Step 5. Get the Best Price on Car Insurance
In the car buying world, one of the easiest ways to save money is to reduce the amount you pay for car insurance. There is so much competition in this space, and rates are constantly changing, so why not take advantage of the situation? Saving only $200 per year on insurance (which is easy to do) will save you $1,000 over 5 years.
If you take the time to compare a few rate quotes, you can get dramatic savings. Each car insurance company calculates their rates slightly differently depending on demographics, the type of vehicle you drive, and where you live. You really never know which one will offer you the lowest price, you just have to comparison shop.
Even if you can't find lower rates than your current provider, there are several other strategies you can use to ring every penny out of your car insurance payment.
1. Find the Lowest Rate
There are few things in life that give you big rewards for such little effort. Comparison shopping insurance rates is one of them! It's shocking how much money consumers leave on the table when it comes to car insurance payments. Take a few minutes and compare your current rates - the difference will likely surprise you.
2. Set Your Deductible to $1,000
The deductible is what you agree to pay out of pocket in the event of an accident or theft. So many people pay extra to keep the deductible low while maintaining a minimum level of liability coverage. This makes no sense.
The purpose of car insurance is to protect your assets, so you should keep a high deductible and use the money saved to increase your liability coverage. Most experts recommend setting your deductible to at least $1,000 for comprehensive and collision. This can save you up to 40% on your premiums.
3. Maintain or Improve Your Credit
Paying your bills on time and maintaining a good credit score is essential to getting the lowest rates on car insurance. (See: Why Your Credit Score Can Affect Rates by 50%).
You can check your credit score at FreeCreditScore. Anything above 720 is considered prime and won't negatively affect your insurance rates.
4. Report Reduced Mileage
If you start working from home or become unemployed, you will likely be driving a lot less. Insurance companies provide reduced rates for those driving less than 7,500 miles per year, so it pays to let them know when this change occurs.
5. Take Advantage of All Discounts
There are tons of discounts offered by different insurance companies - some of which can save you up to 30% on your premiums. But you need to ask for them - insurance companies don't always apply the discounts automatically. (See: Common Discounts Offered by Car Insurance Companies)
6. Choose the Right Car
Some cars have much higher insurance rates than others. It pays to keep your options open to at least 2 or 3 different models and compare insurance rates before making your final decision. (See: The Best and Worst Cars for Car Insurance).
7. Minimize Cost for Teenage Drivers
Having a teenage driver on your policy can increase your premiums by 200% or more! If your teen goes away to college, let the insurance company know. Some will provide discounts as long as they keep their driving to a minimum.
Make sure your teenager maintains good grades and sign them up for a drivers education course to help lower their rates. All of these tips should help you save upwards of $1,000 per year on car insurance. Remember, the most important step is to compare rates from different providers.
