Increase Your Deductible
Raising your deductible – which is the amount you have to pay out of pocket before insurance covers the claim costs – can reduce your premium. This action may be suitable if you’re not driving much right now, if you don’t have a history of accidents on the road, or if you need to lower your monthly costs to stay insured. This could cost you later if you are in an accident, as you’ll have to pay more out of pocket before the insurer covers the damages. You must ensure you have enough money to pay the higher deductible if you face an accident.
Consider Lower Coverage for Older Vehicles
Older cars may not warrant the same insurance attention as your shiny new car or all the bells and whistles of a luxury Mercedes policy. If your car is at the end of its life, you might consider dropping collision or comprehensive coverage for that vehicle, which covers damage to your car. Whether you should drop any coverage depends on your car’s value and its relative insurance cost. Experts recommend that if your car’s value is less than 10 times the annual premium, purchasing coverage for that vehicle may not be a cost-effective option. One of the quickest ways to check value is by browsing the Kelley Blue Book online. For example, suppose your annual premium is $1,600; 10 times that would be $16,000. If your car is worth less than $16,000, it may make sense to reduce the insurance coverage for that vehicle.
Use Public Transport or Carpool When Possible
Insurance companies may offer discounts if you have a low mileage, meaning you drive less than the average number of miles per year compared to other Americans. You are usually considered a low-mileage driver if you drive less than 7,500 miles a year, but that is not a hard and fast rule. What actually determines if you are a low-mileage driver depends on the state you live in, your age, and your gender. The amount of money you can save varies based on individual factors, as well as the insurance company with which you sign a policy. State Farm offers one of the lowest monthly premiums at $128 for low-mileage drivers, according to one analysis.
Bundle Your Insurance Policies
One of the simplest ways to save money on insurance is to bundle your home and auto insurance policies, which means purchasing multiple insurance policies from the same company. Allstate, Liberty Mutual, and GEICO offer premium discounts – depending on the policies and coverages you buy together. You can receive discounts on your premiums anywhere from 5% to 25%, depending on the company.
Shop Around for Car Insurance Rates
You might be working from home permanently and need less coverage. Or you might be returning to the office and need more coverage now. Whatever your situation, it’s always a good idea to shop around to ensure you’re getting the best rates, as other insurance companies may offer larger discounts or lower premiums overall. If you’re unsure where to start, check out CNET’s car insurance summaries, where you can see our picks for the best overall car insurance, cheapest car insurance, best policies for teens and young drivers, and best options for military and veteran drivers.
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Safe Driving Discounts
If you take pride in being a safe driver, you’re in luck. Insurance companies offer discounts for safe driving and a modest claims history, and there are plenty of discounts to take advantage of here. Reach out to your company to ask how to get involved with these programs. Once you successfully join, you should see a decrease in your premiums on your next bill.
Finding a Cheaper Car
If you are looking to buy a new or used car, consider comparing insurance costs among different vehicles. Car insurance premiums are calculated based on a variety of factors, some of which depend on the vehicle itself, including the car’s price, repair costs, and overall safety record. “That’s the thing people forget: you can buy a Honda or a Kia, which is cheaper, or you can buy a Mercedes or a Tesla – it’s going to be more expensive,” according to Janet Ruiz, a property casualty insurance analyst and strategic communications director at the Insurance Information Institute. The difference in insurance costs between a Mercedes and a Honda is significant: the average cost to insure a Mercedes-Benz is about $4,505 annually, compared to an average of $2,151 annually for a Honda. This means you’ll pay an average of $179 per month for a Honda versus $375 for a Mercedes.
The editorial content on this page is based solely on objective and independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.
Article by: Marcus Capalbo
Based in Boston, Marcus Capalbo is a personal finance reporter at NextAdvisor and CNET. He has covered cryptocurrencies, investing, banking, and the U.S. economy, along with other personal finance topics. If you don’t find Marcus behind his computer screen, you might find him behind another screen, playing the latest Nintendo Switch game, streaming the newest TV show, or reading a book on his Kindle.
Source: https://www.cnet.com/personal-finance/insurance/auto/7-ways-to-save-money-on-car-insurance/
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