Three New Ways to Save Money on Car Insurance

October 26, 2016

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The average American pays around $841 every year for car insurance, according to the National Association of Insurance Commissioners. Yep — more than $800 for something most of us don’t actually use. With that money, you could buy a round-trip ticket to Hawaii, or a pretty sweet bike, or the 7,541-piece LEGO Millennium Falcon kit.

And for many people, paying $841 for insurance might sound like a bargain. If you’re younger than 25, if you have a few dings on your driving record, or if you have bad credit, cheap car insurance can be really hard to find. But it’s not impossible! Do these three things and you could pay a lot less.

1. Chop your coverage levels.

There’s a reason cheap car insurance is cheap: When you pay less, you usually get less. So, it makes sense that one of the easiest ways to save money on car insurance is to trim your coverage levels. But be careful! While it feels great to save money in the short run, you could end up sabotaging your financial future if you get into an accident and you don’t have enough insurance to pay for everyone’s property damage and injuries.

Here are a few areas where you might find savings by changing your coverage.

  • Deductible Debates: One surefire way to cut your monthly premium is to increase your deductible. A deductible is the money you need to pay out of pocket when you file a claim. For example, if your car sustains $2,000 worth of damage and your deductible is $500, your insurer will only pay out $1,500. If you’re a safe driver who isn’t logging significant miles, you may opt for a higher deductible. You may find that the benefit of making lower monthly payments outweighs the risks of potentially paying more for repairs.
  • The Collision Decision: If you’re driving an older car with high miles (nearing or over the 200,000 mile mark) you should check your collision coverage. Collision is the part of your car insurance that pays for damage to your own car in a collision with an object or another car, or in a single-car accident. If you can live with a few scratches or dents on your car, then reducing or eliminating your collision coverage may help you obtain significantly cheaper car insurance. The best way to decide is to run the numbers on Compare.com. Get multiple quotes, then look at how much they drop when you remove collision.
  • Forgoing the Towing: Things like towing coverage and roadside assistance are nice perks of car insurance, but they’re not always necessary. Look at the fine print in your policy. Does it only include certain services, or exclude towing after an accident? Driving habits, driving record and annual mileage can be key factors in determining whether you need towing coverage. If you belong to an auto club such as AAA, then you should check to see if you have any overlap of coverage. If you do, you can remove that duplicate coverage from your auto insurance policy.

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2. Fill your pockets with discounts.

Instead of agonizing about how to get cheap car insurance, sometimes you just have to ask for it. Auto insurers stay competitive by offering tons and tons of discounts. They won’t always offer them outright, but you can ask an insurance rep or agent if you’re eligible.

Here are some discounts to look for:

  • Good student discounts: Straight A’s can equal sweet savings
  • Association and group discounts: From Mensa to your alma mater, if you belong to an organization, you may be eligible for a discount
  • Telematics discounts: Tele-whatsit? Telematics is insurance companies’ practice of tracking your driving habits with a little electronic gizmo. If you can live with Big Data riding along in your car, then you may be rewarded with cheap car insurance
  • Lump-sum discounts: Paying once per year or even once every six months can save you more compared to making monthly payments
  • Safe driver discounts: Drivers with few accidents and moving violations get cheaper car insurance rates
  • Bundling discounts: When you buy homeowner’s, renter’s, motorcycle or RV insurance from the same company that provides your auto insurance, you’ll probably see some savings

3. Get cheap car insurance by comparison shopping.

A pack of white socks might cost $8 at one store and $11 at another. No big deal. The price of car insurance, on the other hand, can be wildly different from one company to the next. A policy with the same coverage levels and perks might cost $680 at Insurer A, $765 at Insurer B, and $902 at Insurer C. It’s crazy.

That’s why the single most important thing you can do to get cheap car insurance is to shop around. Get quotes from at least three insurance companies. This was once a long and tedious process, but Compare.com makes it easy to get multiple accurate quotes from top providers after you provide some basic information. Once you get your quotes, you can compare them side by side and even adjust the coverage levels to find the best cheap insurance that provides solid coverage and peace of mind. Don’t stop there, either – set a reminder to compare car insurance quotes every 6 to 12 months. Rates often change for the better as you get older, build a credit history and improve your driving record.

Want even more tips? We’ve got 12 more ways to save money on your car insurance. Buying auto insurance doesn’t have to be a confusing and disoriented process. We make sure that our users can make informed choices about their car insurance. Compare and save with us today!

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You could save up to 32% by using Compare.com!

Based on a survey of 100 California Residents. Average savings determined via a comparison of their selected policy against their self-reported annual premium.