8 Ways to Save Money on Auto Insurance

Your car insurance bill is one that you’ll be paying every month for a long time. So even if it’s just a little each month, anything you can do to save money on auto insurance will add up over time.

There are many different factors that determine how much your insurance company will charge for the amount of coverage you’re looking for. Just remember, cheap insurance isn’t necessarily the best.  Just like many things in life, you often get what you pay for.

Of course it’s smart to get insurance quotes and compare car insurance rates to find the best deal on the coverage you need.  However, even once you’ve found the right company and setup a policy there are things you can do to save money on car insurance.

1) Pay Attention When Driving

It may be common sense, but avoiding wrecks will save you money. How do you avoid wrecks? Pay attention when driving. The stories you hear of kids and families injured or killed due to “distracted driving” are really sad and can often be avoided.

Don’t text when driving. Use a Bluetooth headset if you’re going to talk when driving (but don’t even do that unless you have to). Don’t eat breakfast or do your makeup during your commute. Simple advice, but you’ll stay safe and companies like Allstate and State Farm offer safe driving discounts.

2) Compare Car Insurance Rates

Car insurance companies are fighting for your business. They want you to call, to get a rate quote, and to switch. You may not be able to save as much by switching as some of the GEICO commercials suggest but it doesn’t hurt to check it out.

Some people avoid this step because they don’t want to spend the time on the phone or feel like they’re getting sold to.  The great thing about the web is that it’s fast and easy to get insurance quotes online.  You can get quotes from multiple companies on sites like esurance and insure me or you can look for more specific quotes directly from websites like:

• GEICO
• Allstate
• 21^st Century
• Travelers

3) Raise Your Car Insurance Deductible

Of course, finding the right balance between cost and coverage isn’t easy but increasing your deductible can save you a nice chunk of change. When you’re comparing rates look at the differences in premiums between a $250, $500, and $1,000 deductible.

You can also adjust the deductibles differently for collision coverage vs. comprehensive coverage.  You may decide that you need a lower deductible for collision but can raise your comprehensive deductible.  Some people that drive older cars that are already paid off will even cancel comprehensive coverage altogether.

Just make sure you put the money you save with lower premiums into some sort of savings account in case you end up with some kind of incident and having to pay the higher deductible.

4) Check Your Payment Limits

In addition to your deductibles, your payment limits on things like personal injury protection, liability coverage, uninsured motorist, and rental reimbursement can have an impact on how much you pay for your policy.

The higher your limits, the more expensive your car insurance will be.  Don’t drop them too low, you don’t want to expose yourself to big financial risks, but at least see what they are and whether you’re paying for more coverage than you need.

5) Consider Bundling Insurance

You won’t always save money by bundling your homeowners and automobile insurance together, but it is worth checking. You can call up your agent or a customer service representative to run you through your savings options when using multiple types of insurance. Or you can use the company websites to compare rates on both types of products both individually and bundled. Take the lower rate, bundled or not.

6) Keep Your Credit Score Safe

Unfortunately you can’t buy insurance for your credit score. And, fair or not, having a poor credit score can raise your insurance rates since some companies are using it as a factor when determining your risk. Here are some tips on improving your credit score.

7) Evaluate Extra Coverage

There may be some parts of your policy that are nice to have but aren’t a necessity. For example, rental reimbursement or towing coverage are things you might not need depending on the vehicle.

If it’s on a car that’s not absolutely essential for your daily routine, i.e. a truck for hauling or your kid’s car, you might not need a rental replacement and can skip the rental reimbursement.  Or if it’s a new car with an extended warranty that covers towing you might not want to pay for towing & roadside assistance on your insurance policy.

8 ) Reduce Risk of Theft

Some areas have higher insurance rates than others based on chances of accidents, storm damage, vandalism, or theft.  You probably aren’t going to move just to lower your car insurance rates but there are things you can do to help offset some of these risks.

For example, installing a car alarm can lower your deductible.  Another cheaper option is to have your VIN number etched into your windows as a deterrent to car thieves.  Every company may be different so ask your agent what similar things you can do to lower your premiums.

Before you spend the money for these enhancements, check with your insurance company to see how much they’d save you and whether they’re worth the cost.  If you decide to go ahead with any of them be sure to call and let your insurance company know so they can give you the appropriate car insurance discount.

Kevin Mulligan is a debt reduction champion with a passion for teaching people how to budget and stay out of debt. He's building a personal finance freelance writing career and has written for RothIRA.com, Discover Bank, ING Direct, and many others.

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