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UPDATED: Mar 13, 2020
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Car insurance is a necessary evil and it costs a lot of money. You don’t want to spend the extra money every month but it can be invaluable if you ever have to use it. Insurance premiums can vary a lot, depending on which company you use, how much coverage you have, and what your personal driving habits are. If you feel you are paying more than you should for your car insurance policy, there are things you can do to decrease your rates.
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Many factors go into determining your insurance rates. Some are things that you can change and control immediately, while others may be out of your control or will take time to modify. It may take some research and time but if you change some things about your current policy, you may be able to reduce your premium.
Consider Your Needs
One of the most important things you should do in regards to your car insurance is to evaluate what you need and want from your insurance policy. You may have been told that having a complete, comprehensive policy is necessary, but this isn’t always the case.
If you have a brand new car, it is probably in your best interest to have comprehensive and collision coverage.
However, if your car is older, you often don’t need either of them, which would significantly reduce your payment. Speaking with an insurance agent can help you determine whether you need that additional coverage.
You can also save quite a bit of money by increasing your deductible and/or decreasing the limits on your policy. This should depend on your personal financial situation. In the case you have extra money lying around or in savings and can afford to pay a higher deductible in the event you are in an accident, you may choose to take the chance and save money monthly by increasing your deductible.
On the other hand, if you do not have enough money for a high deductible, it is probably smarter to pay a bit more every month on your premium. This way you will be responsible for a smaller amount if there is an accident.
The limits on your coverage refer to the highest amount that the insurance company will pay per incident. Whatever is above and beyond the limit is your responsibility. When you lower the limit, you will notice a reduction in your premium. This may be a good decision if you have extra money to cover the additional amount and you want to cut down on your monthly payment.
Also, consider what medical insurance you have. You can purchase medical payment or personal injury protection for your policy, but this may not be needed. If you have outstanding health insurance already, that can be used if you are in an accident and you don’t have to worry about getting additional coverage through your car insurance.
The cheapest insurance would be to just buy the minimum coverage that is required by your state, which is usually liability insurance and sometimes, uninsured motorist coverage. Contact the website here to visit the National Association of Insurance Commissioners for your state insurance department.
If you can control some of the factors that determine car insurance rates, you can reduce the amount you pay for your premium. Your driving record is one of the biggest factors. According to the Insurance Information Institute, the safety habits of drivers are a big determinant of insurance rates.
Making a conscious decision to practice safe driving is a good way to reduce your premium, or at least prevent it from increasing. Follow the rules of the road, don’t drink and drive, and go the speed limit. Some insurance companies will also give discounts if you take a driver safety class.
Another thing that affects how much you pay for your car insurance is your credit history. Insurance companies equate your financial responsibility with driving responsibility so if you have a low credit score you will often be punished with higher car insurance rates.
It takes some time to improve your score but the Federal Reserve has tips as to how to bring it up.
Which insurance company you choose can make a big difference, with not only what you pay but also what you get out of it. Although your goal is to pay less for your car insurance, you should not choose a provider just off price alone. This being said, just because it costs more doesn’t mean that it is necessarily better. Check out the financial stability of the company in question, especially if it is a smaller company that you have not heard of before.
A. M. Best is a highly regarded company that independently rates insurance companies in regards to their financial standing. You can find out the amount of assets they have, what their financial rating is, and what the outlook holds for them.
In order to find a stable company and one that will be around for a while, choose a provider that has an A- rating or higher and one that has a stable outlook. This usually indicates that claims now and in the future will be able to be paid and that the company will not go bankrupt.
You also want to choose an insurance company that has not had any, or many, complaints against it. You can get this information from the insurance department in your state. Also, ask around to your friends and families to see who insures their vehicles and what they feel about the companies. Sometimes word of mouth is the best way to find a good company.
Other Tips to Save
In addition to the major methods of saving money, there are a number of other things you can do to save money on car insurance. Most insurance companies now offer a myriad of discounts to help you pay less for your policy. Discounts may apply for safety or anti-theft devices, good students, and loyalty.
If you own a house, have life insurance, or have other members in your household that have cars you can save money by using one insurance company to insure them all. Providers offer discounts, sometimes up to 20%, to provide insurance for all of your needs.
Driving less by taking public transportation or carpooling can reduce how much you pay for insurance, as well as save you money on gas. The type of car you drive will also affect your premium. The Insurance Institute for Highway Safety lists car types and how they rate insurance-wise.
A sports car, for instance, will cost more to insure because of the increased risk, as will an expensive luxury car that may cost more to repair.
Finding a new insurance company may be one way to reduce your insurance rates, especially if you are not completely satisfied with your current provider. There are a couple of ways to find an insurance provider.
A popular way to search for car insurance is online. There is a ton of information at your fingertips and it is quick. If you know which insurance company you’d like to purchase a policy from, you can go directly to its website and purchase a policy that way. You can also compare a couple of companies if you are unsure as to exactly which one to choose.
If you have no idea which insurance company you want to use, it is easy and fast to get quotes online. Many places allow you to compare multiple companies at once. You can enter your information such as car make and model, location, credit information, and more and then get free quotes. You can then contact the companies directly or sign up for a policy right there.
Using an Agent
If you don’t like to use the Internet or you like a more personal connection, you can also use an insurance agent to help you find a car insurance policy. This is an especially good idea if you are a new driver and are not very familiar with insurance and insurance terms.
An insurance agent or broker will sit down with you and take the time to ask you important questions to determine what you need.
He or she can also ask any questions you have in regards to a deductible and limits and will be able to let you know exactly what discounts in which you may be eligible.
Having contact with an insurance agent can also be beneficial down the road. If you ever have questions about what is covered in the event of an accident, your agent can help you. You will also get help with filing claims and during the claims process. An agent will be on your side when you need extra help.
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