Automobile insurance is one of the ongoing expenses of operating a car. It can be a hefty price, particularly if you are young, drive significantly more than the average driver, or have been in more than the average number of accidents.
However, there are also ways to lower your car insurance costs. Below are seven of the best methods that anyone can use.
- Take a defensive driving class. Many insurance companies offer a discount to drivers who have evidence that they have completed a defensive driving course. AAA chapters often offer these classes. So does the American Association of Retired Persons (AARP). A defensive driving course certificate has the potential to particularly help people under 25 or those whose premiums have risen as the result of an accident claim.
- See if your carrier will offer a discount. Some insurance companies will discount premiums if you consolidate your insurance business with them rather than using several different companies. So if you have both homeowner’s and car policies, or policies for several different vehicles, it’s worth inquiring to see if such a discount could come your way.
- Cut your annual mileage. Insurance companies factor the annual (or semi-annual) mileage driven into the data they use to determine a driver’s premiums. The more the mileage, the greater the premium. Why? Across the board, data indicate that the more miles one covers, the greater the risk of either an accident or an emergency situation that might damage your car. Therefore, it can be to your advantage to reduce your annual mileage as much as possible. If you have a long commute to work, for example, consider using public transportation or carpooling for part of the time. If walking or biking occasionally is an option, see if it would cut your insurance premiums.
- Research rates and coverage. A driver looking for insurance should always research the rates offered by various companies, and compare rates and coverage among several different insurers. A good rule of thumb is to look at least three companies. Also, utilize consumer information in your search. Some states have insurance divisions that will provide comparative information to consumers. Some consumer-oriented publications, such as Consumer Reports, have useful information on insurance as well, including consumer ratings, statistics on complaints re claims adjusting, and so forth.
- Utilize organizational affiliations. Insurance companies frequently have unadvertised discounts for drivers who belong to certain organizations. One, of course, is AAA! But discounts don't stop there. If you are a member of an alumni association through your school, belong to a professional organization, are an army veteran, get top grades in school, work for a small business, or are retired, you may be eligible for a discount. Search actively to see if this is so and include it in your questions to insurance companies re: rates.
- Have a good credit score. Credit scores are a factor in determining your car insurance premiums. Why? Insurance companies regard a good rating as a sign of both ability to pay as well as responsibility and stability.
- Pay a higher deductible. Generally speaking, the higher the deductible, the lower the premiums. Since you will only pay a deductible if you are in an accident or are injured, it may benefit you to shoulder a higher cost upfront in exchange for lower premiums throughout the year--and the life of your policy as time goes by. It is best to run through several scenarios to see if this makes financial sense for you.
Despite high insurance rates and the possibility that your age or a recent accident might have raised your premiums, you can achieve lower car insurance bills by following these steps.
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