Every driver needs car insurance, but nobody wants to pay huge premiums. Fortunately, there are many little-known ways to cut down on the cost of car insurance that can save you money this year. Look at all eleven of these options, and consider what you can do to lower your premiums now.
Higher Deductible
Most car insurance policies have a standard $500 deductible. This means that, if you are in an accident and file a claim, you are responsible for the first $500 of costs. The insurance company covers the rest. What many drivers do not know is that one can opt for a higher deductible and pay lower monthly premiums. Be careful, though! If you opt for a higher deductible, put some of the money you save on premiums away to cover that additional cost in case you need to file a claim.
Storage Insurance
Do you own a car that you only use for part of the year, or a spare vehicle that you don't really drive at all? Instead of buying full coverage for that unused vehicle, consider opting for storage insurance. Storage insurance is not legal to drive on, but protects your vehicle in case it is damaged while in storage. This type of policy costs only a fraction of the price of full coverage, since the risk of an accident is so much lower.
Reduced Coverage
Remember, if your car is damaged in an accident, the most you can possibly get from a claim is the book value of the vehicle. If you drive an older car worth less than $1000, it may be financially unwise to pay for collision and comprehensive coverage. Cut back that unnecessary coverage, watch your premiums drop, and put some of the money away to pay for your next car!
Cheaper Vehicle
Speaking of which, if you plan on buying a new car this year, consider how much it will cost to insure. Insurance companies calculate premiums based on each model's claim history; if many other drivers have filed claims while driving the same model, your premiums will be higher. It may be in your interest to buy a more expensive vehicle now and save money on insurance later.
Safety Features
Most insurers will give you a break on premiums if you drive a car with certain safety features, including anti-lock brakes, air bags and car alarms. Investigate whether your insurer offers such discounts, and again, keep these things in mind if you are shopping for a new vehicle.
Credit Score
Statistically, drivers with better credit scores tend to file fewer claims. Taking steps to improve your credit has a host of financial benefits, not the least of which is a reduction in insurance costs. Be cautious when using credit cards or taking out loans, and remember that a bad credit score can increase many other costs.
Defensive Driving Courses
Some insurers offer discounts for taking optional driver safety courses. Investigate whether these courses are offered in your area and how much you can save by taking them. Registering for these classes typically costs some money, but your savings on lowered premiums should more than make up for that cost.
Discounts, Discounts, Discounts
Every insurer offers a different package of discounts. Typical options include safe driver discounts, good student discounts, low mileage discounts and multi-policy discounts. Find out what discounts are available and think creatively about how you can qualify. For instance, you may be able to work at home or carpool to reduce your mileage, save money on fuel and qualify for an insurance discount.
Your Location
Many insurance companies calculate their premiums based in part on where customers live. Drivers in particularly dangerous areas pay higher premiums, while drivers who live in areas with few accidents pay lower premiums. If you are planning to move this year, don't forget to consider the cost of insurance when deciding where to live.
Pay in Full
Most drivers don't know that by paying their premiums monthly, they are actually paying more than they owe for their insurance coverage. Talk to your insurance agent about paying your costs in full, annually or biannually. It can be difficult to arrange your budget to cover that up-front cost, but if you can do it, paying in full is a much cheaper option.
Shop Around
With all of these things in mind, look at different providers to see which company can give you the best deal. Every insurer calculates premiums differently, and every insurer offers a different package of deals and discounts. Do your research, find out where you qualify for discounts, and if it makes financial sense, switch your insurance to a company that offers you a better deal. You won't be sorry.
These tips are very helpful, especially to those getting divorced and struggling financially.
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