Your bank account shouldn’t be drained by auto insurance. Here are some ways to save money and still get the coverage you need.
If you own a car, you will be grateful you have car insurance. You don’t need to spend more on insurance than you absolutely have to. By knowing exactly what affects your auto insurance rates, you can figure out how to save on car insurance and get good coverage without breaking the bank.
These are eight ways you can lower your car insurance cost.
Take a look around
Insurance rates for car insurance can vary widely between insurers.
A NerdWallet analysis revealed that a good driver with excellent credit can save over $100 per month by choosing the lowest-priced insurer rather than the most expensive.
Drivers with poor credit and drivers who have been in an at-fault car accident can save even more. These drivers could save more than $200 per month on their car insurance by choosing the cheapest insurer rather than the most expensive.
According to our analysis, the average rate from a state’s most affordable widely available insurer is less than half that of the priciest. This was based on comparing sample rates for drivers aged 40 who purchased a full-coverage insurance policy.
The company that charges the lowest rates in a state might be the most costly in another. For someone with bad credit or who has been in an accident, the company that offers the lowest rates for a driver with good driving record might not be the best.
Get quotes from multiple companies every year to ensure you get the best rates. NerdWallet’s car insurance comparison tool can help you find the best deal.
Get car insurance discounts
Each insurance company has special ways to reduce your car insurance premium. Ask your agent about the savings you may be eligible for to make sure you are getting all of the discounts that you are entitled.
Here are some discounts offered by the four largest car insurance companies. Remember to get quotes that are best suited for your needs. An insurer offering many discounts does not necessarily mean that it is the most affordable overall price.
- Allstate offers discounts based on vehicles, coverage options, lifestyle and driving. These discounts range from a 5% discount to set up automatic premium payments to a 35% great student discount. The company offers Drivewise, an insurance program that tracks usage, and Milewise, which is a pay per mile program. According to Allstate, these programs could help drivers save up to 39%.
- Geico offers discounts for vehicle equipment, driving history and habits, driver training, customer loyalty and membership in one of 500 “affinity” groups, such as organizations and employers. Military personnel may also be eligible for a 15% discount and federal employees and retirees could be eligible to receive an 8% discount.
- Progressive offers discounts for owning your home, starting your quote online and signing documents online when purchasing coverage. Snapshot is a usage-based program that monitors driving habits and mileage. Snapshot offers a discount to most customers, but customers who have risky driving habits may be subject to higher renewal rates.
- State Farm offers discounts for students, vehicle-safety equipment and safe driving, among others. Customers can get a 5% discount by signing up for the Drive Safe & Save usage-based plan. According to the company, safe drivers can save up to 50% on their car insurance if they drive a low amount of miles. Each state has its own discount program.
Car insurance premiums are rising due to traffic tickets and accidents. You may be able to attend traffic school to have the ticket dismissed or to reduce the amount of violations that will appear on your driving record. You could save hundreds of dollars if you can get the violation removed from your driving record.
You don’t want car insurance
It might be time to get comprehensive and collision insurance if you have a clunker. These policies pay for any damage to your car. Collision insurance pays to repair damage to your car if it crashes into another vehicle or object, or flips over. Comprehensive insurance pays if your car is stolen or damaged by storms, vandalism or by hitting an animal such as a deer.
It’s time to get rid of your car if its value is less than your annual coverage and your deductible. Collision and comprehensive never pay out more than the car is worth. Consider whether you are willing to pay for coverage that will reimburse you a fraction of the cost, if any.
You can set aside money that you would have spent on car repairs and a down payment for a newer vehicle if you lose collision or comprehensive.
Insure a car that is affordable
Before you buy your next car, compare car insurance rates for the models you’re considering. Your car insurance premium will be affected by the vehicle you drive, especially if you purchase collision or comprehensive coverage. Safe and moderately priced vehicles such as minivans and small SUVs tend to be cheaper to insure than flashy and expensive cars.
The deductible should be increased
You can save money on collision and comprehensive by raising the deductible, the amount the insurance company doesn’t cover when paying for repairs. If the repair bill is $2,000 and the deductible is $500, the insurer will pay $1,500.
The savings you can make vary from one company to the next. Compare quotes and different deductible levels before making a decision.
When car insurance companies determine how much to charge, credit is an important factor. In some cases, it can be more important than your driving record. This is not the case in California, Hawaii, and Massachusetts where insurers can’t take credit into account when setting rates.
These are the steps to improve your credit score for lower car insurance rates.
- All your credit card and loan payments must be made on time
- Credit card balances should be kept below your credit limit.
- Only open new credit accounts if absolutely necessary. Too many credit cards could damage your score.
Don’t drive a lot? Use-based insurance is a good option.
Consider an insurance company that offers a pay-per-mile or usage-based program if you don’t drive a lot. These policies are based in part on how often you drive, and in some cases how well, these rates can be adjusted. You must install a small device inside your car to transmit data to the insurance company. With many programs, you can get a discount for safe driving habits and low mileage.
Metromile, Allstate and Nationwide offer pay-per mile insurance in certain states. Pay-per-mile coverage typically involves a base rate and a per mile rate.
Many other insurers, such as State Farm, Progressive and Safeco, offer usage-based insurance plans. These programs track your driving habits, such as speed and hard braking, and offer discounts or reduced rates to ensure safe driving. You may be eligible for a discount by signing up. Many companies, such as Allstate, Esurance, and Nationwide offer both.