We all want to pay less than we must on car insurance, but it’s never quite clear just how to do so.
Scores of big and little insurance companies are vying for your business. Many offer an eye-glazing assortment of policy options, making it tough to compare and understand who is offering lower car insurance rates.
1. Don’t assume that any particular company is the cheapest.
Some insurers spend millions on commercials to try to convince you that they have the lowest car insurance rates. However, no one insurer is the low-price leader to all. The cheapest auto insurance company in one region may be the most expensive in another.
2. Don’t overlook local and regional insurers
A few major providers dominate the market: Allstate, Geico, Progressive and State Farm comprise more than half of all auto insurance sold in this country. But smaller, regional companies like Auto-Owners Insurance and Erie Insurance can offer higher customer satisfaction and even lower car insurance rates.
3. Inquire about discounts
Car insurers will often provide other discounts. Again, these vary by carrier and state, so you can search for any of the following discounts:
- Bundle car insurance with other policies, such as homeowners insurance.
- Insure multiple cars under one policy.
- Have a clean driving record.
- Pay your entire annual or six-month premium at one time.
- Agree to receive documents online.
- Own a car that has anti-theft or safety features.
Is a member of specific professional organizations or association groups?
Don’t let this turn into a long list of potential discounts. Compare rates from multiple insurers.
4. Improve your credit
Your insurance credit score is a major factor in the car insurance quotes you receive except for a few states. California, Hawaii, and Massachusetts do not allow insurers to use credit when deciding automobile insurance rates. Insurance companies say customers’ credit has been proven to correlate with their chances of filing claims.
However, a CarYanams analysis found that having poor credit can increase car insurance rates by hundreds of dollars a year compared with those who have good credit. (For the most part, a FICO score of 579 or lower is poor credit, but insurers have their own credit models and may have different cutoffs.)
You pay your credit card bills and loan payments on time, which increases your credit history — and lowers your insurance rates. Check your progress through the use of a credit score.
5. Eliminate the comprehensive and collision coverage on an older car
Collision coverage pays to fix the damage on your vehicle caused by another vehicle or an item such as a fence. Comprehensive coverage makes sense to pay for damage to vehicles as a result of weather, animal crashes, floods, fire and vandalism. It also pays out for the theft of your car.
But the maximum benefit under either policy is capped at the value of the car if it’s totaled or stolen. If your car is older and less valuable, it probably doesn’t pay to spend extra for these types of coverage.
6. Raise your deductible
You could save money by selecting a higher deductible if you decide to add comprehensive and collision coverage. Liability insurance–which pays for other people and property if you are involved in an accident, does not have a deductible. Be cautious about choosing a high deductible, however, unless you believe you can afford the increased payment in case you have to file a claim.
7. Use usage-based or pay-per-mile insurance
If you are a good driver and drive fewer miles, consider enrolling in one of the usage-based insurance programs from Allstate’s Drivewise, Progressive’s Snapshot or State Farm’s Drive Safe & Save. You earn a discount depending on the number of miles you log, the time of day, and how well you drive.
If you basically do not drive much at all, you can actually save some money by switching over to a pay-per-mile insurance program such as Metromile, Allstate’s Milewise or Nationwide’s SmartMiles.
Be aware that by enrolling in a usage-based or pay-per-mile insurance program, you’re essentially giving your insurance company permission to monitor your driving behaviour. This is typically accomplished either by a device installed in your car’s diagnostics port or by an app you download on your smartphone.
8. Compare insurance costs when buying a car
Of course, you must already think of fuel economy and repair costs in choosing a car to buy. Now, add insurance premiums to the mix. A CarYanams analysis of the most affordable cars to insure based on America’s best-selling vehicles found the lowest insurance premiums came from a Subaru Outback and Crosstrek model and also from a Honda CR-V model.