If you own a car, you’re probably legally required to have at least some car insurance coverage. Some car insurance policies can be incredibly expensive, costing you hundreds of dollars every year for even the most basic coverage – and making you question whether it’s worth driving a car in the first place.
So what are the best ways to save money on your car insurance without skimping on your coverage?
How to Save Money on Car Insurance
Let’s address one of the most obvious ways to save money immediately: reducing your insurance coverage. Most insurance companies charge a premium based on the amount of coverage they would provide in response to an accident.
The more the company could potentially payout, the higher your premiums are going to be. Lowering the coverage amount to something closer to state-mandated minimums could help you reduce those premiums.
However, this isn’t always the best idea. Insurance is there to protect you, your passengers, and other motorists from extensive financial damage. If you don’t have sufficient coverage to pay for an accident that you caused, you could end up being financially liable for the remainder, possibly bankrupting the limit process.
Accordingly, let’s focus on ways you can save money on car insurance without reducing your coverage.
1. Clear your driving record
Car insurance companies will raise your rates if you have a questionable driving history. A handful of speeding tickets or a previous collision could be all it takes to completely skyrocket costs. Thankfully, there’s a solution: clear your driving record. Depending on your circumstances, that could mean taking a driver safety course, contesting standing tickets, paying off other tickets, or directly requesting a formal expungement. Once you’ve gone through these few steps, you can get rid of the standing citations and issues responsible for raising your personal insurance costs.
2. Shop around
Some people purchase car insurance with the first company that approaches them. But it’s much better to shop around. Look at comparable car insurance policies from a variety of different companies and compare them as directly as possible. Can you get the same coverage somewhere else for a lower rate?
3. Bundle your policies
Most insurance companies offer multiple different types of insurance. In addition to car insurance, you may be able to purchase home insurance, renter’s insurance, or life insurance through the same company. To incentivize people to do this, most insurance companies offer discounts for bundling policies. In other words, if you buy multiple insurance policies through the same insurance company, you’ll save money on each of those policies.
4. Negotiate
Don’t be afraid to negotiate. If you feel like you’re spending too much money on your insurance, call your insurance agent or representative of the insurance company and petition for a price reduction. There’s no guarantee that this is going to work, but it takes so little time that it’s worth the effort.
5. Increase your deductible
Another option is to increase your deductible, the amount of money you’re responsible for paying before your insurance policy kicks in. Raising your deductible will often lower your premiums, but remember, this will also increase the amount of money you have to pay if you’re ever responsible for an accident. Accordingly, if you go this route, you should compensate by establishing a robust emergency fund.
6. Get a cheaper car
Insurance companies calculate your rates based on a variety of different factors, including the price and nature of your vehicle. Sometimes, downgrading your vehicle with a cheaper or less attractive model is all it takes to reduce your insurance premiums. You may not like driving the inferior car every day, but it could save you a lot of money in the process.
7. Maintain good driving habits
Finally, work on practicing good driving habits. Avoid collisions at all costs, obey the speed limit, and always buckle up. Some insurance companies offer discounts for each year you go without a major infraction. You may even be able to volunteer to send telematics data to your insurance company directly, allowing them to monitor your driving habits remotely and reward you if you drive in a safe and predictable way.
Alternatives to Driving
If you find that car insurance is more expensive or more trouble than it’s worth, you should know there are plenty of alternatives to driving that are worth consideration. If you live in a city with great public transportation, you could take the bus or the train to work. You could consider running errands on a bike if your city has a great bike path or bike lanes in the road. You could even rely on carpooling or ridesharing services, Assuming these options are available to you.
Still, with the strategies we’ve explored above, you should be in a position to dramatically reduce what you’re paying to your car insurance company. Without sacrificing the quality of your coverage, you’ll be able to reduce your monthly payments and begin driving much more affordably.
