10 Ways To Lower Auto Insurance Costs
For many people, owning a car is considered to be a necessity. With a car you can go anywhere you please and at anytime you please, although this convenience does come at a price.
Owning an automobile is a major expense, and to make matters worse, if you have an accident in your vehicle and injure another driver or cause damage to someone’s property, it could end up costing you a considerable amount of money which you may or may not be able to afford to pay by yourself.
For this reason, it is important to protect yourself against such financial losses by taking out car insurance. However, doing so adds one more expense that you have to pay for, so it is natural that people want to try to save as much money on their auto insurance as they can.
In this article, we look at some proven tips on how to reduce your auto insurance costs. Hopefully, by following these tips you will be able to reduce your automobile expenses and have a bit more money left over in your pocket for other things.
1) Use Your Automobile Less
Most car insurance companies will reduce your auto insurance costs if you use your car less. So rather than driving your car to work everyday, why not walk, ride a bus or take public transportation instead?
Alternatively, you may want to consider car pooling with other work mates. Many insurance companies offer reduced rates for carpoolers, so this is something that is definitely worth considering.
In order to benefit from these savings however, you need to inform your auto insurance company that you will be using your vehicle less often as otherwise they won’t be aware of what you are doing.
Teenagers can also save money insuring their vehicle, as providing they are not registered as the principle driver, they can save up to 30% on regular auto insurance costs.
However, regardless of your age, using your vehicle less often on the road will help you to lower your auto insurance costs. As an added bonus, it will also help you to save money on petrol and maintenance costs.
If you absolutely do need to use your vehicle everyday, try to do so only for essential journeys. Non essential journeys, such as travelling to your local store which is within walking distance, should be done on foot and not in your vehicle.
Although this probably won’t help you to save money insuring your vehicle, it will help to reduce the amount of wear and tear that your car suffers as a result of usage, which will subsequently extend the life of your vehicle and reduce the amount of money it takes to maintain it.
2) Buy A Safe Car To Get Insured Cheaply
Insurance companies look at data given to them by the Insurance Institute for Highway Safety. This agency conducts safety tests of cars, and gives cars a safety rating.
The safer a car is considered to be, the lower its insurance rates tend to be. So keep this in mind when you buy a new car, as not only will it help to lower your car insurance costs, but it will help to keep you safe too!
What are the safest cars to buy? The list below will tell you the most recent vehicles voted as being the safest on the road by the Insurance Institute for Highway Safety in 2011.
Note: Insurers generally consider small and light cars to be of higher risk than larger and heavier cars, which can affect the overall cost of your auto policy. The more safety features a vehicle has such as driver, passenger and side airbags, anti-locking brakes and electronic stability control, can reduce the perceived risk of a vehicle and allow you to purchase a cheaper auto insurance policy.
Safest Large Cars In 2011
• Buick LaCrosse
• Buick Regal
• BMW 5 series (except 4-wheel drive and V8)
• Cadillac CTS sedan
• Ford Taurus
• Hyundai Genesis
• Infinite M37/M56 (except M56x 4-wheel drive)
• Lincoln MKS
• Mercedes E class coupe
• Mercedes E class sedan
• Toyota Avalon
• Volvo S80
Safest Midsize Cars In 2011
• Audi A3
• Audi A4 sedan
• Chevrolet Malibu
• Chrysler 200 4-door
• Dodge Avenger
• Ford Fusion
• Hyundai Sonata
• Kia Optima
• Lincoln MKZ
• Mercedes C class
• Subaru Legacy
• Subaru Outback
• Volkswagen Jetta sedan
• Volkswagen Jetta SportWagen
• Volvo C30
Safest Small Cars In 2011
• Chevrolet Cruze
• Honda Civic 4-door models (except Si) with optional electronic stability control
• Kia Forte sedan Kia Soul
• Mitsubishi Lancer sedan (except 4-wheel drive)
• Nissan Cube
• Scion tC
• Scion xB
• Subaru Impreza sedan and hatchback (except WRX)
• Volkswagen Golf 4-door
• Volkswagen GTI 4-door
Safest Minicar In 2011
• Ford Fiesta sedan and hatchback built after July 2010
Safest Minivan In 2011
• Toyota Sienna
Safest Large SUV In 2011
• Volkswagen Touareg
Safest Midsize SUVs In 2011
• Audi Q5
• Cadillac SRX
• Chevrolet Equinox
• Dodge Journey
• Ford Explorer
• Ford Flex
• GMC Terrain
• Hyundai Santa Fe
• Jeep Grand Cherokee
• Kia Sorento built after March 2010
• Lexus RX
• Lincoln MKT
• Mercedes GLK
• Subaru Tribeca
• Toyota Highlander
• Toyota Venza
• Volvo XC60
• Volvo XC90
Safest Small SUVs In 2011
• Honda Element
• Hyundai Tucson
• Jeep Patriot with optional side torso airbags
• Kia Sportage
• Subaru Forester
• Volkswagen Tiguan
If you purchase any of the vehicles from the list above you can expect to save money when you insure them as opposed to other cars which are not considered to be as safe on the road.
Cheaper Auto Insurance Videos
3) Insure Your Vehicle With High Cash Deductibles
One of the easiest ways to reduce your auto insurance costs is to choose higher deductibles on your auto insurance policy.
Doing so will expose you to more financial risk if you need to make a claim, but if you don’t, you will end up saving money on your insurance policy without having to lower the level of coverage that you get for your vehicle.
What Is A Deductible?
A deductible is the amount of money that you agree to pay out on any claim that is made to your automobile insurer as a result of your vehicle being damaged or stolen, or suffering any other type of loss that is covered by your auto policy.
