It costs $8,698 per year to own and operate the average automobile. Multiply that by the number of cars you own, and you’ve got a pretty sizeable chunk of your paycheck gone. After fuel, the cost of Auto Insurance is easily up there as one of your highest expenses.
Unfortunately, you might not know of the many ways that you can significantly reduce how much you pay for Auto Insurance this year.
Here’s a list of our top 8 ways for you to save on your Auto policy.
#1 – Drive safely and less
The longer you drive without getting citations the more you will save. It’s as simple as that! If you drive less, you are less likely to get in an accident and therefore, less of a risk to the insurance company. You can get rewarded for that with a discount.
Insurance companies look at your yearly mileage when deciding rates for your policy. If you drive less, that rate is lower.
If you drive 2-3 hours to work, you will generally pay more to insure your car. Try taking the bus or having a job that is close to your home to lower your Auto Insurance costs.
Also, think twice before giving your teen a car. “The crash rate for 16 to 19-year-olds is 2.7 times higher than drivers of all ages. The crash rate for 16-year-olds is 3.7 times higher than drivers of all ages.” (DMV) Does a 16-year-old really need to have their own car to drive to school or can you drop them off?
#2 – Choose your car wisely.
Auto Insurance premiums are also generally based on:
- Your car’s ticket price
- The repair cost. For example, the cost to replace just one BMW 328i adaptive LED headlight is about $739 (cite). That is way more than that of say, a Toyota Camry.
- Your car’s safety record
- The likelihood that your car could be stolen
The more expensive the car, the more it will cost to repair in the event of an accident. That means a higher rate for you. On the other hand, something as simple as a car alarm can help reduce your Auto Insurance rate.
NerdWallet’s ranking of the cheapest cars to insure can give you an idea of what cars to look for.
#3 – Take advantage of all discounts
Almost all of the major insurance companies offer some type of discounts for good driving behavior and practices. They just don’t always mention them when quoting your policy. Some of these discounts are:
- Good driver
- Good student
- and much more…
#4 – Ask for a higher deductible
This will probably give you the biggest savings by far. However, there is a catch: You will have to pay a higher deductible in the event of a claim. But, in return, you can end up reducing your monthly payments by about 9-15%.
Make sure that you have enough money set aside to be able to pay the higher deductible. Raising your deductible, say from $500 to $1000, could mean that you end up footing a large part of the bill if there’s a claim.
On average a driver will have an accident claim once every 17.9 years. So, the chances of you having a claim are somewhat slim. But, that all depends on many factors such as how safely you and others drive, as well as other outside factors that you may not have control over (theft, natural disasters, etc).
Make sure to calculate the risk before you ask for a higher deductible
#5 – Don’t get coverage you don’t need
If your car is worth 5-10x less than your Auto Insurance premium, you don’t really need Comprehensive Damage and/or Collision coverage. This is usually the case for older cars that just aren’t worth much anymore.
A great website to look up the worth of your car is Kelley Blue Book.
#6 – Keep your car in a garage
Statistics show that you are less likely to have your car stolen if you keep it in your garage as opposed to on your driveway or street.
If you reduce the chances of a claim (in this case theft), you will most likely have less, if any, claims on your policy. As years go by, your insurance company can give you a lower rate because you have not been a high risk for them in the past.
This is more of a long-term saving technique.
#7 – Get a quote before you buy/lease
Before you decide to get a new car, ask yourself whether it is worth it. You can get yourself a quote from different insurance companies before purchasing, and then see if you can fit that into your budget.
Request a Quote
#8 – Don’t pay per month
It may seem cheaper to pay on a monthly basis as opposed to every 6-12 months. But, the added payment fees charged by the insurance company can add up.
One thing you can do is just divide your premium into 6 or 12 parts and set aside that amount into a savings account every month. Then, when it is time to renew, pay it all upfront.
Take a look at your insurance situation and decide which above mentioned tips you can start implementing today. There might be some things you might have to go without, such as taking away your teen’s driving privileges for a year. Or, you might need to start clearing out some space in your garage to park your car.
Nevertheless, feel free to give your agent a call to discuss any changes you would like to make.