Cheap Auto Insurance: 6 Ways To Reduce Premiums
Much like with many things in life, inflation, along with a rise in accidents and claims, has seen the average cost of auto insurance rocket by around 17% on premiums. While premiums can vary from state to state, the rise has impacted drivers nationwide and left them wondering how to absorb this into their already over-stretched budgets.
Author:Luqman JacksonReviewer:Liam EvansOct 09, 202318.5K Shares299.4K Views
Much like with many things in life, inflation, along with a rise in accidents and claims, has seen the average cost of auto insurance rocket by around 17% on premiums. While premiums can vary from state to state, the rise has impacted drivers nationwide and left them wondering how to absorb this into their already over-stretched budgets. While New Hampshire and Virginia don't have legal requirements for drivers to have any insurance at all, other states mandate drivers have some type of policy. Although there aren't actually any legal minimums, this is enforced at the state level.
For those who need to obtain insurance before hitting the road, finding the right policy is paramount to keeping costs down and ensuring good coverage should you need to put a claim in. Getting a car insurance quote onlineis generally easier to do than ringing around providers and giving you faster results.
This article looks at some of the best ways to lower those premiums and get the best value policy for your driving.
No One Company Offers The Cheapest Price
It's important to know that insurance prices aren't universal, and two people driving the exact same car in different states with a clean driving history can pay widely different prices. While insurance companies might advertise their prices as more competitive than others, in reality, this is simply a marketing ploy, and facts are manipulated to give you a biassed idea of how low prices are; in some cases, you might not even qualify for low rates simply based on the state you live in.
A NerdWallet analysis found that insurance for the same car insured in California and Florida, the cheapest provider for one state, was more expensive in another to prove that you need to shop around.
Don't discount local providers. 4 auto insurance companies dominate the market nationally in the US, but that doesn't mean they will give you the deal or even service. Always look at local and state providers to see what they can offer you.
Ask for Discounts
If you don't ask, you don't get. This is true for auto insurance, too. Many providers will offer discounts or extras based on your history or your purchasing habits. Discounts could be available for drivers taking out bundle insurance, i.e., home insurance at the same time or having more than one vehicle on the same policy. Other factors influencing your premium include driving history, how you pay (semi or annual payments cost less), how you receive your documents, any additional safety features on your car, or if you're affiliated with any organizations or have additional driving training, etc.
Always ask and include these when getting a quote to see if they can help you reduce costs.
Have Good Credit
Your credit score significantly influences how much you pay for your insurance policies. Only Massachusetts, Hawaii, and California do not allow insurance companies to use a credit check to determine the cost of your car insurance; in all other states, this is the deciding factor in the price you will pay. The poorer your credit score, the higher your premiums will be.
Each insurer will have its own credit scoring model and influences that will determine the price they set, but typically, if your score is below 570, you can look at spending hundreds of dollars more to get inspired than someone with a higher score.
Skip Comprehensive Cover for Older Cars
Comprehensive cover prices repairs for your car and the other car involved should there be an accident and your vehicle becomes damaged. In any case, for older cars, this policy can be increased more than the car is worth. Always get third-party and comprehensive cover quotes to see the difference in coverage and cost. If the comprehensive policy will cost you more than your car is worth repairing over the year, or you can do the repairs cheaper yourself (i.e., you work in the auto industry), this might be additional coverage you do not need. Always look at what you are covered for in all policies to see what best fits your needs.
The same goes for collision coverage, too. If you don't think it is worthwhile, don't buy it.
Raise your Deductible
Your deductible is what you pay out of pocket should you make a claim. A lower deductible generally comes with a higher premium and vice versa, especially if you have chosen comprehensive or collision insurance.
When it comes to deductibles, the more you pay, the less the insurer has to pay if you put a claim in, so you can expect to see some variation in the cost. Again, entering a few different amounts to ascertain the difference and not going over an amount you can afford will yield the best results, but always double-check before clicking buy on your new policy.
Pay Per Mile
If you don't drive all that much or only see the car for shorter journeys, opting for pay-per-mile insurance can reduce your payments as you will only pay for the miles you drive.
The most important thing to know about this option is that you will need to allow your insurance company access to your driving habits, which is done via a device fitted to your car that monitors your driving habits and distance driven. Typically, your premiums will end up fluctuating based on your driving habits. The fewer miles you drive and the better a driver you are, the less you will pay. This isn't ideal for those who have a long commute or are regularly stuck in traffic. But for people who don't drive far or much, this can be an excellent option to help you pay less.
Reducing your car insurance premiums needn't be too hard if you know what you are doing. While it can seem easier to stick with your current provider, this can incur higher premiums and hit your wallet hard. Do your research, take your time, and ensure you know exactly how to get the right coverage for the right price to benefit you.
Luqman Jackson
Author
Liam Evans
Reviewer
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