Our goal is to maximize your coverages at the lowest cost to you. Your money should be going towards way more important things than than your insurance carrier's pocket. Learning the different ways you can save money on auto insurance can help you hold onto more of your hard-earned cash.
1. Have good credit, or work on improving your credit!
Listen, everyone hates paying for insurance, and I may get some blowback from this, but as wealth increases your insurance cost is going to rise as well. Why is that? Insurance is the basis for a significant financial foundation.
Part of that foundation is....you guessed it - insurance. One of the most important ways to make sure you are getting the best rate is to have a good credit score. I know, I know... how annoying is that? But proper credit is so important these days. Your credit score directly impacts your insurance score.
Working on ways to improve your credit will be the best way, in the long run, to assure you are getting the best premium for your dollar - OR just make sure you're a client with us.
2. DON'T GET A TICKET!
Look, everyone is in a hurry, I get it. Life is busy and chaotic. But try not to get a ticket. Tickets can add a surcharge on your insurance premiums of around 20% and can stay on your insurance score for up to 5 years. That really adds up!
If you do get a ticket, take a class, make some calls. Try and get those bad boys reduced to non-moving violations!
3. Etch your VIN onto your windows
One of the best tricks to lower your insurance comes from etching your VIN into your windows. That's where 10% to 15% discount on comprehensive car insurance can come from, as told by NASDAQ.
Every vehicle comes with a unique vehicle identification number, or VIN. It's usually found on a sticker pasted onto the driver side door of a vehicle. This number can be the bane of a car thief's existence. Since selling or transferring a car's title requires running the VIN number through a federal database, it's an easy way of identifying whether a vehicle has been stolen in the past.
Etching this number into your windows makes your car less of a target for thieves and less risky to your insurer – hence the discount. Allstate explains more about how that works:
Do take caution to make sure you don't pay too much for VIN etching. Dealerships often offer to etch the VIN onto the windows of newly purchased vehicles, but at ridiculous prices. Here's Consumer Law Group with an explanation:
At those prices, even people paying just $400 per year on truck insurance could see a $20 VIN etching kit pay for itself within one payment cycle, and then save $20 every year thereafter.
Before etching your VIN into your windows, check with your insurance plan and make sure it offers a discount. Also, many newer cars already come with this type of security measure. Check your car's windows and windshield for any existing VIN etching.
If you can't locate a VIN number on your windows, don't get ripped off by unscrupulous auto dealers looking to pad their profits. Find a reasonably priced VIN etching kit by shopping online or in an auto parts store, and then just carefully follow its instructions. Afterwards, give your insurer another call and let them know about your car's brand spanking new safety feature.
4. Install a car alarm
Make life a little harder for vehicular bandits and save a little more green by installing a car alarm. The Rocky Mountain Insurance Information Association reports that this anti-theft measure can cut your bill by up to 30%.
If you're paying $1,400 annually for your car insurance, these little devices could save you up to $420. That's money well spent on keeping thieves away and your premiums low. Cost Helper estimates that the cost of buying and installing a car alarm falls between $110 and $800. This piece of added security would pay for itself within one or two years at those prices.
However, getting the full savings requires installing a passive car alarm, not an active one. The difference between the two is explained below:
- Passive alarms turn on automatically once the ignition gets shut off and all the doors get closed. The driver doesn't have to do anything to turn it on. The twelve states of Florida, Illinois, Kentucky, Louisiana, Massachusetts, Minnesota, New Mexico, New York, Pennsylvania, Rhode Island, Texas and Washington mandate that insurers must provide discounts for passive alarms, according to the Rocky Mountain Insurance Information Association.
- Active alarms only turn on when the driver activates them using a remote or other method. Since drivers might forget to turn on their active alarm, car insurance companies offer a smaller discount for their installation.
Cars Direct offers some great advice on getting a discounted rate for installing a car alarm. Here's a quick summary:
- Contact your insurance company about whether they offer this discount.
- Purchase and install the car alarm
- Collect information on the brand and type of alarm you purchased.
- Provide this information to your insurance company.
It's as simple as that.
5. Buy a new car
When it comes time to get a new ride, you can also get lower rates – sometimes thousands of dollars lower.
