How to Lower Your Rate Car Insurance
When it comes to insurance, you can save big just by shopping around. It doesn't take much time or effort to obtain quotes from different carriers, and that can make a big difference in your monthly premiums.
You can also lower your rate by reducing the amount of coverage you carry. Reducing your deductible, for example, can save you hundreds of dollars each year.
1. Shop Around
The cost of car insurance varies widely from company to company, so it's important to shop around for the best price. You can compare rates on a policy by calling the insurer directly or by using online tools that show prices from multiple companies.
A good way to get the lowest car insurance rates is to shop around for personalized quotes from at least three different insurance companies. These quotes should include coverage, deductibles and available discounts.
You can also look at whether the quote is liability only or a full coverage policy to determine which is more affordable. Liability only can lower your premium by a significant amount each month, so this could be worth considering.
The cheapest rates are often found with smaller, less-established insurers. They typically offer competitive rates and better customer service than larger firms, but they may not be as financially stable.
2. Drive Safely
Whether you're new to driving or an experienced driver, it's important to drive safely. This will help you save money in the long run and prevent a serious accident.
Always follow the posted speed limit and don't exceed it. Speeding increases your chances of being involved in a crash.
Stay aware of the traffic around you and make adjustments for any unusual changes in the flow of the road. For example, if the car ahead of you suddenly speeds up or changes lanes, be sure to maintain a safe following distance.
It's also a good idea to keep an extra two seconds of space between you and the car in front of you during rush hour, or at least four seconds if you're traveling through rainy weather or on an icy highway. This will give you more time to react if necessary.
3. Increase Your Deductible
If you can afford it, an increase in your deductible is a great way to lower your rate car insurance. This is because it requires you to be financially responsible for smaller claims.
But before you increase your deductible, it’s important to consider how it will impact your premium. This is especially true if you think it’s possible you could wind up making a claim in the future.
You’ll also need to consider your personal tolerance for risk and financial capacity. If you can’t handle a higher deductible, it may not be the right choice for you.
4. Bundle Your Policies
If you’re looking to lower your rate on car insurance, one of the easiest ways to do so is to bundle your policies. This involves buying multiple insurance products with the same insurer, including auto and homeowners or car and life insurance.
Insurers typically offer a significant discount for bundling these types of policies together, and it can help you save money overall.
But if you’re thinking about bundling, it’s important to do your homework first. It’s a good idea to compare quotes for both bundled and separate policies from a variety of companies.
Also, be sure to review your policy regularly to ensure that it offers the coverage you need. If you’re paying extra for something that’s no longer needed, you may be wasting money in the long run. You should also check your credit score and other factors that might influence your rates.
5. Maintain a Clean Driving Record
Keeping your driving record clean is important because it can impact how much you pay for car insurance. Drivers with clean records are typically seen as lower-risk drivers and are rewarded with lower rates.
One way to maintain a clean driving record is to follow traffic laws and avoid infractions. Moving violations, such as speeding, failure to use a turn signal, or causing an accident (considered at-fault accidents), all count against your driving record and can lead to higher auto insurance premiums.
In addition, minor violations like texting while driving and phone calls while driving also can be penalized. These types of violations are considered less serious than a single ticket for speeding, so they can help you stay out of trouble with your insurance company.
6. Maintain a Good Credit Score
If you have a good credit score, you can save on your auto insurance premium. However, a bad credit score can mean higher rates.
It’s important to know what factors are most likely to affect your credit score so you can take steps to fix them if necessary. This includes analyzing your credit reports for inaccuracies and disputing any errors that appear on them.
Your payment history is one of the most influential factors in your credit score, accounting for 35% of it. Paying your bills on time is the simplest way to improve this factor.
Keeping your credit utilization ratio low is also key to raising it. Ideally, you should keep your outstanding balances at 30% or less of your total credit limit.
7. Pay Your Policy in Full
Many car insurance companies will give you a discount if you pay your policy in full up front. This is usually a great way to save money and avoid late fees or lapses in coverage.
You can also set up automatic payments, which will transfer money from your bank account to your insurer every time you have a payment due. Some car insurance companies also offer discounts for setting up autopay, but you should check with your insurance company before doing so.
You can also choose to pay your premium in monthly installments, which is a great way to spread the cost of your insurance out over time. However, it may not be the best option for you if you don’t have a regular income.
8. Reduce Unnecessary Coverage
Removing or cutting down on some of the more gimmicky features of your car insurance policy can save you money in the long run. Dropping roadside assistance, for example, or adding a car rental coverage option can make a significant dent in your monthly premiums.
Another simple and relatively inexpensive way to reduce your insurance bill is by increasing your deductible. By choosing a higher deductible, you can lower your monthly premium by as much as 40 percent or more.
Keeping your credit score in tip-top shape can also help lower your car insurance rate. Many insurers use credit information in determining your premium, and maintaining good credit can save you hundreds of dollars over time.
9. Get a Low-Mileage Discount
A low-mileage discount is a great way to lower your rate. Depending on your specific insurance company, you may be eligible for a rate reduction of up to 30% when you show proof that you drive less than a certain number of miles annually.
Often, these discounts are offered through telematics programs that plug into your vehicle or an app that you download to your phone. These tracking devices will record your speed, driving habits and other data to ensure that you’re being charged for the mileage you actually drive.
Many drivers who commute shorter distances or use public transportation are eligible for these rates. If you’re one of them, you can save around $300 a year on your car insurance with a low-mileage discount.
10. Improve Your Credit
One of the best ways to save money on your auto insurance is to improve your credit score. You can do this by paying your bills on time and maintaining a good credit utilization ratio.
It also pays to keep an eye on your credit reports. If you find inaccuracies or errors, dispute them with your creditors.
Another way to improve your credit is to pay off your balances. This will show financial reliance and stability.
You should also make sure to not open too many new accounts in a short period of time. Opening too many credit cards all at once will cause a hard inquiry on your credit report, which lowers your credit score.
