88 percent of Americans own at least one car.
Whether you already own one or are looking to buy your first ride, there’s no doubt car ownership comes with a host of benefits. The convenience of having your own car is unrivaled.
However, car ownership also has a fair share of downsides. You have to carter for gas, repairs, and on-going maintenance costs. There is also the issue of auto insurance. Combined, these costs can make owning a car a costly affair.
Lucky for you, it’s possible to cut down on these costs.
In this article, our focus is on how to save money on car insurance.
But first off:
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How Much Does Car Insurance Cost?
Auto insurance premiums vary from driver to driver and from state to state. In Michigan, for example, car owners pay $213 a month, while residents of Ohio pay just $77 a month. On average, though, car owners across the United States spend $1,500 annually or $125 per month.
If you’re currently paying the national average, can you imagine what lowering your premiums to $77 can do to your finances?
You will be able to save about $50 every month. If you save this money in a rainy-day fund, you’ll have $600 at the end of the year. This amount is enough to get you out of most financial emergencies.
Now that you have a clear picture of the cost of auto insurance, let’s focus on what you can do to lower your premiums.
Keep Auto Insurance in Mind When Buying a Car
Saving on car insurance begins before you even own a car. It starts during to car buying process, and here’s why.
You see, there are a lot of factors that auto insurance companies consider when determining the value of your premiums. One of the most important factors is the type, make, cost, and overall safety record of your car.
If you’re looking to purchase a pricey luxury car, spare parts aren’t going to come cheap. As a result, insurance companies will charge you more to cover the risk involved in insuring your car.
The same goes for cars with a bad safety rating. The National Highway Traffic Safety Administration issues safety ratings to cars that are sold to consumers in the United States. A car with a low safety rating means it’s more likely to crash. Buying such a car means you’ll pay more on insurance.
As such, keeping these factors in mind when shopping for a car will help you settle on a car that won’t attract high insurance premiums.
If you already own a vehicle that’s not insurance-friendly, consider selling it. You can then purchase a car that won’t cost a lot to insure.
Shop Extensively for Auto Insurance
There are hundreds of auto insurance companies, each offering uniquely-priced auto insurance policies.
To secure the possible deal on your car insurance, be sure to shop around widely. Use online comparison tools to get quotes from various companies and narrow down to one that meets your needs.
If you don’t compare, there’s a strong chance you’ll end up with a pricey policy, leaving behind similar policies with lower premiums. By the time you realize you’re paying more than necessary, it might be too late to switch, especially if you’re on an annual policy.
When shopping for auto insurance, make a point of asking your friends and relatives about their insurance experiences. There are companies that offer healthy discounts to existing customers who refer a client to them. If the company also offers a discount to the referred client, you’ll save some money.
Use the Same Insurance Company
If you own multiple cars, insure them with the same company.
This is because most companies offer a discount to clients who bring in more business. And even if your current company doesn’t have a discount policy, you can simply ask for the discount. Your insurer would likely offer you a deal than risk losing your potential business to a competitor.
Similarly, if you want to purchase another insurance policy, say homeowner’s insurance, consider buying it from your auto insurance provider if it also offers the policy you need. When you give an insurance company more business, it’ll thank you with discounts and other money-saving rewards.
Maintain Good Credit
You already know that you have a credit score, but did you know you have an insurance score?
Your insurance score is confidential information available only to insurance companies, but it heavily relies on your credit. If you’ve got strong credit, you certainly also have a strong insurance score. And if your credit is poor, your insurance score will also not be attractive.
A bad or low insurance score means you’re more likely to file an insurance claim, which is a red flag to insurance companies. You won’t be denied coverage, but your premiums will be higher than that of someone with a better insurance score.
Therefore, maintaining good credit can go a long way in helping you save on auto insurance.
Keep a Good Driving Record
Your driving record has a direct impact on your car insurance premiums.
Generally, a good record – no or very few speeding tickets, road accidents, and other driving infractions – means you’re a low-risk driver. You’ll get lower premiums.
But if you have a bad driving record with multiple tickets, serious crashes and other major traffic offenses, your premiums will be sky-high.
So, every time you hit the road, be conscious of your driving record. If you can’t afford any more increment on your auto premiums, do your best to drive safely and follow all traffic rules. One more ticket on your record can be all it takes for your premiums to increase come renewal time.
Learn How to Save Money on Car Insurance
For most people, driving is an enjoyable experience. However, it costs money to keep your car on the road, and auto insurance is one of the biggest costs. But having read this article, there’s no doubt you now know how to save money on car insurance.
Keep reading our blog for more tips on saving money and how to get the most out of your finances.