Saving Money on Your Auto Insurance

What You Should Know About: 

Managing Your Auto Insurance Costs

Good insurance coverage doesn’t have to break the bank.

Three things you should know:

  1. Auto insurance premiums can vary by hundreds of dollars depending on a number of factors.
  2. Shopping around and comparing rates, deductibles and discounts will help you reduce the cost of auto insurance.
  3. Auto insurance premiums are based in part on the vehicle’s price, the cost to repair it and its overall safety record, so check with your insurance company or agent and compare rates for coverage before you buy a car.

The insurance rates you pay for your car can vary dramatically depending on the insurance company, agent or broker you choose, the types of coverage you request and the kind of car you drive. If you’re shopping for a car, or for an auto policy, consider these tips to maximize your protection and manage your costs: 

  1. Comparison Shop Before You Buy Prices for the same coverage can vary by hundreds of dollars, so it pays to shop around for an insurance company, agent or broker that fits your auto insurance needs. Ask your friends, research online, check consumer guides or call your state insurance department to get an idea of price ranges and which companies or agents have the lowest prices. And don’t shop based on price alone. The insurer you select should offer both fair prices and reliable, fast, fair claims service.
  2. Ask for Higher Deductibles Deductibles represent the amount of money you pay toward a repair or a loss before your insurer pays after you file a claim. By including higher deductibles on your Collision and/or Comprehensive auto coverage, you could lower your premium substantially. For example, increasing your deductible from $200 to $500 could reduce your cost for collision and comprehensive coverage by 15 to 30 percent.
  3. Drop Collision and/or Comprehensive Coverage on Older Vehicles It may not be cost effective to have Collision or Comprehensive coverage on vehicles worth less than $1,000 or worth less than 10 times the insurance premium because any claim you make would not substantially exceed the annual cost and deductible amounts. To find out if dropping these optional coverages is right for you, check the value of your car. To look up what your vehicle is worth, free websites are available such as Kelley Blue Book, National Association of Auto Dealers and TrueCar. 
  4. Consider buying a “Low Profile” Vehicle Vehicles that are expensive to repair, or which are favorite targets for thieves, often have much higher insurance costs. Be sure to check into insurance costs of a particular vehicle before you buy it. You can research the annual list of most-stolen vehicle models online at the National Insurance Crime Bureau
  5. Take Advantage of Discounts Most insurance companies offer a variety of discounts to their customers. For example, some companies offer discounts to motorists who drive less than the average number of miles per year, or to drivers who carpool to work. Some insurers may offer discounts for more than one vehicle, no accidents in three years, driver training courses, anti-theft devices and good grades for students. If you have an insured young driver in your household who is away at college without access to your vehicles, there may be a discount for “students living away.” And, as new vehicles add safety features line lane detection, crash avoidance and back-up cameras or alerts, insurers are beginning to respond with discounts for those features as well. 
  6. Bundle Your Insurance Many insurers offer a discount if you purchase two or more types of insurance from them, such as homeowners and auto insurance or more than one vehicle. It’s important, however, to compare costs for a multi-policy discount from a single insurer with buying your insurance separately from different companies.
  7. Maintain Good Credit Most states allow insurance companies to use your credit score when calculating your insurance rates. Be sure to regularly check your credit and correct any errors you may find on your report.
  8. Drive and Maintain Your Vehicles Responsibly Your driving record and your prior claims history are important factors insurance companies consider when underwriting (determining your coverage) and rating (determining your premium) your auto policy. Obey traffic laws – don’t drive above the posted speed limit, maintain a safe distance from other vehicles, do not drive while impaired by alcohol, drugs (legal or illegal) or prescription medication – and put away your mobile phone/device while behind the wheel. Have your tires and brakes checked routinely for wear, and keep your car locked when not in use to prevent theft.

*Some information provided by Insurance Information Institute