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Saving money on auto insurance

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Insurance is legally mandated in most states, but it can be expensive. There are many different options that you can choose from when deciding on the type of policy that is right for you, each priced differently based on a number of factors. 

10 ways to save money on car insurance 

You can save by comparing different insurance plans and getting quotes from multiple different insurance providers — but there are more ways to get a discount on your premium than just being smart about your shopping. 

1. Raise your deductible 

Most auto insurance policies have a deductible, which is the amount of money that you have to pay on a claim before coverage kicks in. If you have a $500 deductible and are in an accident that does $5,000 of damage, your insurance company will only pay $4,500.  

One way to save money on car insurance is to raise your deductible, which will lower your rates. Just be sure you have enough money in your emergency fund to cover your deductible should an accident occur.  

2. Keep a good credit rating 

Many insurance companies use your credit rating to determine whether to insure you and how much to charge. The better your credit score, the lower your rates will likely be. This is one more reason it’s a good idea to keep an impeccable credit rating. 

However, certain states do not allow insurance companies to use a customer’s credit rating in the underwriting process. If you live in California, Hawaii or Massachusetts you won’t have to worry about your credit score affecting your rates. 

3. Shop around 

You can pay more than double for the same insurance from different carriers, so it does pay to shop around. Some states offer price guidelines for several types of coverage in different areas, and a few states even put the information online. Call your state insurance department, and ask if they have pricing information available. 

If you call around for quotes, include a few brand name companies as well as a few independent agents who will shop more than one company for you. Doing so will help ensure that you will get the lowest possible rates. 

4. Take advantage of every discount 

Many insurance companies offer discounts depending on your situation. A few common discounts are available based on certain situations and behaviors include: 

  • If you’ve gone a certain number of years without an accident or ticket. 
  • If you store your car in a garage or drive less than a certain number of miles each year. 
  • If your car has safety features, such as airbags or anti-lock brakes, or anti-theft devices, such as a tracking system or alarm. 
  • Having more than one car on your policy. 
  • Buying your policy through the same company that insures your home. 
  • Paying your premium annually or semi-annually.  
  • Older drivers can get a discount for taking a defensive driving course.  
  • Teens can shave a little off the premium by maintaining good grades or taking a driver education course. 

If your teen is away at college, change your policy. According to industry professionals, teen drivers add anywhere from 50 percent to 500 percent to a premium. However, many insurance companies will discount the rate when a child is away at school.  

Another option is even cheaper, but riskier. If children are going to school more than 100 miles from home, you can take them off the policy and save a serious chunk of money. Two caveats: The kids can’t drive at school unless they get their own insurance, and if they come home for a break, don’t lend them the car if they don’t get their own insurance. 

5. Get married and get older 

While this isn’t something you can do overnight — and getting married to save on auto insurance is ridiculous at best — but it’s a reality that young singles pay more. Find out where the age breaks are on your insurance. If waiting a year means you fall into a lower risk category, it might make that new sports car affordable. The same applies if you plan on getting married soon. Wait to buy a new car until after the wedding and you could save a lot on insurance. 

6. Install a car alarm 

Most companies give discounts for anti-theft devices. But don’t tell the agent you have one if you don’t. That could set you up for a nasty surprise if you make a theft claim — the insurance company may ask for proof that you had an anti-theft device and void the policy if you can’t prove you had one installed. 

7. Pay without financing 

Most insurance companies give you several options to pay your premium. You might be able to pay for an entire year at a time, twice a year or monthly payments. Often if you pay over time, the insurance company will add finance charges. You can save on your total insurance cost by paying the premium in full each year. 

8. Buy a car with safety features 

Insurers give discounts for such things as anti-lock brake system, alarm and air bags, but not all devices are covered. Anti-lock brakes and basic air bags are not necessarily items that give a discount anymore. Make sure to check with your insurance carrier to know what discounts you might be eligible for. 

9. Move to a “better” ZIP code 

Some states allow insurers to offer better rates to drivers who live where theft and collision rates are lower. While saving money on your insurance rates is probably not going to be the biggest factor in determining where you live, it is something to keep in mind. 

10. Keep your driving record clean 

Nothing cuts an insurance premium more than a driving record free of citations, accidents or claims. And don’t think you can “forget” to mention that fender bender. Computer systems have made everything instantly accessible to your agent. 

Next steps 

You might be legally required to have auto insurance to drive, but that doesn’t mean that it has to break the bank. Follow the simple steps above to look for ways to keep your costs reasonable. Two of the biggest ways to save money on auto insurance are to make sure your policy has the right deductible and limits and to compare quotes from many different carriers. 

Written by
Dan Miller
Points and Miles Expert Contributor
Dan Miller is a former contributing writer for Bankrate. Dan covered loans, home equity and debt management in his work.
Edited by
Auto loans editor