How to Save on Your Car Insurance Auto insurance works by protecting the policyholder from loss due to damage to property or people in the event of an accident. Any person who owns a vehicle on the road must have auto insurance. It is illegal in all 50 states to drive without it. Depending on your age, driving record and vehicle, your auto coverage can be costly in comparison to your monthly budget. To reduce the financial impact of your monthly car insurance policy, we’d like to suggest a few tips:
Your deductible is the amount of money you must pay before you can file a claim in the event of an accident. Essentially, it’s the price you must pay before your vehicle’s coverage ‘kicks in’. When you raise your deductible, the monthly premium you pay to your auto insurer will go down. If you are a safe driver and have an emergency fund, you may be able to afford a higher deductible in the event of an accident or insurance claim; if this is the case, increasing your deductible may be an easy way to reduce your monthly expenses. Keep in mind that if you lower your deductible but later change your mind and want to increase it, you will need to negotiate with your insurance company – be sure to discuss a potential future reversal of the decreased deductible upfront to determine if this is the right option for you.
Bundling your policies is one of the easiest ways to save on your car insurance. By putting your assets under one policy or by keeping all your policies with one company, you may get a significant discount on your coverage. The most common insurance bundles are multi-vehicle and home & auto; but these aren’t the only policies you can bundle. Speak with your insurance broker or company directly to find out if they will allow you to bundle and save on any other policies you have, such as tenant, medical, jewelry or liability insurance.
You know you’re going to have to pay your insurance no matter what, so if you can afford to do so, consider paying it on annual basis rather than a monthly basis. Many insurers offer a price cut for those who opt to pay in advance. Before taking advantage of this option, it is important to calculate your savings. Saving $50 may not be worth paying $1000-$2000 up front, but saving $300 annually and knowing your bill is already paid for the next year might be a bit easier to accept.
One final way to keep your insurance costs down is to keep your driving record clean. Car accidents and traffic violations stay on your driving record for 3 to 5 years. Convictions like DUI will stay on your driving record for 10 years. Every infraction on your driving record will make you look like a riskier driver and is likely to increase your premium(s). While taking the tips above into consideration will give your immediate savings, in the long run, they won’t make a difference if you’re not a safe driver.