Auto insurance, I would say, is one of those expenses made by adults that may seem suspiciously high until you really need it. And then, that is the moment you feel glad to have insurance like that. My aunt's husband once shared a lesson with me on auto insurance, and that is exactly what I will be sharing.
At a point when he was wondering whether his car had turned into a Ferrari overnight due to the rise in industry cost and outdated coverage. And for him, who hasn't shopped around for so many years, to have to encounter such costs, he did research, which helped him find several means by which he could reduce his auto insurance premiums.
But before we get into it, let me help you understand why auto premiums are expensive.
Why Auto Insurance Premiums Are So High (And Why You Can Lower Them)
Auto insurance premiums are so high because they are priced based on risk. Auto premium insurers look at factors like
- Your driving history
- How much and often you drive
- The type of vehicle you are using
- Your location(where you stay)
- And in some states in the world, "your credit history is looked at.
What you should be happy about is the good news that many of these factors mentioned above are within your control.
But how do you control these premiums? Well, sure, here is how you can go about it
1. Shopping Around
Let us compare shopping around for insurance premiums to asking for the prices of different items in different shops. Loyalty is an admirable friendship but not always in insurance. So even if you like your insurer, shopping around wouldn't be a big deal because you are probably looking for alternatives that may be cheaper.
To do this right
- You have to compare at least three to five insurers
- You should use comparative tools like NerdWallet and Policy Genius
- You must re-shop every twelve to eighteen months
2. You Must Have a Good Driving Record
You know, when you have speeding tickets, accidents, and all kinds of claims on your neck, it tells insurers one thing: risk. The cleaner your driving history, the better your rates.
Ways in which you can keep insurance low
- You must avoid claims for minor damages
- You must take defensive driving courses (some states allow discounts, which you must know)
- Use telematics programs if you are a safe driver
According to the National Highway Traffic Safety Administration (NHTSA), safe drivers file fewer claims, and that is something insurers reward with lower premiums.
3. Raise Your Deductible But Don't Get Reckless
Remember this: your deductible is what you pay before your insurance kicks in. The higher your deductible, the lower your premium.
For example
- If you have a 500 dollar deductible, then you will have a higher monthly cost
- Also, if you have a $1000 deductible, then you will have a lower monthly cost
4. Another Way To Reduce Auto Insurance Premiums is To Bundle Policies Like a Pro
Bundling auto and home (or renters) insurance can help you have access to serious discounts, and this is often within the range of 10%–25%.
Insurers love bundling because
- You are less likely to switch to another insurance company
- They insure more of your risk
Ask your insurance provider about bundling.
- Auto insurance + home insurance
- Auto insurance + renters insurance
- Multi-vehicle discounts
5. Drive Less and Pay Less on Auto Insurance Premiums (Mileage)
Insurance companies also care about the number of times or how often you’re on the road. This means that you drive fewer miles, which means fewer chances of getting involved in an accident.
The truth to tell, you may qualify for low-mileage discounts if you
- You are the type who works remotely
- You use public transportation more frequently
- You carpool regularly
Some insurers even offer pay-per-mile insurance, which can be ideal if you drive under 7,500 miles per year.
6. Your Credit Score Might Be Costing You Money
If you have a good credit record, you will probably have lower premiums, but if you have a poor credit record will be relatively low.
To improve your auto insurance credit score
- You must pay your bills on time
- You must keep your credit utilisation low
7. Last But Not Least: Ask About Discounts on Your Auto Insurance Premiums
Insurance companies don’t always volunteer discounts, and they will not always tell you, but they exist.
Common Auto Insurance Premiums Include
- Safe driver discounts
- Good student discounts
- Anti-theft or safety feature discounts
- Military or professional affiliations
If you really want these premiums, then a five-minute call could save hundreds every year.
A Little Advice From An Expert
From my Aunt's husband's view, auto insurance premiums are helpful and could cost a person a lot of money. He therefore advised that, though insurance premiums have a lot of benefits, an individual should, no matter what, find ways and means to reduce expenditure.
Read also:
Types of Insurance Every Adult Should Have According to Someone Who Learned the Hard Way
