I used to think that lowering my car insurance premium was nothing more than a myth, a trick that only worked for the savviest of consumers. That was until I realized I was paying nearly $300 more per year than my neighbor, who drove the same car and lived just a few streets away. What gave? It turned out, there were plenty of legal ways to lower my premium, and I wasn’t taking advantage of any of them.
Shop Around and Compare Quotes
The first mistake I made was sticking with the same insurer for years without shopping around. I assumed loyalty would pay off, but in reality, it didn’t. I found out that different insurers use different formulas to calculate premiums, so what’s expensive with one company might be cheap with another.
Don’t make the same mistake I did. Take the time to shop around and compare quotes from different insurers. It’s not as daunting as it sounds. There are plenty of websites that let you compare quotes side by side.
Here are a few things to keep in mind when shopping around:
- Don’t judge a book by its cover. The cheapest option isn’t always the best. Make sure to read the fine print and understand what’s covered.
- Look for discounts. Many insurers offer discounts for things like safe driving, multiple policies, or even being a good student.
- Consider the insurer’s reputation. You want an insurer that’s financially stable and has a good track record for customer service.
Raise Your Deductible
I used to think that keeping my deductible low was the way to go. After all, that’s less money I’d have to pay out of pocket in case of an accident, right? Wrong. It turns out, raising your deductible can significantly lower your premium.
Your deductible is the amount you pay out of pocket before your insurance kicks in. By raising your deductible, you’re essentially telling your insurer that you’re willing to take on more risk. In return, they’ll lower your premium.
But here’s the catch: don’t raise your deductible so high that you can’t afford to pay it if you need to. Be sure you’ve enough savings set aside to cover the deductible in case of an accident.
Why This Works
The reason this works is simple: math. By raising your deductible, you’re reducing the insurer’s risk. They don’t have to pay out as much if you’re in an accident, so they can charge you less for your premium.
Avoid Common Mistakes
There are plenty of myths and misconceptions out there about car insurance. One of the most common mistakes I see people make is thinking that their credit score doesn’t affect their premium.
Credit Score
I used to think that my credit score had nothing to do with my car insurance premium. I was wrong. Many insurers use something called a credit-based insurance score to help determine your premium. This score is based on your credit history and is used to predict how likely you’re to file a claim.
- If you’ve a good credit score, you’re likely to get a lower premium.
- If you’ve a poor credit score, you’re likely to get a higher premium.
But here’s the good news: you can improve your credit score. Pay your bills on time, keep your credit utilization low, and regularly check your credit report for errors. It might take some time, but improving your credit score can lead to lower insurance premiums.
Mileage
Another common mistake is not telling your insurer if you drive less. Many insurers offer low-mileage discounts for drivers who don’t put a lot of miles on their car. If you’re not taking advantage of this, you’re missing out on a great opportunity to lower your premium.
Here’s why this works: The less you drive, the less likely you’re to be in an accident. It’s that simple. So if you’re not driving much, make sure to tell your insurer. They might be able to lower your premium.
Bundle Your Policies
I used to think that having separate policies for my car, home, and other insurance needs was the way to go. I thought it gave me more control and allowed me to shop around for the best deals. But it turns out, bundling your policies can actually save you money.
Many insurers offer discounts for bundling your policies. This is often called a multi-policy discount. By bundling your car insurance with your home or renters insurance, you can save money on both policies.
- Shop around. Not all insurers offer the same discounts, so it pays to shop around.
- Consider your needs. Make sure the bundled policy meets all your needs. Don’t just bundle for the sake of bundling.
- Ask about other discounts. Even if you’re bundling, there might be other discounts available.
Why This Works
The reason bundling works is simple: it’s good for the insurer. By bundling your policies, you’re making it easier for the insurer to manage your risk. In return, they’ll reward you with a discount.
But remember, don’t bundle just for the sake of bundling. Remember to the bundled policy meets all your needs. If you’re not happy with the coverage, it’s not worth the discount.
Drive Safely and Maintain a Good Driving Record
This one might seem obvious, but it’s worth repeating: safe driving pays off. If you’ve a clean driving record, you’re likely to get a lower premium.
Many insurers offer safe driver discounts for drivers who go a certain period of time without an accident or ticket. Some even offer discounts for completing a defensive driving course.
Why This Works
The reason this works is simple: safe drivers are less of a risk. If you’re a safe driver, you’re less likely to file a claim. In return, your insurer will reward you with a lower premium.
Common Mistake: Not Checking for Errors
One common mistake I see people make is not checking their driving record for errors. If there’s an error on your record, it could be driving up your premium unnecessarily.
Here’s what to do:
- Get a copy of your driving record. You can usually do this through your state’s Department of Motor Vehicles.
- Check for errors. Look for any accidents or tickets that aren’t yours.
- Dispute any errors. If you find an error, dispute it with the DMV. They’ll investigate and correct any mistakes.
Conclusion
Lowering your car insurance premium doesn’t have to be a myth. There are plenty of legal ways to save money on your policy. From shopping around and comparing quotes to raising your deductible and bundling your policies, there are plenty of options out there.
But remember, don’t make the mistake of thinking that one size fits all. What works for one person might not work for another. It’s all about finding what works best for you and your unique situation.
So take the time to shop around, compare quotes, and ask about discounts. You might be surprised at how much you can save. And who knows, you might even save as much as I did – nearly $300 per year. Now that’s something worth smiling about.