When you agree to pay a higher amount on any claim that you make, you are essentially taking on more risk because for every claim that you do make, you will reduce the amount of money the insurance company will have to pay out whilst increasing the amount that you pay out.
So all a deductible really is, is the amount of money you have to pay out first before your insurer will pay out to cover the rest of the claim.
The advantage of having a higher deductible for you as a driver, is that it can result in you paying lower insurance premiums which then saves you money on your policy. For example, raising your deductibles from $100 to $500 can save you 10-20% on your premium costs, whilst raising it to $1000 can save you 25-30%.
The main disadvantage however, is that as previously mentioned, it exposes you to a greater level of financial risk.
This however, will only be the case if you make a claim, and usually people who have a large deductible on their car insurance policy will not claim for small inexpensive damages, but rather absorb the cost themselves. Only when it comes to large losses, does it make sense to make a claim if you have a large deductible.
If you are a relatively safe driver and never have to make a claim, having a higher deductible on your car insurance policy is a great way to save you money.
But if you do opt for this option, make sure that your insurance company provides you with enough benefit to make taking on this extra risk worth doing. Otherwise, there will be no point in you carrying this extra risk.
4) Keep Your Driving Record Clean
If you are a careful driver who does not speed and obeys traffic laws, you will maintain a clean driving record and the insurance companies will reward you for this.
Drivers who have clean driving records can get discounts of up to 25% on their car insurance costs. Be careful however, because once you have an accident or make a traffic violation, you are likely to lose this discount privilege for three years.
Keeping a clean driving record is especially important for teenage or young drivers, as insurance for that age group is already very expensive due to the high perceived risk of being a teenage driver.
Any car accidents that occur within a few years after taking out insurance can result in dramatically increased rates for that driver.
As a result, if you are a teenage driver, one of the best ways to prevent even higher auto insurance costs is to stay safe on the road and don’t make any unnecessary claims on your insurance such as claiming for minor losses.
5) Lower Car Insurance For Teenage Drivers
Parents who add their teenager to their insurance policy can expect the rates of their policy for the car that their teenager drives to double if their teen is registered as an occasional driver, and to triple if their teenager is registered as the principle driver.
Aside from putting your teenager up for adoption, there are several strategies that you can use to help reduce your auto insurance costs.
The first is to encourage your child to do well at school. Many insurance companies will offer discounts of around 15% on your car insurance rates if your teenager maintains at least a grade B average.
Another strategy to get an even bigger discount is to send your teenager to a college that is 100 miles or more away from home.
If your teenager does not take the car to college, they will qualify for a 75% reduction in their car insurance fees under the distant student discount policy. A truly substantial saving, and they can still drive the car when they return back home.
Finally, you may want to consider giving your teenager an old car that does not require collision and comprehensive car insurance. This can save you up to 40% on your car insurance costs.
In summary, the best ways to reduce young driver automobile insurance are:
- Driving occasionally and not being registered as the principle driver.
- Driving an older vehicle.
- Doing well in school.
- Not going on long journeys over 100 miles.
- Registering automobile insurance under a parents name.
6) Don’t Drink And Drive
Aside from the safety aspect, drinking and driving is bad news financially. If you are caught drunk behind the wheel, your car insurance will automatically be cancelled.
When you later go to renew your insurance, you will have to do so with a higher risk insurance company which specializes in insuring high risk drivers.
If this happens to you, expect your insurance rates to be roughly three times higher than they were before for a period of three years, and then two times higher than they were for a period of two years.
So stay safe physically and financially by not drinking and driving on the road.
7) Insure Your Auto For Less With A High Credit Score
Not many people are aware of this, but apparently car insurance companies have figured out that people with high credit scores tend to have fewer accidents than people with low credit scores.
It is in your best interest therefore to find out what your credit score is, and then to take steps to increase it as this can help you to save money insuring your vehicle.
If you are not currently insured, but are looking to buy a new vehicle some time in the future which you will then insure, you may want to first find out what your credit score is so that if you do have a bad credit rating, you can take steps to improve it before you insure your new vehicle.
Your credit score will also affect any requests for financing you make, such as requesting a car loan on a new vehicle. As a result, raising your credit score will not only benefit your insurance costs, but will also affect how likely you are to get a loan and the amount of interest that you will have to pay on it.
8) Buy Car & Home Insurance Together
Most people buy car insurance and home insurance separately. Doing so not only leaves coverage gaps in your policies, but also works out to be more expensive.
You can reduce coverage gaps and save yourself up to 20% on total costs if you buy both policies together.
This is actually a very simple and effective way to save yourself money and provide yourself with proper coverage, so it is quite surprising that more people don’t do this.
9) Don’t Buy Additional Health Insurance
If you have health insurance already, there is no point in taking out additional health coverage for your automobile as you will be covered anyway.
You may be required to purchase a minimum level of coverage, but past that amount there is no point as you will just be duplicating your existing health insurance policy.
If you do not have health coverage, then you might want to consider getting it as it will provide you with much greater coverage compared to having vehicle health insurance only.
10) Avoid Making Small Claims
If you have an accident in your car or damage someone’s property, you need to think about what effect filling a claim on your insurance will have on the rates that you are charged.
As a general rule, try to avoid submitting claims for small property damage that you cause. This will help to keep your car insurance coverage for when you really need it, and prevent you from having to suffer penalties on your rates.
So if you suffer a minor loss and can afford to cover it yourself without getting your insurance company involved, it is probably better to do so as this will help to save you money in the long run by keeping your car insurance premiums down.
