Ways to Reduce Car Insurance Costs

If you can get more or the same value for less money, you’re doing good business. With car insurance, slashing your costs can help you to maximize your coverage. You can “tune-up” a new or existing car insurance policy by reducing your auto insurance premium – without underinsuring your vehicle or dropping valuable coverage. While there are several ways to slash car insurance costs, the top five listed below are the easiest, most effective and rewarding ways to do this.

1. Reduce the risk of insuring your vehicle

If you have not taken advantage of ways to increase the safety and security of your vehicle, you are giving up a premium-cutting opportunity. Installing anti-theft devices and safety features would reduce the likelihood of theft, damage or liability.  Auto insurers recognize this by decreasing your premium – sometimes by as much as 10%. Anti-theft devices include keyless entry remote controls, car alarm or steering wheel locks. Even increasing the likelihood of your vehicle-recovery after it is stolen – through recovery systems – can reduce your premium.

Increasing the safety of your vehicle has a dual role in reducing your premium. It helps to prevent accidents and reduces liability claims (like injuries to you or passengers). Anti-locking brake systems, parking sensors and air bags are some safety features that insurers favor. Your vehicle cannot be completely risk-free, but if you can make it safer and more secure – do it. You will not only reduce your premium significantly but also the probability of serious injuries, damage or theft.

2. Take advantage of other available discounts

Discounts for safefty features and anti-theft devices are not the only discounts available. You can save between 10% and 30% more on your car insurance premium just by taking advantage of other discounts. Not all discounts are obvious or used in initial quotes, making it important for you to enquire about how many discounts you can benefit from. The most common auto insurance discounts include:

*Multiple-policies discount: Insurers normally offer this discount if you have another type of insurance with them or if you do business with an affiliate company within a group.  

* No-claim bonus: Note that this is not a “no-blame” bonus. If you never made a claim on your insurer – regardless of who was at fault – your insurer has this incentive.

* Safe driver discount: If you maintain a good, unblemished driving record over time, insurers reward this with savings.

* Membership discounts: This applies if you are a member of a listed association (e.g. a motor club) or purchase your insurance from an affiliated institutional agent.

*Low mileage discount: If you drive less, you pay less.

This discount-list is far from exhaustive. You must check with insurers to determine what they offer and for which discounts you qualify. Read about how to get auto insurance discounts here.

3. Comparison-shop

Comparison-shopping is a simple, but effective, way to slash your car insurance costs. First-time owners or those seeking a new policy can benefit tremendously when they compare car insurance offers. Insurers have different auto insurance rates that reflect their different loss experience. In addition, the value package that you get from each insurer is diverse, in terms of coverage options and discounts. Comparison-shopping allows you to take advantage of these features. Keep in mind that you cannot shop on premium alone, especially when checking rates online. After all, some insurers may have discounts that are omitted in an initial quote.

4. Increase deductibles

The deductible (also known as “excess”) on an auto insurance contract is the portion of a claim for which the insurer is not liable.  If you suffer losses, the insurer is only liable for costs above the insurance deductible. For this reason, insurers reduce the car insurance premium – to reflect the reduced probability of a claim. Although increasing your insurance deductible is a certain way to slash your insurance, make sure that the amount is one that you could comfortably afford, should you experience damages or loss.

5. Reduce coverage for older vehicles

Although having auto insurance is mandatory, you have some leeway in determining what type of coverage you need above the minimum required by the law of your State. Other forms of insurance, like comprehensive or collision coverage are normally optional or required by lenders. If you have a used or old vehicle, dropping collision or comprehensive coverage might be a safe option.  A rule-of-thumb is that if your insurance premium is more than 10% of your coverage amount, you should reduce the coverage amount or type of coverage.

Sometimes, being cheap can end up being costly in the end. However, when you cut your auto insurance costs using the aforementioned methods, you are not increasing your risk substantially, but getting the coverage you need and savings as well.