Insure rounded the cheapest and most expensive cars to take out a policy on in 2016. At the top of the heap sits the Dodge GT Viper, coming in at an average annual premium of $4,048. As for the cheapest, that's the Honda Odyssey LX at $1,113. Trading in your roadster for a minivan could net you $2,935 in savings.
Most people probably won't make such a dramatic swap as the one mentioned above. However, knowing what insurers look for when pricing a car's premiums can help you choose a vehicle and policy that won't break your bank.
An important thing you should note is that higher-priced vehicles don't necessarily mean higher rates. This article brings up the following useful advice:
"Insurance companies base rates on multiple factors, such as cost of repair, safety ratings, and the number of claims on a vehicle model. This is typically before taking into account your driving record, so you really can't guess where it's going to fall based on purchase price. You have to run the numbers."
So even if you get a deal on a foreign car, it may cost more to insure since the parts needed for its repairs will fall on the pricier end of the spectrum.
Another somewhat counterintuitive point raised in the article is that safer cars don't always translate into saving money on car insurance:
Say you get a big tank-like SUV. If you crash into an unoccupied VW Beatle, your car might not get a scratch but the smaller vehicle will likely get totaled – forcing your insurer to pay out a pricey claim.
Getting a new car can save you a healthy amount of money on your auto insurance rates, but only if you shop smart. Make sure you compare the cost of insurance for every vehicle you're seriously considering buying. It could save you a whole lot of money in the long run.
6. Buy a house
According to Consumer Federation of America, home ownership means some major savings: up to 47% on car insurance.
Naturally, you shouldn't take out a mortgage for the sake of lower car insurance payments. If you plan on settling down sometime soon, you can plan on some savings coming your way.
As the educated experts over at Property & Casualty tell it, most insurers provide homeowners with some hefty discounts. That's because car insurance companies see folks who settle down in a home of their own as more stable than renters. If a bank trusts you so much they'll loan you a dollar amount with a comma or two in it, your car insurance company trusts that you're less at risk for expensive accidents or tickets.
To get this discount, they recommend calling your agent after closing on your new home. Your car insurance provider/ agent will want to verify that you actually own your home, so make sure you have a copy of your property deed, mortgage documents, home insurance binder, or tax statement handy to send them. Hopefully you have all your policies with one agent, and if you do they will already know.
7. Turn 25
Reaching your 25th birthday means saving money on your car insurance. Males who hit this age usually see a discount of up to 20% and women around 12% to 15%, according to Cars Direct. For example, a male paying $800 annually on insurance will see rates fall down to $640, while a woman paying the same amount would only see premiums decrease down to around $670.
Car insurance rates fall after turning 25 due to younger drivers taking more risks. The CDC reports that teens and younger drivers speed, crash, and use their seatbelts less than older drivers. That makes them much more risky to insure, so car insurance companies hike their rates for these younger teens/adults.
The good news is that these rate discounts should kick in automatically once your policy renews after your 25th birthday. However, not all car insurance companies offer age-based discounts. Contact your insurer to find out whether it factors age into its rates. If not, it may be time to search for a lower price with a different company.
8. Get married
Tying the knot can mean saying "I do" to both the love of your life and lower insurance rates. You could see decreased premiums between 8% and 22% on average, as reported by the Consumer Federation of America. On a $1,250 annual bill, that could mean taking between $100 and $275 off your premiums and saving it for a honeymoon. Those are some great rates for you to have and hold when your bill comes due.
DMV.org provides a great article about the ins and outs of how and why marriage affects your insurance rates. It turns out that married couples get in fewer accidents than single people, as well as sustain fewer injuries when they are in a wreck. Thus, these drivers are a safer bet for car insurance companies, which gets reflected in the reduced rates for their policies.
To get this rate reduction, call your insurance company after saying "I do" and let them know about your newly minted marriage. Be prepared to send them a copy of your marriage certificate if necessary.
