5 Ways to Save Hundreds of Dollars on Your Car Insurance Premiums
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Car insurance premiums usually start out higher for younger, inexperienced drivers. Premiums also go up for drivers who get into an accident. While many insurance companies do not hesitate to raise your premiums, getting them to lower your premiums represents a tougher challenge.
Luckily, there are some easy ways to save money on car insurance. And you don’t even have to switch car insurance companies to do it. Check out these top five ways to lower your car insurance premiums.
Opt for a Higher Deductible with Your Car Insurance
Raising the deductible — which is the amount you must pay in the event of an accident before your car insurance kicks in — is one way to save money on car insurance by lowering the cost of your overall premium. For example, if you raise your deductible to $500 from $200, you could save 15% to 30% on your collision and comprehensive coverage.
This can result in savings of hundreds of dollars, depending on the type of car you drive, the amount of coverage you carry, and the state you live in.
Take Advantage of a Usage-Based Car Insurance Program
If you use a telematics device, some insurance companies such as MetroMile, Esurance, and Progressive offer usage-based car insurance programs. The telematics device, which gathers data about your driving habits, can easily be plugged into the diagnostic port of your vehicle. It records the miles you drive, your driving behaviors — such as sudden stops and the speeds at which you drive — and whether you drive during the day or night.
Car insurance companies use this data to determine how much of a premium you must pay, which is calculated by adding the amount per mile to a base premium. You can save money on car insurance by practicing defensive driving.
Reduce Your Car Insurance Coverage
As your car ages, or once you pay it off, consider dropping or reducing certain coverage such as collision or comprehensive insurance — especially for cars worth less than 10 times the premium you pay.
Collision insurance is optional coverage that pays for repairs or car replacement after an accident. Comprehensive coverage covers damages not caused by an accident, such as theft, natural disasters, and vandalism.
To research the worth of your vehicle, visit one of the following sites: Kelley Blue Book, TrueCar, or Edmunds.
Drive Fewer Miles to Save Money on Insurance
Reducing the number of miles you drive is another way to save money on car insurance. Carpooling with coworkers or cutting the amount you drive per year to below 7,000 miles saves up to two percent, on average, for drivers nationwide.
Some states, such as California, offer discounts as high as 20% for low-mileage driving, while others, such as Hawaii, offer no discounts because low-mileage driving is already a normal occurrence in the state.
Bundle Your Car Insurance with Your Home Insurance
Bundling insurance policies represents a simple and easy way to save money on car insurance. Depending on the company, you can save anywhere from five percent to 15% if you bundle your various policies, including car insurance and home or renters insurance.
In addition to saving money on your premiums, bundling also offers the following advantages:
- It makes managing the policies online easier, since you can do so through the same portal.
- It combines multiple policies so that they are renewed at the same time, simplifying the process.
- You only need to deal with one company.
By following one or more of the tips above, you will save money on car insurance and put your hard-earned cash toward something else, such as bills, vacations, or even retirement. Also, don’t forget to compare insurance rates to make sure you’re getting the best coverage.
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