Reduce Your Car Insurance in 3 Easy StepsApril 29, 2016
Everyone wants to reduce their car insurance premiums, but what do you do when there are no more discounts to be had? Some folks move around from insurer to insurer in an effort to get the lower car insurance costs they seek. Others might drive an older car or reduce the annual mileage they put on their car. All of those are viable options that could reduce your car insurance costs, but we’ve got a tip or two on how to make those monthly payments more affordable.
Your Credit and Your Car Insurance Premiums
You might know this, or you might not, but a major factor affecting your car insurance costs is your credit score. Most car insurance companies do what’s called a “soft pull” on your credit score when you apply for car insurance. The “soft pull” means they check it, but your credit rating is unaffected because you aren’t applying for a line of credit.
This is important because a hard pull, or an inquiry for a line of credit does affect your credit score. It usually isn’t much, but your credit score is an important part of determining your car insurance premium. There’s no sense in having someone do a hard pull if a soft pull would do just fine. To find out what your potential insurer’s policy is regarding credit checks, see their website or talk to one of their agents.
Once the car insurance company has your credit rating, they use it in conjunction with other data you’ve provided to assess how large of a risk you are to insure. If you want to reduce your car insurance costs, then improving your credit score is a good idea.
Why do auto insurance companies need my credit score?
Your credit score is one part of your insurance score, which is a major factor in determining how much you are charged for auto insurance. Most auto insurance companies use an auto insurance score, so keeping your credit in good shape is important. Oddly enough, paying your car insurance premium affects your credit score. Learn how that works in our article on Auto Insurance and Your Credit Score.
Reduce Car Insurance Premiums by Raising Your Deductible
If you have the means to do so, raising your deductible can be a great way to reduce your car insurance costs. Raising your deductible reduces how much you pay in monthly premiums, but it also means that when you do need to file a claim, you’ll have to pay more up front before insurance pays the rest of your claim. If you don’t have the financial means to pay $500-$1,000 for repairs, then this may not be the best option for you.
Eliminate Duplicate Coverages
Personal injury coverages are often duplicate coverages and can be eliminated to save you money if you have your own health insurance policy. Be careful though, some states have mandates on personal injury coverage you’ll need to look to your state’s laws or confer with you agent to make sure that this option is applicable to you.
These are solid tips for reducing car insurance premiums, but what if we told you that you could reduce your auto insurance payments by 30% right now? Research shows that consumers who compare auto insurance quotes before they buy save up to 32% on average.
Compare multiple car insurance quotes side by side now to find the best price on auto insurance.
Learn More About Auto Insurance
When it comes to auto insurance, there are a lot of variables, a lot of unfamiliar terms, and a whole lot of peculiarities – particularly when you consider that each state has its own insurance market. Our Auto Insurance Explainers can help sort it out for you, and make more educated decisions about your car insurance.