How to save money on car insurance

If it’s renewal time for auto insurance and you’re facing a serious case of sticker shock at how much you’re being asked to pay, you may be wondering how to save money on car insurance.

The good news is there are a lot of ways to reduce what you pay for car insurance without sacrificing the necessary level of coverage. In this article, we’ll take a look at some of the most popular ones.

Get multiple quotes Comparison shopping is ground zero when it comes to how to save money on car insurance. You’ll want to get a minimum of three quotes to compare. Be sure you have your current policy in front of you to make sure you’re shopping for the same level of coverage you already have — not lesser coverage. Consider working with an insurance broker, who have relationships with multiple insurers and can easily shop you around to all of them.

Increase credit score

In all but a handful of states, insurers are permitted to use your credit to help set your premiums. So having good credit really pays when it comes to insurance. Let’s say you have a credit score somewhere in the 660s. If you can bump it up by just 10 to 20 points, you’ll enter the next tier in the credit scoring model. Raising your credit score is easier than you think. The #1 rule is to pay every bill on time every month without fail.

Buy used

Buying used “one of the smartest financial moves you can make.” That’s doubly true when it comes to what you pay for car insurance. A new car is always more expensive to insure than a reliable used car that’s two or three years old. In fact, Zebra’s State of Auto Insurance 2019 found that buying a used car will save you about 12% on insurance on average versus buying a new car.

Drop some coverage

If you have an older vehicle, it often doesn’t make sense to carry full coverage on it. That’s because in the event of an accident, the car has so little value to begin with that you’re not going to get a big, fat check to replace it. So, the general rule is when the cost of comp and collision exceeds 10% of your old vehicle’s value, that’s the time to dump it and just have liability coverage. You can determine your vehicle’s value at Edmunds.com, KBB.com or NADA.com.

Bundle with home policy Combining your auto and homeowners insurance can deliver some big-time savings — depending on where you live and your personal history of credit, accidents and other factors. One study from Quandrant Information Services found that the average discount for bundling home and auto is 16%, while bundling auto and renters insurance will save about 8% on an annual premium.

Raise deductible

Raising your deductible is a great strategy to know about when you’re wondering how to save money on car insurance. You should always opt for a $1,000 deductible for the best savings on your policy. At that level, you’ll pay a lower premium and won’t be tempted to file any claims for small potatoes events. Because doing so could unexpectedly jack your renewal rates up.

Final thought

Nobody likes to pay too much for auto insurance. By following the advice in this article, you can lower the cost of your premiums and keep more money in your pocket.