Top Ten Factors that Affect Your Car Insurance Premiums

What Are 10 Ways to Lower Car Insurance Costs?

Owning a car is now not a luxury but a convenience we all anticipate having. We do everything possible to safeguard our car from any mishappening. One such way is to buy insurance. However, sometimes premiums may burn your pocket when they are too expensive. If you are wondering why your car insurance is so expensive and how to get cheaper car insurance, here are a few ways to help you reduce your car insurance premium or get a cheaper one.

Key Highlights

  • An average good driver in the US spends $1,556 a year on car insurance. He can save a lot if he reduces 5 %to 10% on it. 
  •  While shopping for car insurance from any website or person, you must ensure it is trustworthy.
  • Your credit score also impacts your insurance premium. Therefore, it is good to have a decent credit score to have decent premiums on your insurance.
  • You can get cheaper car insurance without sacrificing your coverage by shopping around.

How to get cheaper car insurance?

  • First, conduct comparison shopping

While taking car insurance, the first and best thing you can do is compare the insurance providers and the rates they provide. You can search various websites or consider contacting an independent agent for the best price. When you go to an independent agent, they typically sell five to eight insurance companies, and here, you get the chance to choose the best among the options that suit your needs. It is always good to compare at least three insurance companies before settling on one. Whether getting your insurance for the first time or renewing your coverage, it is always good to look for your savings if you can buy after comparing rates from several insurance companies.

  • All-in-one insurance policies

You can also group and purchase all your policies from the same insurance. It is a cheaper option to buy separate policies from different companies. Many insurance companies offer discounts and deals to policyholders who bundle their policies in one place. By placing all your policies in one place, you get a discount and save time as you have one account to manage. By bundling the policy, you get a multi-policy discount and save up to 5% to 25% on your auto insurance.

  • Increase your deductible

Let's first understand what a deductible is. It is the amount you agree to pay before your insurer makes any payment toward your loss. If you have liability insurance, you don't have a deductible because these insurances cover losses you cause to others in an accident. The larger the deductible amount, the lower your insurance premiums are. If you raise your deductible, you lower your insurance premium. According to the Insurance Information Institute, if you increase your deductible from $200 to $500, you can reduce the cost of your collision and comprehensive coverage by 15% to 30%. However, considering your financial appetite, it is also important to note that you must increase your deductible only.

  • Don't make claims for small expenses.

The primary objective of insurance is to provide coverage for any damage, but it is good to skip the claim if you have a broken mirror or a small scratch. Again, the best part is if you do not make any claim for consecutive years, you can also get the no-claim bonus. No claim bonus again helps you with your insurance premium to get discounted by at least 50%. The repair cost of a broken mirror is much less than the amount you saved with the no-claim bonus discount.

  • Keep your driving record clean.

If you are a new driver, you might get the best or cheapest rates possible. Most auto insurance companies have different criteria where a safe driving record, including no violation of traffic rules or not causing accidents, might receive reasonable rates on their insurance. Some insurance companies even consider you a safe driver if you have never made a claim, no matter whose fault was an accident. Here, you must understand that a speeding ticket may stay on your record for at least 5 years, or a DUI will remain on your record for at least 10 years.

  • Choose your car carefully. 

Your car is one of the key factors an insurer focuses on while setting the insurance premiums. A sports car might turn your head and hit your pocket hard as it majorly influences the insurance premium. Luxury sports vehicles and high-performance cars usually have high insurance costs due to higher repair expenses and theft risks. If you go for a sensible car, it will be more affordable for you regarding insurance premiums. A simple concept to determine your insurance premium is to remember that the more expensive the repair of the car is, the more expensive the insurance premium. The upgraded trim, cutting-edge audio system, and extra technology could also add up.

  • Improve your credit score.

You might wonder why my credit score is important when buying car insurance. In some states, a credit score is an important part that insurance companies consider while providing car insurance. The simple idea behind this is that insurance companies think that some people with good credit scores make responsible driving decisions. If you belong to those states where credit score plays an important role in determining insurance policies, then you must work hard on improving your credit score by paying bills on time and decreasing your credit utilisation ratio. You must also ensure that the information on your credit score is accurate.

  • Sign up for a safe driving program.

If you don't have a good driving record or got into an accident recently, there'll still be room to get out of it. It doesn't matter what your driving record is; you can still demonstrate your safe driving habit with a safe driving program provided by your insurer. This can be a proactive way to be a responsible driver without waiting for your insurance rate to lower after an accident. By participating in such safe driving programs, you can save up to 30% on premiums for the lifetime of your policy. You can get a discount by signing up or participating in such programs. The insurer observes your driving habits and also rewards you for safe driving. The insurer tracks your driving behaviour, like breaking, acceleration, night driving, and how much you drive.

  • Look for the discounts you qualify for

The insurance company offers various discounts to get the best price on your car insurance. The discounts offered are going paperless to signing up for a new policy before the old one ends, buying your policy online, enrolling in some preferred payment options like automatic payments, bundling your car insurance, being a good student or being away at school for teens or young driver, being an active retired or reserved member of the military. Most of the insurance companies offer discounts if you park your car in a garage or how much you drive.

  • Consider pay-per-mile or telematic insurance.

Your insurance company generally give you a questionnaire to complete when you sign up for auto insurance. It asks you about the miles you drive per year. You generally pay high insurance if you use your vehicle more often. If you drive only a few miles or are a careful driver, you can save more money with pay-per-mile or telematic insurance. If you drive less than 10,000 miles in a year, you will probably have lower insurance premiums. However, it is also important to know that the pay-per-mile program is not available in all states or for hybrid or electric vehicles.

Final Words

The auto insurance premium will continue to rise, and a small mistake from your side can make you pay even more. If you are here to learn how to get cheaper car insurance, we have provided you with tips to reduce your car insurance premium wisely and save a lot of money on it. You must understand that buying a car insurance policy is an expensive affair, and it can easily make your hard-earned money vanish if you don't use a proactive approach to saving on the premiums.

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18 Nov, 2023


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