one installment.
4. Maintain a Healthy Credit Score
There are several things that can impact your insurance insurance rate such as your age, your gender, the state you live, your driving record, and surprisingly, for some carriers, your credit score. Maintain a healthy credit score by paying bills in-full and on time. Your credit score will not only impact the interest rate you get on your vehicle loan but also your insurance rate.
5. Drive Safely
Your driving record is one of the primary factors in determining your auto insurance rate. You can maintain a good driving record by abiding by your state's traffic laws and avoiding moving violation tickets. While it can be tempting to drive over the speed limit on an open highway, a speeding ticket could cost you big—both in the form of the traffic fine and the cost of your insurance rates rising. If, however, you do slip and get a traffic fine, consider taking a defensive driving course to keep the violation off of your driving record.
You can certainly find ways to save money on your auto insurance, but make sure you talk to an insurance agent to make sure that you have the coverage that you need to protect you and your loved ones should an accident occur.