Jennifer Moore
Vehicle insurance is required in almost every state, with only New Hampshire and Virginia serving as outliers. And while no one ever raised their hand to say they love paying for car insurance, it is definitely something you’d wish you had in the event of an accident.
That said, car insurance doesn’t come for cheap. NerdWallet suggests that most people pay about $143 per month, or $1,717 per year for full coverage insurance on their vehicle. And that’s just the average, with many people paying far more.
In this article, we’ll discuss various strategies to help you reduce your car insurance costs. After all, while you need this protection, why pay more for it than you have to?
5 Tips to Lower Car Insurance Payments
With about 78% of Americans living paycheck to paycheck, finding ways to cut down your monthly expenses is often a big priority. Let’s look at five ways you can lower those car insurance payments.
- Bundle Auto Insurance Policies
Bundling multiple insurance policies, such as auto and home insurance, can significantly lower your overall premiums. Insurance companies often offer substantial discounts to customers who combine their policies, sometimes saving you up to 25%.
Common bundles include auto and home, auto and renters, and even auto and life insurance. These bundles simplify your bill-paying process and provide a financial benefit, making it an easy and effective way to reduce your car insurance costs. For example, having both your car and home insurance with the same provider might save hundreds of dollars annually.
- Increase Your Deductible
The average deductible on car insurance is $500. Increasing your deductible can help lower the monthly premiums you pay for car insurance. By choosing a higher deductible, you agree to pay more out of your own pocket if you file a claim, which reduces the insurance company’s risk and lowers your premium. The benefit is the immediate reduction in your monthly payments.
However, the downside is the higher cost you’ll need to cover if an accident happens. When deciding on the right deductible, take a close look at your current financial situation to confit, you can afford the higher amount in case of a claim. This approach can save money monthly but requires careful consideration of your ability to pay the deductible if needed.
- Improve Your Credit Score
You may wonder what your credit score has to do with the amount you pay for car insurance. After all, you’re not applying for a loan. But there is indeed a correlation. Insurers look at credit scores because they offer a prediction of the likelihood of filing a claim. So, a higher credit score can lead to lower premiums.
To improve your credit score, pay bills on time, reduce outstanding debt, and check your credit report often for errors—you can get a free copy of your credit report once per year at AnnualCreditReport.com. Maintaining a good credit score not only helps lower your car insurance rates but can also positively impact your overall financial health, helping give you access to lower rates and better borrowing terms for future loans.
- Maintain a Safe Driving Record
Aside from purchasing a less expensive car, your driving record plays the biggest role in how much you will pay for auto insurance. Just one speeding ticket can increase your car insurance by about 24%. So, a clean driving record will significantly lower your rates.
To avoid traffic violations and accidents, always follow traffic laws, stay alert, and avoid distractions. Consider taking defensive driving courses and participating in safe driving programs, which can also lead to discounts and help you become a better, safer driver.
- Opt for Annual or Semi-Annual Payments
It seems counterintuitive, but another way to lower car insurance payments is to pay your insurance premiums either once or twice a year. By opting for annual or semi-annual payments, you can save money as insurers offer discounts for larger upfront payments.
This method reduces the insurer's administrative costs, which can translate to lower rates for you. However, paying in larger installments requires careful budgeting and a bit of insight into frugality. So, be sure to set aside money each month to ensure you can cover the bigger payment when it’s due.
Are you Looking to Lower Your Monthly Car Payment, Too?
While lowering car insurance payments, you’ll be sure to make your pocketbook a bit happier. But that’s not the only thing you can do to bring down the cost of car ownership. Consider refinancing your car loan to save money. You may qualify for lower interest rates than what you are already paying, or you can spread out your loan for a longer duration to help cut down on monthly costs.
Get a free quote from RateWorks today to see how we can help you with lower car payments.
