When was the last time you shopped around for new car insurance?
Car insurance premiums can vary by hundreds of dollars depending on several factors. If you haven’t reviewed your insurance plan recently or compared competitor offers, you could be missing out on huge savings.
Follow these easy steps to save the most money on your car insurance bill…
1. Get a few quotes
Car insurance prices can vary drastically from company to company, so it’s best to get a few quotes before choosing a provider.
When getting multiple quotes, be sure that the premium amounts and specifics of each plan are the same among the different companies. For example, an insurance plan with a $500 deductible will cost more money than a plan with a $2,500 deductible.
It’s never a bad idea to get recommendations from friends and relatives, but remember that everybody’s situation is unique, and the prices they pay may vary drastically from the prices that you pay.
Keep in mind: Just because you’re provided with a low price doesn’t mean is the most reasonable or least-expensive long-term.
2. Increase your deductible
Generally speaking, the higher your deductible, the less you’ll pay for an insurance premium.
High deductibles may seem attractive, but there are some downsides. Yes, you can save a lot of money on your monthly car insurance bill if you have a high deductible, but in the rare case of a car accident, you may need to dish out more money than you have.
As a rule of thumb, we recommend a deductible between $500 and $1,000, depending on your income and savings. The cost difference between a $500 deductible and a $1,000 deductible is usually between $15-$25 per month.
Stop and think: If you were in a collision today and had to pay $1,000 for a deductible… can you do it? If you can spend $1,000 while still covering all of your other living expenses and bills, then the monthly savings for this plan may be worth it for you. But if a $1,000 expense is going to set you behind on your bills and other goals, you may want to opt for the $500 deductible option.
What is a deductible? A car insurance deductible is the amount of money you need to pay if you have an accident before the insurance company covers the rest. For example, if your car has $4,000 worth of damage and you have a $1,000 deductible, you will need to pay $1,000 and your insurance company will pay the remaining $3,000.
3. Bundle your insurances
Companies typically offer several different insurance types (car insurance, renters insurance, homeowners insurance, etc). If you have different types of insurances with different companies, you can save money by bundling them together.
Pro tip: Ask your insurance company “Do you use a 3rd-party insurance company for either policy?” If the answer is “yes”, you may not get a better price from bundling and it may be more inconvenient for you in the long-run.
4. Reduce optional insurances on older vehicles
There are two common types of auto insurance, Collision Insurance and Comprehensive Insurance.
Collision Insurance: Covers you in case of an accident with another vehicle.
Comprehensive Insurance: Covers you in non-collision situations, such as theft, hail, vandalism, and more.
If your car isn’t worth a lot of money anymore, we generally recommend that you drop these insurances.
Pro tip: Add up your yearly car insurance cost, plus your deductible. If you car is worth less than that amount, it’s probably not worth it to pay for these types of insurance.
5. Take advantage of low-mileage discounts
With most insurance companies, the less you drive, the less you pay.
If you don’t drive a lot, there may be options for you to “pay as you go”. Some car insurance companies have devices that you can put in your car (or an app) that tracks your movement on the road.
While this is still a young technology, we’re excited to see how it matures over time, especially for drivers who put very little mileage on their cars.
Pro tip: Ask your insurance company “Do you offer any pay-per-mile plans in my state?”
Click here to easily compare car insurance rates from several providers.
6. Increase your credit score
Your credit score can play a big role in how much you pay for car insurance. The better your credit score, the less you’ll pay for your premium.
Tips for keeping good credit:
- Pay off all your bills on time (especially loans and credit cards)
- Don’t close your old credit cards — keep them open to maintain a long credit history
- Keep an eye on your credit with a Credit Monitoring service
7. Ask about other discounts
Insurance companies offer discounts for everyone, but you may need to ask.
Typical car insurance discounts are typically available for:
- Senior citizens
- Students
- Military Personnel
- Nurses
- Drivers who have taken a defensive driving courses
- Drivers who pay in full or setup autopay
We like to ask, “Do you have any special discounts or promotions available?” This simple question can save you thousands every year, so don’t be afraid to ask!