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8 Ways To Save Money On Car Insurance

By Mark Riddix

Are you looking for a way to bring down the costs of your car insurance? Paying auto insurance premiums can be very expensive, especially for a product that you will rarely ever use. But don’t worry, there are strategies to bring down your auto insurance payments. We recommend focusing on reducing the big, fixed monthly payments in your life before you take away the small indulgences, because those fixed monthly bills are eating away a bigger portion of your monthly income on a consistent basis. Here are 8 ways that you can save money on your car insurance:

1. Increase your deductible.

Raising your insurance deductible is one way to lower your premium payments. The higher the deductible, the less you will pay for insurance coverage. The average insurance deductible is $250. It’s not worth reporting a minor incident to your company for an incidental cost of a few hundred dollars. Raise your deductible to $1,000. You will have to pay more of the cost for any claims but will save money every month. The savings make the increased deductible payment worthwhile.

2. Consolidate your accounts.

Just like with bundling your internet, phone, and TV package, you can get a discount on your car insurance by consolidating your accounts. Buy your homeowners, life, and car insurance from the same discount insurance company. You will come out cheaper by bundling these insurance products together.

3. Pay the lump sum.

Paying the entire auto insurance premium will cost you less than making monthly payments. Installment payments often have processing fees that will cost you more money for the convenience of breaking up your payments.

4. Improve your credit score.

It may not make sense but your credit score does matter when shopping for car insurance. Most people are unaware of the impact that their credit score has on the cost of insurance. Your credit history helps auto insurers determine the type of driver that you are. Individuals with good credit are considered better drivers whereas individuals with bad credit are considered risky drivers. I know what you’re thinking: “That doesn’t make any sense!”

5. Never go uncovered.

No matter how much you dislike your current insurance company, never let your auto insurance lapse! A lapse in coverage means that you are an uninsured motorist and will pay more for a new policy. Uninsured motorists are considered the riskiest drivers by insurance companies and often have to pay high premiums for state insurance coverage before being accepted by a major carrier.

6. Get a good student discount.

Full-time students under the age of 25 can qualify for good student discounts. Just keep a solid GPA and you could save a few hundred bucks. Parents of honor roll students are also entitled to a good student discount. If you have a teenage driver with good grades, you may be in line for big savings.

7. Buy direct.

Avoid intermediaries and buy your insurance from a direct dealer. It costs more to buy insurance through a field agent. This is because the field agent’s commission is included in premium payments.

8. Get a better job.

Why do car insurance companies ask you for your occupation? They have found that the more stressful your occupation, the riskier driver that you are. Who is more likely to be on the phone in the car, a lawyer or an artist? A lawyer is more likely to multitask while driving and may lose focus on the road. Scientists get some of the lowest car insurance rates because of their high level of attention to detail. They are less likely to be distracted. Again, this may not be fair but that’s the name of the game!

Have you found any good ways to save money on your auto insurance? Let us know!

(Photo credit: jessica mullen)

Mark Riddix
Mark Riddix is the founder and president of an independent investment advisory firm that provides personalized investing and asset management consulting. Mark has written financial columns for Baltimore and Washington, D.C. area newspapers and is the author of the book, Your Financial Playbook.

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  • http://www.yourfinances101.com/blog David/yourfinances101

    I would say that driving safely should help as well.

    Also, I have found that using an independent agent has saved me lots over the years.

    They are not affiliated with any one company and they always find me the best deal. I’ve changed companies severalvtimes over the past few years, but who cares?
    I am covered with the coversage I need, at the cheapest rate.

  • http://www.pfsdebtrelief.com Stephan

    its crazy how important a credit score is nowadays. I cant believe it impacts how much you pay for car insurance, but i guess thats the system. Its only getting worse too, job applications and housinng apps now all are impacted by your credit score. I guess it just makes it even more important to be financially responsible as it now impacts more than just your wallet.

  • Pingback: 8 Ways to Save Money on Car insurance | Cincinnati Insurance Quotes

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