Given how expensive car accidents can be, it is always in your best interest to have a car insurance policy in place regardless of how much you may pay for coverage. Not only will you be on the hook for covering accidents you cause with an uninsured vehicle, but you can also receive tickets with high fines if you are caught driving without coverage.
Car insurance can be expensive in many cases, but if you know which steps to take, the cost does not have to be so high that it creates a financial burden. There are many car insurance policies you can buy that meet the minimum insurance standards in your state while still providing enough coverage for your vehicle. However, you do not necessarily have to choose a cut-rate policy to get insurance that you can afford. Below, learn how to reduce your insurance bills the easy way by qualifying for discounts and taking other cost-cutting measures.
Tip 1: Ask Your Agent About Discounts
Drivers who present a lower insurance risk are usually eligible for a variety of discounts. Most discounts are somewhat modest, but they can quickly reduce the cost of a driver’s insurance premium over time. Great insurance discounts to ask about include the following:
- Good student discounts – Young drivers who had a high enough grade point average (GPA) in school can usually qualify for a discount. Parents may also get this discount if their policy covers any current students who maintain a good GPA.
- Discounts for vehicle safety features – Vehicles with airbags, anti-theft devices and other equipment will usually give a driver a discount.
- Discounts for taking a driving class – Drivers can oftentimes take a driving refresher course or a defensive driving class voluntarily to get a discount on their coverage.
If you currently have another insurance policy, like life insurance or even cheap homeowners’ insurance, in addition to car insurance, you may also get a discount by consolidating all of your coverages with a single provider. Many insurance agents offer a discount for bundling services when you have more than one type of coverage. Not only does this mean lower costs for you, but it also simplifies your payments, as most agents will bill you for all of your services at once.
You may hear this type of savings referred to as a multi-line discount. The exact rate of savings varies by company, but you can expect to receive a discount of anywhere from five to 25 percent if you combine coverages with a single insurance provider.
Tip 2: Check Out Rates Before Buying Your Next Car
Are you in the market for a new vehicle? In addition to checking out vehicle specifications, you should always get estimates for how much it would cost to insure each car you are comparing. You may not have considered the cost of insuring a new car until after you have already purchased it.
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However, the cost to insure a car can vary drastically depending on the model of the car you choose, as well as its age and condition. Furthermore, vehicles with a better safety record are usually much cheaper to insure than models with limited safety features or a poor reputation for reliability.
Tip 3: Reduce Points on Your Driving Record
If you have too many demerit points on your driving record, you may notice an increase in your insurance premiums. It is common to receive points on your driving record for moving violations such as speeding, texting while driving, reckless driving and other offenses. Most of the time, moving violations will affect your insurance rates for at least three years, but more serious offenses, such as driving under the influence (DUI), can negatively impact your rates for a longer period of time.
Many moving violations will drop off your driving record as time goes on, but the laws in some states allow you to take a driving class or complete other steps to eliminate points on your record. In New York, for example, you can take a point reduction class, which will allow you to remove up to four demerit points from your record.
The policies and procedures for such classes vary greatly from one state to the next. Check local Department of Motor Vehicles (DMV) policies in your state to see what your options are for point reduction.
Tip 4: Tell Your Agent If You Begin Driving Less Frequently
When you sign up for an insurance policy, you will have to give your agent an estimate of how many miles you drive per year. This allows the agent to set a fair rate based on how frequently you drive. If you begin driving less often for any reason, you may be overpaying for coverage if you do not inform your agent of the change. Simply put, the less you drive, the less risk you present to an insurance company because you will not be as likely to make a claim.
Tip 5: Check Your Credit Report
A poor credit report can affect many areas of your life, including how much you pay for car insurance coverage. While a bad credit report does not necessarily mean you are a bad driver, insurance companies correlate low credit scores with a higher insurance risk. Most insurance agencies will use a credit-based insurance score to determine which rates you pay for insurance.
Credit-based insurance scores are different from credit scores, but agents use information from your credit report to determine your credit-based insurance score. For that reason, any negative factors that affect your credit report may also be hurting your chances of getting a great car insurance rate. You are more likely to get a high insurance rate if your credit report contains any of the following:
- Late payments
- A high amount of debt and a low amount of available credit
- A short credit history
- Too many credit inquiries
- Debt collection on any of your accounts
Because a bad credit score can have such a significant impact on your car insurance rates, it is important to stay on top of your credit report. Improving negative information in your report takes time, but it is well worth the effort.
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