After that, the question comes down to whether you should combine auto insurance policies with your spouse. While this multi-policy or multi-vehicle discount can save you money, it can sometimes backfire and lead to higher costs. DMV.org breaks down what you should consider before marrying your policies together:
If your spouse uses their Ferrari for commuting 50 miles every day into work while you roll around in a mini-van, you should probably keep your policies separate for the lowest rates. On the bright side, congrats on marrying someone with such a sweet car.
9. Join the military
Being all you can be also rewards you savings on car insurance. Military members can receive substantial discounts on car insurance, but choosing the best option for reducing car insurance prices depends on your specific situation.
For instance, a service member gets deployed somewhere and can't take their car with them. As Veterans United suggests, they should consider suspending or reducing coverage for a vehicle they won't be driving:
If you pay $100 for the state minimum amount of liability insurance, $250 for comprehensive, and $300 for collision, cutting down to just liability could save you $550 on insurance bills while you're away from your vehicle. To get that discount, just call your insurance agent and let them know you're interested in decreasing your amount of coverage.
Entering the service also gets you access to special discounts from almost every insurance company. However, it also means you can take advantage of plans specifically designed for military members, like USAA. According to its website, USAA members save an average of $376 per year on car insurance, receive a 15 percent discount when garaging their car on base, and can get a 60 percent discount if your vehicle gets put into storage for more than 30 consecutive days.
10. Switch jobs
Changing careers can cut your premiums in some cases, sometimes up to 18 percent as told in an article published by Quicken. If someone makes a jump from a career insurers find risky to one they support, that could mean going from a $2,000 annual bill to $1,640.
Think about it like this: If you're a NASCAR driver, your insurer worries your speed demon antics could extend off the track and increase your likelihood of a crash. That means you'll end up paying more. Since most people aren't race car drivers, Kastner Insurance compiled a list of the professions that pay the highest and lowest rates for car insurance:
Pay high amounts for car insurance:
- medical practitioners
- social workers
- professional engineers
- business owners
Pay low amounts for car insurance:
- school teachers
- police officers
Even if you switch into a career that pays more for car insurance, you can still compensate for this with special savings. Going back to that Quicken article, many insurance plans offer discounts for certain profession. Farmers Insurance in California offers a 15 percent discount for licensed physicians, so a doctor paying $2,500 for insurance every year could cut their rate down to $2,125.
11. Move to a different state
Moving across the country can be stressful, but the chance of getting cheaper car insurance might ease some of your pain.
Every state uses its own specific rules, regulations, and laws for governing how insurers can set their rates. That means insurance rates vary wildly from place to place. For instance, The National Association of Insurance found that for the fourth consecutive year, Michigan "wins" for the most expensive car insurance. Michigan's average premium is around $1,076 higher than the national average annual premium. Who is second? Louisiana, yes we may some of the highest rates in the nation as well coming in around $1,921 for one auto!
So what happens if someone with an average rate moves from Jersey City to the land of Idaho? They save a whopping $695.35 on their premiums.
Of course, you shouldn't plan your move around where you'll get the best auto insurance rates. If you find yourself moving to Boise or somewhere else with cheap car insurance anytime soon, letting your insurer know about it will save you a pretty penny.
12. Graduate from college
Education can open doors in life, but can also provide better car insurance rates. The Consumer Federation of America found that even if two people were equal in all aspects other than education, prices for car insurance could be up to 45 percent lower for someone with a college degree. On a $1,600 annual premium, that would come out to $720 in savings.
Kastner Insurance offers some tips for hunting around for the right car insurance company:
"The best way to avoid paying higher rates based on educational degree or achievement is to check with local or online auto insurance companies and see if you must provide education level in order to receive an auto insurance quote. If they do require it as mandatory, then most likely they will be using it as a criteria to determine your pricing, so move on and try to find one of the 40% that do not! If you have a higher education degree, you may want to ask around and see if there are auto insurance companies that will offer discounts on pricing!"
If you recently graduated college, call your insurer and show off your fancy new diploma to see if you qualify for lower rates. Folks without a degree can find reduced premiums by shopping around for a car insurance company that doesn't base their prices off of schooling for reduced rates.
13. Comparison shop OR have a broker do it for you...hint, hint...yes we are talking about us!
When it comes to auto insurance, shopping around can save you some serious green. J.D. Power found that switching insurers saved people an average of $388 in 2015. That's a pretty great incentive for doing a bit of looking around.
