Money-saving Tips To Lower Your Car Insurance Premium

Car insurance is a necessary expense that always ends up burning a hole in our wallet. While it is widely known to be expensive, it doesn’t have to be. Without proper research, you are prone to paying too much for your insurance.

You may have accepted the rate at first, but you can still change it to work in your favor. In fact, you might be able to knock the price down by the hundreds. Let’s take a quick look at what determines the premium of your auto insurance, and what you can do to save some of your hard-earned cash.

How Is Your Premium Calculated?

Car insurance companies take many factors into account when calculating your premium according to the insurance experts over at Money Expert. Unfortunately, we do not have control over many of these factors.   

• Your age and sex

• The state in which you reside

• Driving habits

• Length of commute

• Number of miles on your car

• Average miles driven per year

• Number of vehicle accidents

• DUI convictions

• Moving violations such as speeding

• The make, model, and year of your vehicle

Depending on your location, how your premium is calculated may vary. For instance, if you are in Canada, BrokerLink Car Insurance states that your premium is calculated using a rating system called CLEAR (Canadian Loss Experience Automobile Rating). 

Ask Your Insurer About Discounts

No one knows your insurance better than your agent; they may give you more affordable options. Your insurer may be able to provide you with a discount for:

• Bundling your insurance with other types (i.e., homeowners insurance)

• Being a long-time customer

• Not having accidents or violations in a specified time

• Attending a defensive driving course

• Drivers who drive less than average amount of miles per year

• Policyholders who carpool to work

Change Your Car (Or The Way You Drive)

Considerably safer cars are also cheaper to be insured. Before you buy your next vehicle, check how your car choices are affecting your car insurance rates. If you prefer flashy and expensive cars, get ready to be penalized. When assessing risk factors, even the color of your car can indicate that you are more likely to drive recklessly. 

How you drive has a strong influence on how much you pay on your premiums. Traffic tickets and accidents raise insurance rates. You can save yourself hundreds of dollars over time if you can maintain a clean driving record. If you end up with a violation, you may be offered the chance to go to traffic school to dismiss it or reduce the number of violation points you receive.  

Usage-based programs aren’t only for low-mileage driving. Did you know that some companies can reward you for safe driving habits? You can install a GPS tracker in your car so that your insurer can receive data on your driving habits. You can be eligible for reduced rates for following the speed limits or receive a discount just for signing up. 

Raise Your Deductible

Technically, it will lower your premium, but it will cost you. The deductible or "excess" is the amount you agree to pay out of pocket in the event of an accident. Raising your deductible is risky, but depending on your location, you might be able to pocket hundreds in savings. 

While you will pay less every month on your premium, it will hurt your wallet if you get in a fender bender. If you do take this route, we advise that you set aside an emergency fund just in case.

Raise Your Credit Score

Not all insurers are allowed to use your credit score to set rates. For companies that can use your credit history, your score will be as relevant as your driving record, if not more. Improving your credit score will help you save in many aspects of your life beyond your auto insurance premiums. If you need to boost your score, focus on: 

• Making all your loan and credit card payments on time.

• Keeping your credit card balances well below your credit limits.

• Be careful and open new credit accounts only when necessary. Applying for too many credit cards can hurt your score.

Drop Insurance You Don’t Need

Cutting down on your premium may mean getting rid of policies that aren’t suitable for you or your car. For example, if your vehicle is on its last legs (or wheels), having a collision and comprehensive insurance may not be conducive to you. If your car gets damaged or stolen, that kind of coverage will only pay the worth of the vehicle. 

So, if your car is worth less than your deductible and the annual coverage put together, it is time to drop your collision and comprehensive insurance. You can use the money you save to buy yourself a better car down the line.    

The Bottom Line

Now that you are aware of the different ways you can save on your premiums, use as many resources as you can to get the best possible rate. No matter what options you choose, it always pays to shop around and drive safely. That way, you can spend less while getting the same coverage or better.