Conventional wisdom teaches that you can only enjoy discounted car insurance rates if you prove yourself by maintaining a clean driving record over an extended period of time. While this path does lead to more affordable premiums, it takes time and a little bit of luck. Fortunately, there are plenty of other ways to jump-start your car insurance savings. If you’re seeking more bang for your insurance buck, consider these options:
Research Before You Buy
Here’s an exercise to try: compare what you would pay to insure a sensible, fuel-efficient economy vehicle versus a high-performance sports car. Spoiler alert — it’s not the same price. Even though you’re the same person with the same personal background and driving record, your rate for the economy vehicle will be way lower.
While that’s an extreme example, it does speak to a truism of the insurance industry. Different vehicles carry different risk profiles and therefore get insured at different rates, regardless of who’s driving them. If you’re in the market for a new car, spend a little time researching how much each model you’re considering will cost to insure. You may also want to check out lists of the vehicles most often stolen in your area and avoid them. Most insurance companies charge more to cover those cars and trucks.
As with any major purchase, you’ll want to spend some time comparing the rates offered by various providers. Websites that aggregate quotes can help, but they may be limited. They tend to consider only very basic criteria. Instead, approach the company directly and start by gathering recommendations from trusted friends and family members.
Personal finance gurus endorse collecting at least three quotes from different providers. Remember that the way an insurance company’s sales funnel is organized affects policy costs. The lowest prices are usually available through companies that sell insurance directly to consumers over the phone or online, while the highest prices typically come from those that sell through agents.
One caveat: insurance agents provide value if you need to make a claim, as they can help you deal with the company more effectively than you would be able to on your own. Don’t necessarily cut them out of the equation just to save a few dollars up front, since the agent could earn their money in other ways if you ever encounter a difficult problem.
Buy a Bundle
Some insurers only cover vehicles, while others provide many different types of protection including home insurance, health and dental insurance, travel insurance, and so on. A lot of companies offer a de facto reward to customers who purchase more than one policy from them. The most common configuration sees significant savings delivered if you buy your home and auto insurance from the same provider.
For another variation on this idea, consider sticking with the same insurance company for the long haul. They often deliver loyalty discounts to long-term customers, which puts more money back into your pocket. In an era of rising real estate costs, many companies will now bundle auto and renter’s insurance together too.
Increase Your Deductible
A deductible is a specified amount of money for which you, as the policy holder, remain responsible in the event of a claim. For example, if your policy has a $500 deductible and your insurer approves a claim for $3,000 in damages, you’ll be reimbursed for $2,500. In other words, you have to cover the $500 deductible out of pocket.
Zero-deductible policies are always more expensive. One of the easiest ways to reduce your overall costs is to increase your deductible. It can be risky, but if you keep the deductible within affordable limits, the savings might be worth it. Even increasing your deductible from $500 to $1000 can provide decent savings.
Ask About Hidden Discounts
Insurers don’t often advertise it, but they frequently offer hidden discounts to customers who meet certain criteria. For example, straight-A students can qualify for lower rates, as can members of certain professions. Also, make sure your insurer knows if you have taken a certified driver training program, as most providers offer better rates to customers who have completed safety courses.
You can also get small discounts for having snow tires if you live in a Northern climate. Or informing your insurer that your daily commute to work recently went from 40 miles down to 10 miles, as a result of moving. Basically, the less time you spend on the road (and the safer your vehicle is), the less of a risk you are to insurance companies.
Improve Your Credit Rating
Consumer research shows that people with higher credit ratings tend to file car insurance claims less frequently. Insurers will also look into your credit score when you file your application. If they like what they find, chances are you’ll automatically qualify for a reduced rate.
If your credit score has taken a hit, invest some effort in improving it. A long list of financial benefits will follow, and car insurance savings is one of them.
Purchase a Security System
Anti-theft devices provide an effective deterrent. Even the simplest and least expensive options on the market make your car significantly less likely to be targeted by criminals. Through insurance discounts, you can enjoy a favorable return on your investment if you purchase an anti-theft device. However, check with your insurance company beforehand to see if they have any policies, terms and conditions, or limitations in place regarding the types of anti-theft systems that qualify you for lower rates.
Talk to Your Employer
If you work for a large company, contact your human resources to see if your employer has any formal relationships with insurers. It’s common for bigger companies to maintain partnerships with preferred insurance providers. There’s a huge benefit to collecting referrals from the hundreds or thousands of employees the company might send their way. Those relationships can translate into big savings on your bottom line, and they’re well worth investigating.
There’s Always More to the Story
One critical thing to remember about insurance is that your policy’s costs are carefully calculated by well-paid professionals and complicated computer algorithms. Premiums rise in response to the level of risk you pose, which may or may not be justified. The greater the risk, the higher your premiums. Are you a 20-something male who drives around a red mustang? It doesn’t matter if you’re the best driver on the planet — you’re going to pay dearly.
However, there’s another way to look at things. Try to reframe insurance costs not as a commodity, but as a reflection of the value delivered by the policy itself. Industry insiders sometimes say there’s no such things as cheap insurance or costly insurance. Instead, premiums reflect the level of protection you qualify for if you need to file a claim.
Inexpensive policies usually mean you’re exposed to significant financial risks if something goes majorly wrong. To that end, remember that the policy’s bottom-line cost isn’t the only thing to think about. Protect yourself and the investment you’ve made in your vehicle. That means getting adequate coverage that provides real value, even if it means spending beyond the bare minimum.