For advice on shopping around, Quote.com polled 39 different experts in the insurance field. Here's their advice for finding the best rate available:
"Be it online, with direct writers or local insurance agents, you have more options than you think. But don't be fooled by coverage cuts – if one quote seems too good to be true, make sure you check that your requests for adequate coverage are being met." – Katherine Jop, VP of Operations, Chase and Lunt Insurance
That means don't just focus on the price. See whether that specific company offers the level of comprehensive, collision, liability, or other form of insurance you need to make sure you're adequately covered.
"Don't choose your insurer because you like a company's ads. Compare at least three quotes for your insurance, and make sure that you're comparing the same coverage levels. You can save hundreds of dollars a year by shopping around." – Janet Ruiz, California Representative, Insurance Information Institute
14. Get good grades
Budding scholars can get rewarded for making the grade with good student auto insurance discounts. These savings can be substantial, which helps keep the high rates for young drivers affordable. For instance, State Farm will cut premiums up to 25 percent for students with a high GPA – that's $400 off a $2,000 plan.
As explained by DMV.org, statistics show that these high-performing students get in wrecks less than their peers. That makes insurers see them as less risky to insure, and are more likely to offer them a better rate on car insurance.
The article goes on to explain that getting a good student discount requires:
- Being younger than 25 years old
- Full time enrollment in high school, college, or a university
- Maintaining a 3.0 GPA, the honor roll, or Dean's List
- Showing other proof of good performance if home schooled
If your insurer offers this discount, getting it just takes calling them up and sending over a report card or letter signed by a school administrator. Do this every time your policy renews to maintain your low rates.
15. Drive less
Low-mileage discounts let you put more money in your bank account in exchange for putting fewer miles on your car. An article in the Huffington Post found that someone who drives 5,000 miles per year can pay 8.4 percent less than someone driving 15,000 annually. That could take your rates from $1,300 per year to $1,190.
As for the reason behind the discrepancy, it comes down to (get ready for a shocker)—risk. The article quotes Loretta Worters, Vice President of the Insurance Information Institute on the subject:
"It's all about risk," she says. "The more miles driven, the greater the chances of being involved in an accident."
If 5,000 miles sounds way lower than the typical mileage you put on your car every year, there's still hope for a low mileage discount. Some specialty plans like Esurance Pay Per Mile promise reduced rates for drivers that put fewer than 10,000 annual miles on their odometer.
To find out whether you should look into these plans, first calculate how many miles you drive per year. Insurance provider, Direct Line, offers a great tool for taking how many miles you drive in a typical day and converting it into a yearly figure.
For example, say you drive 20 miles on an average day. According to Direct Line, that would come out to approximately 8,000 miles per year. Factor in a few hundred miles of wiggle room for unexpected trips or other occurrences, and you can tell you would probably save some money with the Esurance Pay Per Mile program.
After doing this basic research, you should be ready to call your insurer and find out whether you can qualify for its low mileage discounts, or look around for a different company if it doesn't offer reduced rates for reduced driving.
16. Take a defensive driving course...sometimes
Proving you know the rules of the road (here it comes again) makes you seem less at risk of filing a claim for insurers. You can show them your knowledge by taking a defensive driving course, and knock around 5 to 10 percent off your premiums, as told by The Law Dictionary. That's discounts of between $90-180 on a $1,800 annual premium – not bad considering most online courses cost around $30.
As these legal specialists explain, defensive driving courses go over topics ranging from proper yielding procedures to what you should do after getting in a wreck. These courses can either be taken online or in person.
To get this discount, search online for a defensive driving course approved in your state. Typically, the website for your local DMV will list several options. Just sign up and complete the course.
After completing your defensive driving training, you'll receive a certificate proving that you passed the class. Ship a copy of this off to your insurer, and they'll apply the discount whenever your policy renews. However, you can only get this type of rate reduction once every few years depending on where you live.
