Car insurance is kind of like a coffin – everybody needs it, but no one wants to use it. This is probably one of the reasons that one in seven drivers is uninsured; they don’t like paying for something they have no intention of using. However, car insurance is a legal requirement in all 50 states, and the financial penalties for driving without it are much higher than the cost of buying a policy.
Without insurance, you could lose your vehicle and even your license. If you rely on your car for work, you could end up losing your job.
So if you are one of the 16 percent of drivers who is uninsured, get yourself some insurance. And here are some facts to help make paying for something you never plan to use easier to bear.
1. Car insurance is tax deductible. If you use your car for business, you can deduct all or part of your car insurance premiums at tax time. The amount you can deduct depends on the percentage of the time you use your car for work. For example, a taxi driver who uses his car 80 percent of the time for work could deduct 80 percent of his premium.
2. A low-risk or low-profile vehicle can lower your rates. A low-risk vehicle is one that is less likely to get into an accident or less likely to result in accident fatalities, like a four-door sedan with anti-lock brakes, a backing camera and curtain air bags versus a two-door sports car that only has anti-lock brakes. A low-profile vehicle is one that is less likely to be stolen like a minivan versus a 1996 Honda Accord (the most commonly stolen car in 2012).
3. Changing providers could benefit you. You may think that once you have your policy you can just forget about it. You’ll pay your premiums each month and the policy will renew each year like clockwork. The thing is, while you are blithely paying your premiums for years on end, you could be getting a lower rate. If you have been insured by the same company for more than a couple years, it’s time to start shopping around with other auto insurance providers. If you discover that they offer better rates than your current provider, you could switch or use that information to negotiate a better rate.
4. Paying monthly costs you money. Although it’s easier to pay a little every month, it’s actually better to pay the premium in one lump sum. Some insurance companies charge a fee for making monthly payments. Over time that actually raises the cost of your policy. If you can, pay the entire premium up front. If you can’t then try to break it down into as little payments as possible such as, making two or four payments instead of twelve.
5. The color of your car does not affect your insurance rates. Somewhere, someone started a rumor that red cars cost more to insure than any other color. Actually this is a total myth. There has been one study regarding car color and accident risk, and it concluded that cars in all low-visibility colors (black, blue, silver, green, gray, and red) all have a higher accident risk than white cars.
However, the study also went on to indicate that light conditions and vehicle type was more of a factor than color. So, if you want to drive that bright red coupe, go for it. The insurance company won’t charge you any more for the color.
6. Good credit could get you a better rate. Some insurance companies run a credit report when you apply for a policy. If you have good credit you could actually qualify for a better premium. If you have good credit, and the insurance company doesn’t take your credit information, you can ask them run a credit report to see if you can qualify for a better rate.