If you opt for full insurance coverage for a car in the US in 2021, statistics tell us that the average you’ll pay is $1,674 for your annual premium, or $139.50 per month. That’s quite a lot of money, especially when the cars themselves are getting more advanced and more expensive.
It’s at times like these when you need some serious cost-cutting power, and with insurance you can make those cuts. Insurance is one of those interesting areas of car expense where you can more actively work to make cuts, and in today’s blog we’ll share 10 great ways to get it done.
How to Lower Your Car Insurance Rate
1. Get Multi-Car Discounts
For many years the average number of vehicles per household has hovered between 1.8 and 2, so it’s fair to say that a great number of American families have more than a single vehicle at home. For those families dealing with 2 or more cars, you can get savings of up to 25 percent depending on the provider that you’re using.
According to valuepenguin.com, Geico offers the best potential rates at up to 25 percent lower, but State Farm, Progressive, and Travelers all offer discounts, too.
So, if you have 2 or more cars, consolidate them into a single insurance policy and generate savings everyone can enjoy.
2. Consolidate Insurance with a Single Provider
Your household might not have multiple cars, but it could well have multiple insurance policies from different providers. Hardly anyone buys all of their insurance at exactly the same time, and everyone is encouraged to shop around for policies (see further below) so it’s quite possible that one would end up with multiple providers.
If you make some alterations to your various insurance policies, consolidating your various policies into a single deal with one provider, they will almost certainly offer you a better deal.
Never forget, insurance is a cut-throat game; a dog-eat-dog industry. If getting you into their books for more than just car insurance is the result, they’ll be willing to make it a little more worth your while!
3. Track Your Driving
For several years now, major car insurers have offered a unique idea to those who want to enjoy some meaningful discounts on their insurance without putting in the years of trouble-free driving first — they fit a tracking device to your car. At All State, they call it “Drivewise,” and Liberty it’s called “Safeco,” and so it goes on.
Basically, you agree to have either a tracker plugged into the OBD-II port, or an app that tracks your driving via your phone, whatever the company uses, and then you just drive as usual. By agreeing you can get discounts, but as the data rolls in and you can prove your steady hand at the wheel, they’ll get more generous.
4. Advanced Driving Courses
If you’re not comfortable with the driving trackers, then an alternative method to proving your driving skill and reliability, and that’s to take advanced courses in things like defensive driving. Typical discounts range from 5 to 20 percent and are generally eligible for drivers under 25 years old and drivers over 60, both times when insurance can be disproportionately high depending on the circumstances.
The best-known potential discounts are given by Geico to drivers 50 or over who take defensive driving courses, ranging between 5 and 20 percent. This is a great discounting method not just for the financial benefits, but also because it makes you a better driver and you’ll certainly be safer on the road.
5. Compare, Compare, Compare
Further above we mentioned that people are told to shop around, then we said consolidate into one provider. That advice is still true, but it doesn’t mean you can’t still shop around for that one provider. Comparing insurance rates has never been easier thanks to free online platforms like thezebra.com and insurify.com, among others.
It’s not as time-consuming as it used to be, but it can be a little draining printing off quotes or reading through the details of different providers. It’s worth it, though. This is a service you will be signing up for year on year, so it’s worth investing some time to find out if the provider is really worth what they quote or not.
6. Improve Your Car’s Storage
If you’re moving home and still looking for a place, then try to get somewhere with a garage. You can get small but helpful discounts of up to 5 percent or so when you can show your insurance company that you have a secure and safe location to store your car each night.
If your zip code is a “problem zip code” for the insurer — referring to those zip codes with higher per capita crime rates — then there’s not much you can do about that unless you leave the entire area, but you can improve your chances by getting a secure lockup within that zip code.
7. Pay a Higher Deductible
The deductible refers to the amount of money that you state to the insurer that you are willing to pay in the event of an accident and a claim against your policy. Some people put their own deductible as low as possible, which means that if you really do have an accident, your insurance will cover more, but also means your premium will be higher.
For those who have a well-founded belief that they are safe drivers, and very rarely find themselves at risk of accidents — e.g., hardly any people around where they drive; they don’t drive very often, etc. — then they could offer a higher deductible in exchange for a lower premium. If the risk of claims is low, it’s worth taking that small gamble.
8. Work on Your Credit Score
Like so many things in regular life, your credit score has a serious impact on your car insurance. The basic rule as far as insurance providers are concerned is that if you have a low credit score, then you are more of a liability and thus your annual premium will be higher.
According to credit ratings agency Experian, “Many auto insurance companies use a credit-based auto insurance score to help them decide whether to take you on as a policyholder, as well as the premium you’ll pay if they do.”
It’s not in every state, as it happens. California, Hawaii, Massachusetts and Michigan all either limit or ban using credit details to determine insurance premiums. In most places, however, you can expect there to be some impact. The difference can be huge, too. On the same vehicle, someone with a “Very Good” credit score might be quoted $1,508, whereas someone with a “Bad” rating will receive $2,940.
9. Boost Your Anti-Theft Security
If you are currently holding or planning to get comprehensive insurance for your vehicle, then making sure that you have a high-level alarm system can be a great way to bring down premiums. The reason for this is that comprehensive insurance covers break ins, whereas liability only insurance and other more limited forms do not. Augmenting your existing security with a mechanical immobilizer, wheel locks and tracking devices can create savings of up to 10 percent depending on the provider.
It should be noted, however, that for some it would be a counterproductive discount, first of all because you have to opt for more expensive comprehensive coverage in the first place in order to qualify for it, and secondly because you may also have to spend money purchasing upgrades for your car if it doesn’t already have them.
10. Cut Coverage or Get Liability Only
Finally, to cut your car insurance costs you can take some time to look over your policy summary and figure out whether or not you have a package of insurance that you really need. It could be that you’re sitting on a policy for which you’re paying extra to receive roadside assistance, courtesy car provision, and other protections that sound good but in reality are not providing you with any real value or safety net.
A good example of this can be seen on car insurance policies with comprehensive coverage for a vehicle that is already 10 years old and past its prime. Why bother paying so much insurance when the total policy cost comes to a significantly higher percentage of the total value of the vehicle. Consider trimming the fat on your policy. Better yet, for older cars, stick with liability only insurance. You can keep a lower deductible and still get cheaper insurance overall.