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Several factors affect the amount of money you will pay annually for car insurance. Some of these may be out of your control, but knowing about certain factors may help you to lower your premium. Taking your time and doing some research before you begin your car insurance search can go a long way towards helping you find cheap car insurance.
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The Insurance Information Institute reports that insurance companies use certain pieces of information to help determine your premium rate. This information includes:
- Where you live and work
- Age and gender
- Driving record
- Average annual mileage
- Make and model of your vehicle
- Where your vehicle is stored
- Credit score
- The amount of insurance coverage and options you are seeking
Some of this is hard to control unless you are willing to make drastic changes such as where you live and work or the type of car you drive, while other factors such as your gender or age are not changeable. Still, there are ways to find cheap car insurance rates for almost everyone out there.
Getting Started Finding Cheap Car Insurance
Prior to beginning your search for the best car insurance rate, you need to start by making a list of insurance companies licensed in your area. Talk to friends and family members to find out if they are happy with their insurance company. Decide whether you feel comfortable researching insurance on your own through the Internet or by calling various companies or whether you would prefer an insurance broker to help you sort through the different options and package offers.
Finally, make sure you know how much insurance you need so that you are protected in the event of an accident. Once you have gathered this information you can follow these five tips to find car insurance that is affordable.
Shop Around and Do Your Research
Never settle for the first quote you are given. Get quotes from several companies and compare not only the premium cost but also what the policy includes. In addition to getting quotes and policy information, you should take the time to check into the companies you are considering.
A.M. Best will give you information on the financial stability of a company. It rates companies from a score of A++ (superior) to a score of F (in liquidation).
The Better Business Bureau will also give you information on customer complaints filed against a company and the percentage of which have been resolved by the company. You can also find information about insurance companies at your state department of insurance’s website.
Keep Your Driving Record and Credit Score Clean
By keeping your driving record clean and avoiding unnecessary risks, you can help insure that this will not be something that will impact your ability to get a decent insurance rate in the future. Your driving record and past insurance claims are typically the most important factor insurance companies look at when determining your rate.
In particular, drive safely and never engage in risky behaviors such as driving under the influence of drugs or alcohol.
In addition to having a clean driving record, a decent credit score will help you to be offered lower insurance premiums. The Insurance Information Institute explains that your insurance score, which is often derived from your credit score and driving record is used to differentiate lower and higher risk drivers. The lower the risk, the better the rate you will be offered for insurance.
Increase Your Deductible
If you do not qualify for other deals in order to lower your premium, you always have the option to increase your deductible in return for a better annual insurance rate. If you are a responsible driver and rarely have an accident, you may be able to save a lot of money by doing this. You can also save money by paying for your insurance in one lump sum payment each term rather than breaking it down into monthly payments.
Insurance companies, like credit card companies, tack on interest when you do not pay your balance in full.
It is also advisable to purchase a yearly policy versus a policy that expires every six months. Each time a policy expires the insurance companies can raise your rates. If you go with a six-month policy, your rates can be raised every six months. If you can purchase an annual policy, your rates can only be raised half as often.
Discounts through Organizations You Belong To
One way you may be able to save money on your car insurance is by looking into discounts that are offered to people affiliated with certain organizations. These may include:
- Federal government employees
- State employees
- Various other employers
- College alumni organizations
- Society of Professional Journalists
- American Automobile Association
- Military Branches
- American Medical Association
- National Education Association
- National Society of Accountants
- Institute of Electronics and Electrical Engineers
- Credit Unions
- Various credit card companies and banks
- Sam’s Club
It is a good idea to look into these discounts before you begin your search for car insurance. Many of the discounts are only available if you use a certain insurance provider.
Check with your Human Resources Department at work, your union representative, or consult websites and brochures for organizations you belong to. Although these discounts are available, they are often not widely advertised.
Discounts Offered by the Insurance Companies Themselves
Insurance companies offer many discounts nowadays. So many, that your chances of qualifying for at least one of them are very good. Insurance companies may not openly tell you about the discounts, so once again, do your research ahead of time and make sure you ask them about specific discounts that may be available for you to take advantage of. Several of these discounts are described below.
Good Student Discount – Offered to high school or college students, whether they are on their parents’ policy or their own, for maintaining a B average or a 3.0 GPA (typically) or better.
Safe Driver Discount – Drivers who have not had an infraction or claim for a specified amount of time may qualify for this discount.
Low Mileage Discount – Drivers who put a limited amount of mileage on their vehicle each year are considered a lower risk for insurance companies and therefore can qualify for a low mileage discount.
Retirement Discount – Individuals who have retired from working can receive a discount from some companies due to the fact that they typically drive less often. These discounts are usually offered to retired individuals ages 40-65. Above this age, you fall into a higher risk category.
Multiple Vehicle Discount – Insuring multiple vehicles under the same insurance policy can allow you to receive a discount.
Multiple Policy Discount – Obtaining multiple forms of insurance from the same company (example – car, life, homeowner’s) qualifies you for a discount from most providers.
Longevity Discount – Remaining a customer with the same company for an extended period of time, usually three years or more, often allows you to receive a discount.
Defensive Driver Discount – Drivers who agree to take part in a defensive driving course can receive an insurance discount from most companies. Check with your state department of insurance for courses offered in your area.
Electronic Billing Discount – Customers who agree to receive and pay their bills electronically, cutting down on mailing costs for the company, can receive a discount. Insurance companies may tack on as much as five dollars per billing cycle for payments sent through the regular mail.
Vehicle Safety Discount – If you drive a vehicle with added safety features not found standard on every car, such as an anti-theft devices, rear airbags, automatic seatbelts, or back up cameras, you may qualify for a discount.
Discount for participating in a Driver-Monitoring Program – This is a relatively new option many insurance companies now include which can help you save money. Although called something different by each company, examples include “Smartbox” or “Big Brother,” the concept is the same. You agree to have a driver-monitoring device installed in your vehicle for a certain amount of time that monitors your driving habits such as speed and mileage. The insurance company then calculates your rate based on their findings. If you drive safely while undergoing this process, you could save a lot of money.
It is in your best interest to do your research before beginning your car insurance search and thoroughly investigate companies and policies while you search. From starting off with a good driving record and positive credit rating, making a list of reputable insurance companies, knowing what organizations you belong to that may offer insurance discounts, and asking the right questions about specific discounts can help you to save a lot each year on your car insurance premiums.
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