Some steps you can take to keep from paying too much in premiums, but actually even bring them down a little.
In the coming year, car insurance rates are likely to increase for many drivers out there. Rates could go up anywhere from 3% to 12%. Why? For one thing, inflation has raised the price of everything, including the price we pay for new and used vehicles, as well as healthcare. The auto insurance field has also undergone some major disruption thanks to the COVID-19 pandemic.
Both those things translate directly into higher insurance premiums for drivers. Also, as technology in vehicles grows ever more prevalent, sophisticated, and costly / difficult to repair, the cost of those repairs goes higher, and — you guessed it — those costs get passed right along to you.
Plenty of people already know about what you can do to keep your insurance premiums from going up too much — maintain a clean driving record, drive a cheaper vehicle, maintain good grades and / or a good credit rating — but there are some other steps you can take to be prepared, and not only keep from paying too much more in premiums, but actually even bring them down a little.
1. Increase your deductible
One of the quickest ways you can drop your monthly insurance premiums is to raise your deductible. Your deductible is the amount taken out of the money you receive when you file a comprehensive or collision claim. You can choose this deductible when you are choosing a policy, and you can always change it later. Because you take on more of the costs in the case of a claim, your premiums will be lower. It also means you’ll be less likely to file a claim for minor costs, because the actual repair costs won’t be that much more than your deductible would be. By raising your deductible from $200 to $500, you could reduce your premiums by 15 to 30 percent.
2. Drop comprehensive and collision coverage for older cars.
Another common way people lower their insurance premiums is to drop comprehensive and collision coverage for an older car. If your car is on its last legs, chances are its Kelly Blue Book value has dropped dramatically. In a case like this, you might be paying more for insurance than the car is worth. The typical rule of thumb for dropping comprehensive and collision coverage is if the car is more than 10 years old and valued at $3,000 or less than 10 times your annual premium. When your insurance policy comes up for renewal, review it to make sure your premiums are actually cost-effective.
3. Compare insurance quotes
Speaking of reviewing your insurance policy: one thing you can do every year or so to bring your premiums down is to compare insurance rates with competing companies. Most people stick with their same insurer for years and years, in no small part because it’s “easier,” but it’s quite likely you could find the same amount of coverage, or better, for the same money. You might even save some money. Fortunately, there are plenty of tools out there to help you compare insurance quotes.
4. Bundle car and home insurance
Many insurers offer opportunities to bundle your car insurance in with your other policies, such as homeowner’s insurance. If you’re a homeowner and have separate policies for your home and automobiles, chances are good you’re paying more than you need to. Insurers will often give discounts for bundling multiple policies together, and these savings can range from 5% up to 25%.
5. Take a defensive driving course
If you successfully complete a defensive driving course improved by your insurer, you could save some money on your insurance premiums. You could save as much as 10% on your payments over the next three years by taking the course. You can search for a course near you, or ask your insurer about the possibility of a lower rate.
6. Let your insurer monitor your driving
Some insurance companies offer the option of putting an electronic tracking device in your car. These devices will track how many miles you drive, what your driving behavior is like (such as speeding, braking hard, etc.) and pass this information along to your insurance company, which may be able to offer you a lower rate. The device could also let insurers know if you’re not driving very much at all, which could qualify you for a low mileage discount. For people working from home and rarely using their vehicles, this could be a great way to lower your premiums.
7. Inform your insurer of any changes in your circumstances
The average car insurance company offers around thirty different discounts to policyholders, depending on their circumstances. That’s why you should let your insurer know if there are any significant changes in your life circumstances. For example, if you recently graduated with a college degree, got married, changed jobs, or had a significant change in your income, you might qualify for a discount. Ask your insurer about your options.