Having covered ways to save money on fuel, repairs and maintenance in Part One of our “How to Slash Your Car Expenses” series, we now look at ways to reduce your car insurance.
Most car owners pay little attention to their car insurance and just pay the premiums year after year like an ATM, but we want you to be wiser than that. Read on to see how your car insurance matches up
How to Save on Automotive Insurance
1. Shop around: According to a study by JD Powers, only 39% of Americans looked for new auto insurance in 2014. Rather than feeling forced to stick with your current insurance provider when it comes time to renew your policy, get annual quotes from at least four companies. Make sure these providers are reputable and not simply the ones the Internet throws at you, says the finance guys at Arrigo Palm Beach.
2. Cut coverage on older vehicles: Having full insurance coverage for a very old car — say 10 years old — is a waste of money, because the cost of repairing it could be more than the car’s actual worth. Once the value of your car is less than 10 times the insurance premium, removing collision coverage could save you up to 40% on your monthly payments. So consider scaling down to just injury and property damage coverage on all your older cars.
3. Bundle insurance policies: Using a single company to insure your home and auto could bring your rates down by about 10% a year, with a Consumer Reports study of 2 billion price quotes from more than 700 companies across the U.S. revealing that bundling home and car insurance can save the average customer $97 or more a year.
4. Let your insurer “monitor” you: Insurance companies have become nosier over the decades, with many now offering a discount to drivers who install a device that lets them monitor their driving habits. Progressive, for example, gives discounts of up to 30% to customers who drive conservatively. If you’re a good driver, this is something to consider.
5. Ask for a mileage discount: In addition to wanting to monitor your driving habits, insurance companies want you to drive less, period! Some will offer you a discount if you drive less than the average number of miles per year, with a recent study finding that a person who drives 5,000 miles (8,047 km/h) a year pays 8.4% less for auto insurance than someone who drives 15,000 miles (24,140 km) a year.
6. Mind your credit score: Your credit score could be factoring into your insurance rate. A WalletHub study found that there is a 49% difference in the cost of auto insurance premiums for someone with great credit versus someone with no credit history.
7. Boast about your teenager’s good grades: If your child gets good grades, make sure to let your insurer know. A Consumer Reports study found that students who perform well in school pay an average 6% to 20% less than their fellow teens do on car insurance, with their families reaping an average of $263 in savings.
8. Know when not to claim: Hastily filing a claim after an accident can raise your premium by an average of 30-40% if you’re found at fault, so if you’re involved in a minor collision, consider whether the money you’ll get back will exceed the premium hike. For small accidents, it might just be best to simply repair the damage yourself.