All but one of America’s fifty states requires drivers to purchase car insurance, but most people don’t know how it works or if they’re getting a good deal.
With so many car insurance companies out there trying to get us to sign up for services, finding a good price can be difficult. What do you need? Who can you trust?
We’ve put together eight rules you should use to help you get the best possible rate the next time your policy expires. Here they are
#1. Buy an Insurance-Friendly Automobile
When buying a vehicle, it’s natural to pay attention to the factors that you hear about in popular talking points, such as gas mileage, paint colors, and the size of the engine. There are certain factors to look for, however, if one of your goals is to minimize your insurance costs.
Cars with alarms and good safety features, such as lane assist and blind spot monitoring decrease the likelihood that you’ll need to file an insurance claim. If you’re less likely to file a claim, then insurers can afford to charge you less money.
If you want to get something that’s particularly insurance-friendly, consider a Subaru Outback, Ford Escape, or Chevrolet Equinox . Those seem to be among the most affordable to insure.
#2. Pay Attention to the Little Guys
The nation’s four biggest auto insurers are ones that you already know by name: State Farm, Geico, Allstate, and Progressive. But there are hundreds of smaller auto insurers providing coverage for drivers all over the country.
Ignoring these smaller players may be an expensive mistake. Just because you haven’t heard of them before doesn’t mean anything. Local and regional insurers often rely on word of mouth and small-scale advertising. Because they’re so much smaller than the Big Four, they tend to place more emphasis on customer service.
In fact, many of the smaller insurers, like Erie Insurance, have better customer service reviews that the big guys. Sometimes, they have better prices too.
#3. Go Discount Hunting
Everybody likes a good discount, and insurers offer tons of them to try and lure you in. Make sure you know which discounts you qualify for and include all of them in your quote.
While all insurers are different, many will cut the price for drivers who:
- Purchase additional insurance for a home, boat, or health (called “bundling”)
- Bring multiple cars to the new policy
- Have safe driving histories
- Pay upfront
- Opt out of paper communications
- Have cars with security features
- Served in the armed forces
Whether you call, visit a website, or stop in at a brick-and-mortar office, be sure to learn about all available discounts. Why pay more than you have to?
#4. Protect Your Credit Score
In most states, your credit score has a big impact on the quality of the insurance offered to you and the price that you pay for it. The only states where car insurers are banned from increasing your car insurance rates based on the information contained in your credit check are: California, Massachusetts, and Hawaii
Add that to the list of reasons why it’s important to maintain good credit.
There are many factors that influence your credit score, and you can learn more about them using a free service, like Credit Sesame.
If you’re the owner of a poor credit score, you want to start trying to get it under control as soon as possible. You may not see an impact on your auto insurance policy price this time, but it will pay dividends eventually.
#5. Shop Around
You’re a fool if you think that the company with the funniest commercial is the best value. Those advertisements are designed to make you buy impulsively, even if the rate is too high.
Don’t let them fool you.
You shouldn’t treat the recommendation of a friend or family member as a final decision either. The factors that make insurance cheap for them may not be true for you, especially if you live in different states.
You need to shop around. Online, you can get “instant quotes” from ten insurers in a single afternoon. Be sure to use them, and then compare the results. The proof is in the pudding, and looking at quotes side-by-side may surprise you. Shopping around can often save drivers hundreds of dollars per year.
#6. Consider Foregoing Certain Coverages for Old Vehicles
Liability insurance protects you from paying for vehicle, property, or medical costs when you are involved in an at-fault accident. Basically all states require it and lenders often require you to have it while you are financing an automobile. We recommend it, since you could be sued to cover damages if you’re involved in an accident that is your fault and don’t have it.
Collision coverage, on the other hand, covers damage to your vehicle when it collides with a vehicle or some other object (such as a pole or stop sign). Similarly, comprehensive coverage is used to pay for damage to your own vehicle, whether caused by weather, animals, theft, or some other non-collision event.
Both of these coverages may be optional for you, and may be expenses you can avoid if your car is old (and low-value) or you can afford to pay for damages to your vehicle without assistance from the insurance company. If either of these are true, then you may want to save some cash right now by skipping collision and comprehensive coverage.
(Note: in the end, you need to make a decision that works best for you. Sometimes, protecting yourself by paying a little more is worthwhile. Only you can decide.)
#7. Accept Higher Deductibles
Deductibles represent the amount of money you must pay before an insurance company swoops in and starts paying anything.
If you have a $1000 deductible, the insurance company will only get involved for damages exceeding $1000. If you have a $2500 deductible, it will require a bigger problem for them to get involved.
Only comprehensive and collision coverage have deductibles. If you’re willing to accept a higher deductible, you can save on your insurance policy. Of course, getting into an accident will likely erase any savings – but that’s a chance you may be willing to take.
#8. Evaluate Pay-Per-Mile Insurers
Don’t drive much? You might benefit from a less static form of insurance that certain insurers have recently began offering.
Pay-per-mile insurance is one of several usage-based systems. The more you drive, the more you pay. Some of the bigger insurers have gotten involved in usage-based insurance. Perhaps the most popular is Progressive’s Snapshot (which bases rates on how well you drive, as opposed to how much).
It’s Time to Make Your Insurer Work for You
Few people regularly compare insurance rates. As a result, it’s easy to lose out on savings. With so many insurers available, and such a wide variety of discounts to consider, what are you waiting for? Get some quotes and start saving some money!