Per the Insurance Information Institute (III), auto insurance is mandatory in most states in the U.S. It covers medical expenses and property damage resulting from a car crash. Typically, auto insurance companies break down the total cost of auto insurance coverage into small regular payments called premiums, which vary depending on several factors, including state of residence, driving history, car type, and additional services, such as roadside assistance. American drivers spent $2,388 on car insurance in 2020, as reported by Business Insider. Fortunately, you can take certain proactive measures to lower your car insurance premiums. These measures include:
Practice Safe Driving
In general, insurance companies set your premium according to your risk. If you’re considered a high-risk driver, your insurance company will charge you more to cover the risk of frequent claims. The National Safety Council (NSC) states that most fatalities in road accidents happen due to alcohol, speeding, and lack of safety belt use. A clean record means avoiding DUI charges, following traffic signs, wearing your seat belt, paying your parking fees, and driving within speed limits. With minimal traffic violations, you can reduce your auto insurance premium.
The Insurance Information Institute (III) recommends obtaining quotes from different insurance companies, especially when you’re about to renew your policy. You can contact the companies directly, visit their websites, or consult the state insurance department for price comparisons.
When shopping for insurance coverage, be sure to pick a financially stable company. You can check each auto insurer’s rating on sites such as AM Best, Fitch, and Standard and Poor’s. While some insurance companies work with agents, others do not. Take your time to confirm details and ask questions until you are satisfied. Your family, friends, and online review platforms are also excellent sources of information.
Get Higher Deductibles
A deductible is the amount of money you pay out of pocket before you receive compensation from your insurer. Deductibles vary significantly, from $250 to $1000. To lower your premiums, increase your deductible. However, make sure that you have cash available to pay the higher deductible when an emergency arises.
Most auto insurers offer low mileage driver discounts, which you can use to lower your automobile insurance premiums. To become a low mileage driver, you simply have to drive less. Some of the things you can do to achieve this goal include using public transportation, limiting unnecessary travel, embracing online shopping, and living near your workplace.
Work on Your Credit Rating
Insurance companies also use credit score ratings as an indicator of risk. Insurers generally assume that people with low credit scores are more likely to file claims compared to people with higher credit ratings. While the accuracy of this assumption is debatable, it’s never a bad idea to improve your credit rating and you may be able to reduce your auto insurance premium as a result.
Use these five tips to lower your car insurance premium. If you have more questions about your auto insurance coverage, contact First Insurance Solutions today.