17. Let your insurer track how you drive
It may sound creepy, but letting your insurance company install a tracking device in your car can save you around 10 percent on your premiums on average – that's $190 if you're paying $1,900 a year. However, some insurers offer absolutely ridiculous discounts for this specialized form of insurance, typically known as usage-based insurance (UBI for short). State Farm's Drive Safe and Save program offers up to 50 percent off your premiums, while Nationwide's SmartRide program boasts up to a 40 percent reduction.
Usage-based insurance tracks how you drive using a device that plugs into your car, your mobile phone, or your car's existing systems like OnStar. It uses this information to supplement what it already knows about you – your age, the type of car you drive, marital status, and other factors – to better estimate your risk and set your rates.
Basically if you drive safer, you pay less. UBI plans determine whether or not you'll save by monitoring certain driving behaviors.
Here's what most UBI plans typically track:
- When you drive: More accidents occur at night or in rush hour, so daytime driving when there's not much traffic means reduced rates.
- Where you drive: If you don't regularly add triple digits onto your odometer, you may pay less. After all, cars in garages don't get in crashes.
- How you drive: Hard braking and acceleration increases the likelihood of a wreck. Be gentle with your gas and brake pedals, and your premiums will be gentle with you.
If you're an infrequent, safe driver who avoids rolling around after dark, UBI would probably save you some money. Check with your insurer whether they offer UBI to determine if this type of insurance is right for you.
BONUS 18: Raise your deductible
Comprehensive, collision, and a few other types of insurance include a deductible, which is how much of the cost you'll be on the hook for in an accident before your plan starts paying out. Raising your deductible means your insurance plan is less likely to have to pay out when you file a claim, and will cut your rates in exchange.
The financial gurus over at Five Cent Nickel offer a great explanation of how this premium reduction works:
"For example, let's say that you reduced your six-month car insurance premium from $600 to $500 by increasing your deductible from $250 to $500. So in this example, you'd save $200 per year in premiums, but you risk paying an additional $250 out of pocket if you file a claim."
In this case, you're basically betting that you'll avoid accidents for two years. At that point, you would have saved $400 on your rates, enough to cover your losses by $150 in case you get in an accident, and pay out $250 so you can meet your deductible.
However, sometimes cutting just a little from your premium can hurt you in the long run. The article's author offers this personal example:
"When I called my insurance company asking about raising my deductible from $500 to $1,000, I was told that the savings I would earn on my premiums would only be $27 every six months. At that rate, I would have to be claim-free for about ten years in order to recoup the increase in risk I took by raising my deductible."
Before raising your deductible, perform a cost-benefit analysis over how long you'd have to go without an accident before seeing any substantial savings. Find this out by asking an insurer how raising your deductible would affect your rates. If you can save enough money within a few years to make up for any losses in case you do get in a car accident, this could save you some cash.
BONUS 19: Bundle insurance plans
These companies offer some steep discounts for the privilege of your business as well. Allstate offers up to 25 percent of auto insurance rates and 35 percent off home insurance premiums when you insure both of these plans through them. Meanwhile, State Farm will cut you up to a 20 percent discount for adding two or more cars onto an existing policy, which would work out to $300 discount on a $1,500 annual premium.
DMV.org offers a breakdown of all the different things you need to qualify for a multi-vehicle policy or one provider insurance bundle.
If you're looking to just insure all your cars on one plan, here's what you should know:
- All the cars insured under a multi-vehicle policy must be under your name. That means if your spouse has a separate policy for their car, they have to switch it over to you.
- These cars must only be driven by the policy holder, or people in their household.
- All cars must currently be in use, not in storage.
If you can check all the boxes listed above, you can save on your car insurance by calling up your provider. The savings should kick in whenever the policy renews.
For those interested in combining multiple types of insurance with one company, it's a simple process as well. Call up your insurer, and if they offer multiple lines of insurance see how much you can save by bundling. If the company's offer seems unsatisfactory, it's time for some shopping around.
You can pay less for car insurance!
Keeping these tips in mind can help you reduce your rates and save hundreds of dollars. Whether by purchasing rate-reducing devices, checking off premium-slashing life milestones, or putting in some elbow grease to keep your auto insurance costs down, you can have more money to spend on a swanky vacation or paying down debts.
Schedule a consult with Kastner Insurance today!
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