Practical ways to save on car insurance this year.
A new year provides a time for reflection on what has passed as well as what is on the horizon. This year, you may have some goals in mind, including earning more money, taking a vacation, perhaps learning something new. The new year should also be a time where you review your expenses, including what you pay for car insurance. To that end, we’ll take a look at some ways you trim your auto insurance bill.
1. It begins with the car you want to buy.
Car sales over the past few years have been strong, thanks to an improving economy and newly designed models offering safety, technology and comfort features that weren’t even around a decade ago. Pent up demand means people are buying, but it is the type of car you purchase that will impact your auto insurance costs significantly.
Sportier cars will cost you more to insure as well as will most luxury cars. You’ll pay more for a car with a higher horsepower engine and a manual transmission than you would for a car equipped with a smaller or less powerful engine and an automatic transmission. That doesn’t mean you can’t enjoy the car you want, but it does mean that your car insurance rates will reflect the higher performance, elevated price or both.
2. It continues with your credit score or insurance score.
Did you know that your credit score can impact your auto insurance premium? Since the beginning of the millennium, most insurance companies have incorporated your credit history into their matrices, when determining how much to charge drivers for insurance explains Kevin Lynch of The American College of Financial Services.
Said Lynch, “In addition to driving records and accident frequencies, credit was added to the mix, because empirical evidence showed the combination of these three factors could predict losses for insurance companies.” Insurance of any kind is based on risk assessment, thus these three factors are widely used by insurers to determine insurability.
You can obtain your credit scores for all three credit reporting bureaus by visiting MyFico.com. You can also ask your insurance company for your insurance score, which is based on your credit reports. An insurance score looks at some, but not all the factors pertaining to your credit history to assign you a score. Importantly, you should know that not all states allow the use of credit-based scores in determining premiums according to the National Association of Insurance Commissioners.
3. Savings are realized by taking all available discounts and other cost saving measures.
All auto insurance policies feature deductibles. Deductibles are your share of the cost of claims you make, such as for an accident or theft. If your deductible is $500 you’ll pay more for car insurance than for deductibles beginning at $1,000. You might find that your 10-year old car is no longer worth backing with collision coverage. Dropping same can save you money.
Lynch also notes that combining your insurance coverage can save you money. Thus, if you bundle your home and auto insurance policies under one insurer, you’ll receive a discount. Some insurers also include other coverage, such as boat, motorcycle or an RV.
Work with your insurer to find other discounts. Lynch notes that families with teenagers can save money if their son or daughter has good grades. But he also warns that consumers shouldn’t be so intent on saving money to forego coverage that may not be required in their area such as Uninsured and Underinsured Motorist Coverage. Explains Lynch, “…considering the number of uninsured drivers on the roads in the USA, can you really afford not to have the coverage?” Approximately 1 in 8 drivers is uninsured according to the Insurance Research Council (IRC).
Insurance Savings This Year
Just as you review your car insurance policy, make a point to check your other insurance coverage — health, dental, life, home, and the rest.
Your insurance agent is there for you. Just the same, use your review time to obtain quotes from competing insurers. You may find additional savings simply by switching providers.
See Also — 7 Ways to Trim Car Insurance