The cost of car insurance is a major budget item in most households. The average good driver in the U.S. is paying $1,556 a year. Lowering this tab by as little as 10% can mean meaningful money back in your wallet. It is possible, without too much effort, to slash your car insurance premiums by 30% or more. In addition to common cost-lowering strategies such as shopping around, bundling your insurance, or opting for a higher deductible, here are five additional and less-commonly-known ways to reduce the pain when you pay to insure your automobile.
1. Drive Less
Nerdwallet.com points out that “driving less can be an effective way to reduce your auto insurance premium. Strategies to do so include using public transportation, carpooling and working from home.”
Potential Savings: For example, driving 7,500 miles annually could reduce your premiums 10% compared with driving 10,000 miles. According to Experian, driving less than 5,000 miles annually can result in the most savings.
2. Take a Defensive Driving Course
Many insurers offer a discount for taking a defensive driving course, but check with your insurer before signing up. You will want to confirm that they offer a driving course discount and that the savings will offset the cost of the course. As an example of what a defensive driving course could cost, Safe2Drive, a highly rated online driver's education company that has been in business for the last 20 years, offers a safe driving course for under $25.
Potential Savings: Here’s one example. Geico says their Nebraska drivers could save up to 10% on applicable coverage by completing an approved defensive driving course.
3. Clean Out Your Garage
Do you have too many kid’s bikes, spare furniture, or boxes of “who knows what” in your garage? It may pay you to clear them out and make space for all your cars. Forbes magazine points out that “some insurers will lower your car insurance if you park your car in your home garage rather than in your driveway or on a street. Data shows that cars parked in garages are less prone to being stolen or having crash damage.”
Potential Savings: Some insurance companies offer a 5% discount on premiums for parking your car in a garage. (However, not all insurance companies offer this discount, and the discount amount varies.)
4. Maintain a Good Credit Record
“Establishing a solid credit history can cut your insurance costs,” the Insurance Information Institute says. “Most insurers use credit information to price auto insurance policies. Research shows that people who effectively manage their credit have fewer claims. To protect your credit standing, pay your bills on time, don’t obtain more credit than you need and keep your credit balances as low as possible. Check your credit record on a regular basis and have any errors corrected promptly so that your record remains accurate.”
Potential Savings: A lot. Zebra.com, an online site that helps people compare and shop for insurance, reports that “drivers with poor credit pay more than twice as much for car insurance as those with exceptional credit.” According to their analysis, drivers with poor credit (those with a credit score lower than 580) pay about $2,729 per year for car insurance. Drivers with exceptional credit (those with a credit score of 800 or higher) pay $1,308 — less than half as much.
5. Pay Your Premium in Full.
Most of us spread out our insurance premium payments. But instead of paying monthly, look at paying your premium in one or two payments. Check with your insurer, but many insurance companies will give you a discount. Although the discount may be modest, wouldn’t you rather put that money in your pocket instead of onto the bottom line of a big insurance company? “Progressive, Allstate, American Family and Farmers are among the major insurance companies offering this discount,” according to Forbes magazine.
Potential Savings: According to ValuePenguin, on average insurance companies offer a discount of about 5% to 10% for paying your entire six-month or annual rate up front.
At a time when we are all sensitive to the cost of things, we hope these five simple and effective ways to reduce how much you must pay for car insurance can create some breathing space in your family’s budget.
