How to Avoid Exorbitant Auto Insurance Payments
Almost everyone needs a car to get around, but cars are expensive. In addition to the initial cost, you have to pay ongoing charges such as maintenance, gasoline and insurance. Insurance can be especially difficult for car owners because the amount you are charged can vary widely depending on factors you can and cannot control. Sometimes it feels like the smallest mistakes can drive your insurance costs so high that you might as well buy a bike.
If you own a car and want to avoid exorbitant insurance payments, here are some of the best ways to lower your risk and have cheap insurance.
Insurance companies like to work with low risk drivers. The lower the risk that your insurer has to pay on your policy, the less your insurance company will charge your premium.
How do you show that you are a low risk driver? One way is to keep a blank file. If you get a ticket for reckless driving, speeding, drunk driving or other violation, it can drive up your insurance costs. If you get a ticket, you could find yourself paying 20% or more each month when you renew your insurance.
On a related note, try not to cause accidents. This may sound obvious, but it deserves to be highlighted. Your insurance premiums may go up if you’re involved in an accident, but they’ll go up even more if you’re found guilty.
Choose the right vehicle
The type of vehicle you drive will influence the amount of your insurance costs.
One obvious factor is the cost of your car. If you have a more expensive car, you will have to pay higher insurance to cover any damage that may happen to it. If you drive a clunker that would be considered full if it gets a small dent, it will help keep your premium low. It’s the same thing that makes high-end or premium versions of the same vehicle more expensive to insure.
Less obvious is the type of car you drive can affect insurance rates. For example, large vehicles like pickup trucks can cause more damage or injury if you have an accident. Because of their higher potential to cause costly damage, insurers might charge more to compensate for this.
On the flip side, driving a vehicle with more safety features can lower your insurance bill by reducing the potential damage it can cause to passengers, bystanders, and other vehicles.
Choose the right neighborhood
Insurance costs can change depending on where you live, even if you don’t change anything else, like the car you drive or your driving record. There are several reasons for this.
Some areas simply have worse roads than others, which can cause damage to cars or accidents. Imagine the difference between driving in a crowded city like Boston, compared to the rural roads of the Midwest. It’s reasonable to assume that people who drive on congested streets are likely to have more accidents, so their insurance may cost more.
Another reason, some areas may be more prone to non-driving insurance claims. If the zip code you live in has higher than average reports of stolen vehicles, vandalism, or car break-ins, you may have to pay a higher price, even if you are a perfect driver.
Compare the prices
Just because you’ve used the same insurer for years doesn’t mean you have to stick with them forever. When your policy is about to expire, shop around. You may find that another insurer is willing to offer you the same coverage at a lower rate.
Shopping can’t hurt, so you should take the time to do so whenever you get the chance.
Related: How often should I buy auto insurance?
Compare auto insurance plans
Benefit from discounts
Insurance costs less if your insurance company considers you to be low risk. The less you drive, the less likely you are to have an accident. Many insurers offer discounts for the low mileage you can claim based on how often and how far you drive. Check if you qualify for a discount from your insurer based on how often you drive.
You can also get discounts from groups such as professional organizations or alumni. Check with the groups you are a part of to see if they have an auto insurance partner and compare the rates available.
Take care of your credit score
Most states allow auto insurers to examine your credit score to determine how much to charge for auto insurance. The idea is that people who can maintain good credit can be more careful and conscientious, making them less risky drivers.
This means that you can save money on your auto insurance premium if you have a good credit rating. Do your best to make each monthly payment and avoid getting into too much debt. This will keep your credit score high and your insurance costs low.
Increase your deductible
A deductible is the amount of money you have to pay before the insurance covers the additional costs. For example, if you have an auto insurance deductible of $ 1,000 and you are in an accident that causes $ 3,000 in damage, the insurance company will only cover $ 2,000 of that cost. The first $ 1,000 should come out of your pocket.
If you feel comfortable doing so, you can increase your deductible to lower your monthly insurance payments. If you have an accident, you’ll have to pay more out of pocket, but you can save money in the long run if you don’t need to use your insurance. Just be sure to adjust your emergency fund to accommodate the higher deductible.
Bundle your insurance
If you have another insurance policy, like tenant or home insurance, see if you can bundle your policies. Large insurers that offer more than one type of coverage may offer you a discount on one or both policies if you bundle them. Another benefit is that it makes your life easier by reducing the number of separate bills you have to pay.
Prepay your premiums
Many insurance companies have several billing options. For example, you can pay monthly, semi-annually, or annually. If you have the option to pay for 6 months or a full year of insurance, there is usually a discount for doing so. If you have the extra cash and there’s a discount, don’t be afraid to prepay your coverage.
Many insurers offer discounts if you take driving lessons. For younger drivers, this usually means picking up Driver’s Ed before getting behind the wheel, but adults can take advantage of education discounts as well. Find out if your insurer offers discounts on your monthly premium if you take a defensive driving course. Plus, you’ll learn a thing or two about how to avoid accidents.
Auto insurance payments are a reality for American drivers, but that doesn’t mean you can’t try to lower your premiums. Taking the right steps to improve your driving and optimize your coverage can help save you money on transportation. It is money that you can add to your savings or even to your investments.