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How to Save on Auto Insurance: 11 Great Ways to Cut Costs

Auto insurance is a major expenditure, and everyone's all looking for ways to reduce our overall insurance bill.

Here are a few ways in which you can save money on auto insurance.

  1. Shop to compare: Each company has its own set of prices for auto insurance. Prior to comparing, make sure you know the minimum amount of automobile insurance that your state requires you to carry. Once you know this, obtain insurance quotes from several insurance companies. Look at the coverage, price, reputation, customer service, and the discounts that are available.
  2. Request a higher deductible: The deductible is the amount of money that is required to be paid in full prior to your insurance paying for anything when a claim is filed. By increasing your deductible from $250 to $1,000 (assuming you can afford it; otherwise, this isn’t a good idea), you can save up to 40% and sometimes more.
  3. Drop collision, comprehensive or both on older vehicles: In the event that you total your vehicle in an accident, you will only be paid the actual cash value of the vehicle. Technically speaking and in terms of financial sense, it isn’t logical to pay high premiums on collision and comprehensive coverage when your car isn’t worth $2,000 or more.
  4. Consider vehicles that are cheap to insure: Some cars cost less to insure than others. Consider sports cars. These types of vehicles cost more to insure because they are involved in more dangerous activity and car collisions than other vehicles such as mini vans and family sedans. Plus, they are typically more expensive to fix.
  5. Moving? Consider auto insurance rates: Whether you are moving to a neighboring city, across state or across the country, consider the auto insurance rates in that area. Also, keep in mind that rural communities have lower auto insurance rates than a city simply because the likelihood of car accidents and theft are less likely.
  6. Take advantage of safety discounts: If your vehicle consists of certain safety features such as a car alarm, anti-lock brakes, air bags, etc., you can receive a discount lowering your insurance premium. The safer your car is, the lower your premium.
  7. Gain from low-mileage discounts: Some auto insurance companies will offer low-mileage discounts to their customers that don’t rack on the miles each year. Generally speaking, the standard amount of miles on a yearly basis is 12,000 miles so if you only put on, say, 5,000 per year, you could be eligible for this discount or you may be better off under a pay-as-you-drive plan.
  8. Take advantage of other insurance discounts: There are a number of different auto insurance discounts that are available for drivers. If you insure more than one vehicle with the same company, you may qualify for a discount. In addition, you may be able to save money by insuring your home and having life insurance through the same company. Good drivers (no or minimum accidents and tickets) and good students (teenagers and college students) may also obtain discounts if offered. Discounts are also available for those that voluntarily take driver-training courses.
  9. Ask about group discounts: Sometimes you can get a discount on your car insurance policy if you work with a large corporation or are part of a large, professional organization or group such as your local chamber of commerce or the American Bar Association.
  10. Keep your credit score up: Believe it or not, your credit rating may very well affect your insurance premiums. Depending on the state in which you live and the insurance company you are doing business with, your credit score may be used to determine your rates. Studies show that good credit drivers are less likely to file an insurance claim, which is likely to be a major reason that credit scores are now used to determine your insurance premiums.
  11. It may pay to spy on your teen driver: As crazy as it may sound, many insurance companies are turning to monitoring programs for customers with teen drivers. An added benefit of this program is that the companies are beginning to offer discounts to participating customers – discounts that can save anywhere from about 10% to 15%. The actual program will vary from insurer to insurer and not all insurance companies have these available. Some of the programs will install a camera inside the car that will only come on when aggressive driving is occurring and will allow you to view video and hear audio during this time. Some programs are actual GPS systems that will track the speed, acceleration and braking of your teen driver in addition to where your child travels. The program also comes equipped with a setting that will notify you by e-mail or text message if your teen travels to a specific address allowing you to track if your child goes somewhere he or she isn’t supposed to.