5 Ways to Cut Down on Car Insurance Costs

Author:  Jessica

Car insurance is one of those bills that people hate to pay, but are required to have in the United States to legally drive on streets and freeways. For many consumers, they pay their monthly or yearly insurance bill without any thought to the coverage inside. Does a 10 year old car need to have the same coverage as a 1 year old car? Absolutely not. There are a number of different ways to save on car insurance costs.

Increase the Deductible

When shopping for a car insurance policy, many consumers look for the lowest deductible possible; it makes sense that you would want your out of pocket expenses to be as small as possible after a car accident. However, a low deductible normally equals a high monthly premium for the convenience. By increasing the deductible, the premium will naturally lower.

Be cautious when increasing the deductible though; you will need to evaluate what monetary amount is feasible for your personal situation if you have to actually pay the deductible amount in the event of an accident. Careful planning and budgeting will help you find a happy medium between the deductible and your monthly premium.

Wrong Coverage

When a consumer finances a new car, the lender will require a collision and comprehensive coverage package on the vehicle to protect the investment during the financing period. Many consumers continue with this coverage even after the vehicle is paid in full. Most financing periods are between 3 and 5 years; after this amount of time, the collision and comprehensive coverage can be significantly lowered on the insurance policy since the car has a lower resale value.

In fact, cars that are nearing 10 years and older can actually have this coverage pulled completely off the policy. If the vehicle is in an accident, it would be financially better to repair the car yourself, rather than going through the insurance company. Avoiding a claim with the insurance company will help you retain your good standing and inexpensive monthly payment structure.

Keep a Strong Credit Score
 
Insurance companies need an internal business gauge to determine the likelihood of an individual claiming on a policy. As a result, many companies rely on credit scores to calculate each policy's premium amount. If a credit score is low, it is possible that the insurance company will increase the monthly rate accordingly.

Keep track of your credit history by checking it at least on a yearly basis; consumers that scan their credit history for mistakes will reap the rewards of a smaller car insurance bill. In addition, consumers should pay their bills on time; any late or default accounts will reflect on the credit report and will be visible to the insurance companies.

Look for Discounts

Many insurance companies have incentives for good drivers; ask your individual carrier about their discount offerings. Some discounts that can be applied include driver training completion, student academic achievement, and multiple policies. Many companies offer discounts based on the amount of years without an accident. If you are a good driver, this is a discount that deserves your attention.

Another discount type is simply based on yearly mileage. If you are a person that only drives less than 7,000 miles in a year, many companies will discount their premiums; the lack of driving during the year lowers the chances of an accident. You will save insurance and gas money by driving less during the year.

Use Tracking Devices

Today's technology has given a rise to tracking devices. Some insurance companies offer these devices to customers; by attaching the device to the car, it will send out signals about the driver's speed and daily driving habits. For good drivers, these devices are proof of the daily caution used on the road. Heavy discounts can be earned on monthly premiums by agreeing to use the device.

One insurance area that many people overlook is the use of short term car insurance for short term driving. For example, if you borrow someone's car, or drive a rental vehicle, who is liable for damages if an accident occurs? Although you may be insured on your own personal vehicle, that will not extend to a rental car or to your friend behind the wheel.

Short term car insurance can be allocated for these situations, from a one day policy to a full six months. You will be fully covered, based on the chosen coverage, in the event of an accident. This insurance type is often overlooked, but is extremely helpful in a bad car accident.

Having a limited budget means being creative with bills that can be modified; car insurance has many options that can be changed, as opposed to an electric bill that must be paid in full. If you have concerns regarding the correct coverage of your vehicle, contact your local insurance representative. He or she can guide you to the best coverage.

Always keep in mind that there are many insurance companies in the marketplace. Figure out the best quotes and why you're saving on car insurance. A good insurance company will try to cater to your needs as much as possible.