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9 Tips for Saving Money on Car Insurance

Updated on January 4, 2013

We've all heard the commercials with the cute little green gecko claiming that the secret to saving vast amounts of money on your car insurance policy is making a simple phone call to ask for a new policy quote.

While it would be great if getting the best possible rate and saving money on auto insurance were that simple, the truth is that it requires just a little more work than that. The process isn't very difficult but it does help if you understand some of the factors the industry uses to set rates.

Putting forth the effort is well worth your time though as you could be leaving money on the table that could go right back into your pocket. Here are some of the best ways to make sure that you are getting the right auto coverage for your needs, at the lowest possible price. Follow these tips and you will find that your auto premiums will be much more affordable than you may have thought.

Start By Evaluating Your Coverage Needs

Before you ever begin shopping for a new provider, it is important to know ahead of time exactly what coverage you are looking for so you are sure you are comparing like policies. Start by figuring out what the state minimum required coverage is for your state and then build your policy from there. Decide if you will need full comprehensive coverage for your vehicle or just liability insurance. This can make a huge difference in the amount of money you will pay for your policy.

As a general rule, most new cars or those with an outstanding loan balance on the vehicle must have comprehensive coverage. If you have an older car with a low replacement value, you may find that carrying only liability insurance is the way to go.

Next, take a look at the features and upgrades available to you such as full auto glass replacement, roadside assistance, towing, medical, property damage, etc. Make a list of the features that are important to you and order it by how important each one is to you and your family. Once you have decided what you want your policy to look like, you can then start shopping for quotes from different providers.

The Best Ways to Save Money

As consumers, we never want to overpay for anything but especially for something that involves an ongoing monthly bill. Here are some areas to focus on that may help you cash in on hidden discounts and savings.

1. Your Deductible

Most auto insurance companies will allow you to set your own deductible. The deductible is simply the amount of money you will be responsible for paying directly out-of-pocket if an accident occurs. As a general rule, the higher the deductible you select; the lower your payment will be. Just be sure to select an amount that you are capable of paying if you get in an accident.

2. Your Credit Score

While many of us would argue that our credit score has absolutely nothing to do with our driving record, the insurance companies don't see it that way. Many companies are now charging more money for the same coverage to customers with lower credit scores. Not all companies use credit score in their risk analysis so if your credit score is less than perfect, you may want to select a company that doesn't use credit history in their policy pricing.

3. Your Driving History

Your driving record is one of the biggest factors in how much you pay for car insurance so you want to make sure you keep it as clean as possible. Things like accidents have the largest impact but even speeding tickets, being caught driving under the influence of alcohol, or excessive traffic citations can lead to huge rate increases. With that being said, if you are a safe driver with an excellent driving record, be sure to ask your insurer what discounts are available for safe drivers. Yes, you do have to ask! The insurance company will not always automatically apply it to your policy.

4. Bundling Multiple Drivers and or Policies

One great way to save on your coverage is to bundle multiple cars, drivers, and insurance policies with the same provider. If you and the other members of your family are now insured through different companies, you could be missing out on extra savings that might be available to you by grouping your auto, homeowners, or renters policies together.

5. Your Status as a Student

If you are a full-time student at an accredited college or university, you may qualify for extra savings. Community colleges and trade schools can also count so be sure to discuss it with your agent. Most companies will offer a discount for full-time student status and in some cases, a high GPA as well but you have to ask for it.

6. Your Annual Mileage

Did you know that a large part of your policy premium relates to the amount of driving you do. Ask your insurance company how much you could save by keeping your annual mileage below certain levels. You might be surprised at what a difference it can make!

7. Where You Garage the Vehicle

Location also plays an important role. If you live in a high crime area or an area with a history of accidents, you are likely to get charged more by your insurance provider. Investigate what effect switching your primary address to a second home, parent's house, or work address might have. The key here is they will want you to make that the primary storage site for your vehicle.

8. Your Car's Safety Features

Features like daytime running lamps, anti-theft devices, anti-lock brakes, and airbags can also lead to significant savings. Be sure to let your agent know about any of these features your car or truck has and ask what discounts are available.

9. Your Payment History

Some companies are starting to offer discounts for long time customers with a good payment history. Check with your provider or local agent to see if your company offers these discounts and if you qualify.

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    • compareinsurance profile image

      compareinsurance 8 years ago from San Diego, CA

      Great info lender! Selecting a policy is all about balancing cost with what the consumer 'needs' in terms of coverage which depends on lifestyle, age, etc... Great info, keep it up. James

    • lovelypaper profile image

      Renee S 8 years ago from Virginia

      Great hub. Very informative.