Save Money on Car Insurance in These 4 Ways (No Coverage Reduction Required)
Rising car insurance costs coincided with more people returning to work — and to the roads — in the aftermath of the COVID-19 pandemic. With the lofty price of cars, their maintenance and their fuel, many drivers are looking for ways to cut down on their vehicle spending, starting with insurance.
Check Out: 10 Affordable Compact Cars That Will Last 300,000 Miles
Read Next: 5 Genius Things All Wealthy People Do With Their Money
According to research by The Ascent, the overall average for annual car insurance premiums has jumped to $3,017. Some Americans have seen their auto insurance increase by nearly 30%, even for those owning older models with no history of accidents or tickets, per Newsweek.
Not everyone can use public transportation, carpool or walk to work, but it’s getting to the point financially where many must. Luckily, there are ways that you can save on auto insurance without reducing or cutting off your insurance altogether.
Here’s four dos and one don’t to save money on car insurance, according to CNBC Make It.
Sponsored: Owe the IRS $10K or more? Schedule a FREE consultation to see if you qualify for tax relief.
Do: Switch to a Different Insurance Provider
Once bought, many drivers stick by their auto insurer even if they are overpaying. As Forbes reported, the Insurance Information Institute (III) recommends getting quotes from at least three insurers when you are deciding on a new provider. Those looking to buy car insurance or switch to another provider should be treating it like shopping for a car.
Sites like EverQuote, or any of the major national and regional car insurance company apps, will provide you with a vast array of insurance options and can potentially save you hundreds of dollars a year. It might be wise to look into pay-as-you-go insurance, too.
Learn More: 10 Cars That Outlast the Average Vehicle
Do: Improve Your Credit Score
According to Experian, only eight states — California, Hawaii, Maryland, Massachusetts, Michigan, Nevada, Oregon and Utah — limit the use of credit-based insurance scores when deciding on auto insurance rates and whom to insure in the first place.
If you live in any other state, a low credit score could cost you hundreds a year in car insurance. In fact, improving your credit score from a “poor” rating (below 580) to an “excellent” one (above 800) can get you more attractive rates — and can save you an average of $2,198 a year on premiums, per The Ascent.
Do: Bump Up Your Deductible
If you can afford to pay a higher deductible and out-of-pocket costs in the event of a claim, you’ll save on car insurance premiums. It involves taking a risk, however, because you have to honestly consider your driving history and the likelihood of filing a claim.
Speaking to CBNC, Loretta Worters, vice president, media relations at the III recommended it if cutting costs is a priority. “You’re going to have a bigger outlay [in the case of an accident], so you want to keep that in mind,” says Worters. “But you can save money that way.”
Do: Hunt for Insurance Discounts
You typically can’t negotiate your car insurance rate, but you’re not contractually obligated to stay with your insurance company either. That’s why it’s more important than ever to get any possible discount an insurer is offering. You can often get a discount on your rate by doing your research.
Car insurance discounts can help you save hundreds of dollars. Being a defensive driver, the first owner of a new car, getting an anti-theft device installed, using alternative energy or being a member of the federal government, the military or a certain school or club may mean a discount depending on the discount rules of the underwriter.
Don’t: Cancel or Reduce Your Insurance
As more workers return to the workplace, many are rethinking their car use and trying to figure out how they can trim or cut-out insurance premiums entirely. If you rarely drive, have an old, high-mileage car — or a vehicle that is worth less than your insurance policy — you might think it’s a smart idea to drop your insurance policy.
Worters advised against this option. Simply put, you don’t want to be caught under-insured. “There are always ways to save money, but one way not to do it is to reduce your coverage,” she said. “The worst thing to do would be to lower your liability limits.”
More From GOBankingRates
This is One of the Best Ways to Boost Your Retirement Savings in 2024
6 Things You Should Never Do With Your Tax Refund (Do This Instead)
This article originally appeared on GOBankingRates.com: Save Money on Car Insurance in These 4 Ways (No Coverage Reduction Required)
