Think your car insurance rates depend mostly on your driving record? Maybe not. Auto insurance companies base their rates on many factors that have little to do with whether you drive safely. Here are other factors that go into calculating your rate, giving you eight ways to save on insurance premiums.
Build Your Credit
Research shows that people who manage their credit responsibly have fewer insurance claims; thus, insurance companies cut a break for people who tend to pay their bills on time. Some insurance companies also offer a discount for customers who pay their premium in full up front. This also gives you one less bill to worry about, helping you avoid accidental late payments and consequential dents in your credit score. Win-win.
Up Your Deductible
Your deductibles carry a great deal of weight in determining your insurance premiums, so obviously raising the former will lower the latter. According to the DMV, raising your deductible from $250 to $1500 can save you around $500 a year; while $1500 seems like a lot of money, that’s the amount you’ll save in just three accident-free years. Just make sure to have backup savings in case of an accident.
Change Your Vehicle
Each year, Insure.com compiles a list of the 20 least and most expensive cars to insure. While minivans tended to be among the cheapest to insure in recent years, a number of SUVs and crossovers made the cheap list for the 2013 model year. The list is affected by insurance claims made over the previous year, so the list depends on what vehicles the safer drivers are gravitating toward. In other words, steer clear of anything from Mercedes-Benz, Porsche, Jaguar, or BMW. Car enhancements such as anti-theft devices, airbags, daytime running lights and anti-lock brakes can lower your insurance premiums as well.
Bundle
When you keep your auto, home, and life insurance policies under one roof, your insurer is likely to give you a discount. You’re likely to save thousands per year by bundling your insurance policies, so see which of your insurance companies will give you the best deal and make the switch. Since it’s harder to switch life insurance companies when you already have a policy, bundling likely will mean doing so with your life insurance company.
Avoid Small Claims
To keep your premiums from going up, avoid making claims for small amounts of damage. Many companies may raise your rates by up to 10 percent for any claim at all, so only make a claim when the cost of fixing your car is truly unaffordable.
Go Back to School
According to the Consumer Federation of America, car insurance quotes are often significantly higher for drivers with clean driving records than for better-educated, more affluent motorists who had in fact been responsible for an accident. As it turns out, your car insurance rates have more to do with your level of education, occupation, and whether you have continuous insurance coverage. Going
Relocate
Your zip code has more to do with your car insurance rates than you think. People living in Louisiana pay higher insurance premiums (averaging about $2700 annually) due to the state’s high number of claims for bodily injury, while Maine drivers average only $934, probably due to a low traffic density.
Shop Around
It’s wise to get at least three different quotes when shopping for car insurance, either online or by calling the insurer directly. Some state insurance departments even provide comparisons of prices charged by major insurance companies.
