More than half of policyholders pay too much for auto insurance according to Progressive report. Another report shows that nearly 2/3 of policyholders don’t even know it since they never get alternative quotes. It is a good starting point to ask why you may be spending more on premiums than you should and this post is all about answering it. There may be at least thirty reasons for expensive rates and we will dissect ten of the most influential ones below in an attempt to figure out the ways to reduce costs.
It may seem like computers are just spitting out gibberish numbers these days but they work on very well formulated patterns, which are based on influential background information about anything and everything relating to covering the risks associated with driving around automobiles. Let’s start with the very first item in the checklist and get to the bottom of it.
- Is Vehicle Insurance too Expensive Because of the Way You Drive?
Who will be listed on the policy is one of the most important questions asked while getting quotes. Particularly the main driver and owner of the vehicle is the most important although having a teenager on the list of drivers will increase costs considerably. Here are a few of the questions that matter.
- How many years have you and other listed drivers been licensed?
- Have any of them had an accident and what are the details?
- Have any of them had traffic related convictions and penalties on license?
Depending on answers prices can go up or down. And at times it can go up as much as twice as soon as you add a bad or teen driver onto the policy. You probably know this but you need to mind the way you act behind the steering wheel and reduce rates by reducing accidents and tickets.
- Is Automobile Insurance Premium High for What You Drive?
As much as personal particulars and history the details of the car have to be looked at as well. As you know automobiles come with different prices, speed and attractiveness. They also have different safety and security features to take into account. Here are the key points to look at when you are buying a new automobile;
- Is it one of the safest models in the market?
- Is it one of the frequently stolen autos or not?
- Is it expensive to replace if it is totalled?
- Is it expensive to repair after damages?
- What is its rating and possible costs?
When the insurance rating of a vehicle is low it generally means that the premium will be cheaper. You can guess the possible charges by looking at the price and horsepower under the bonnet. But why would you want to guess when you can check how much you are likely to spend by getting insurance quotes before buying a car quickly and easily online? One of the most effective ways of cutting this cost is to choose the automobile right.
- Are You Spending Lots on Car Insurance for Where You Fit?
Companies generally group people who have similar risk profiles due to their age, gender and several other factors. If you are considered one of the safer types of drivers you can qualify for discounts. You can also get them because of your profession or membership to a professional organization. Even AAA membership may qualify you for them. If you are a middle aged person who owns his home, lives in a nice neighborhood, has a perfect credit score and a respectable job, you can expect to get a few good discounts and reduce rates.
- Where You Live Can Help You Lower Auto Insurance?
Most motorists move around their home and between home and work. So, it is important where home and work are located. The zip code would have been already checked and risks profiled. Here are the key questions regarding home address;
- Do you live in a high auto crime and vandalism area?
- Do you live in a congested area and is it a city?
- Is work far from home and do you commute every day?
If you answered yes to those questions you probably are facing higher car insurance costs. If you answered no to them you can enjoy lower rates. Also, the type of property you reside in can help you. For example, living in own home and having private parking are couple of ways you can cut costs. Also, bundling home and auto plans can save you another 10 – 15% overall.
- Are You Paying too Much Vehicle Insurance for Coverage Chosen?
Like anything else items you add to a basket will determine the total expenditure. You will have to buy the minimum liability enforced by the state. Anything above this amount is totally up to you. Here are the basic outlines of coverage requirements;
- The more you add the higher the premium will get but it may not be as high as you are worried. So, always get quotes for various levels of protection and see the price difference.
- The higher the deductibles are the lower the rates. Again, get quotes for higher and lower deductibles and see if it is worth to increase it.
- You get better protection when you choose sufficient coverage. So, there is a trade-off between saving now and taking risks. Try to find a balance. As a general guideline, insure the risks you cannot cover out of pocket.
If you are concerned about the costs you should try to find a package policy that offers most things you want to be included. You can still add or take away one or two items in the package. However, it would cost you a lot more if you try to customize a policy that was nowhere near as good at the start. So, try to economize by choosing what goes into a policy carefully.
- How to Reduce Car Insurance Costs by Driving Less
Yearly mileage is asked and taken into account. As a simple guideline, the more you travel the higher the chance of having accidents. If you are clocking particularly low miles you will be saving money. And if you are driving more than average you will be spending more.
Therefore, keep a record of yearly mileage and tell them. Some of them try to estimate this figure looking at particulars like age, work and gender. If you are driving less than colleagues or similar people in the same age group because you prefer public transport you will lose out. The solution is to give them the right information so that the quote is accurate.
- Find out the Discounts You Qualify for Cheaper Auto Insurance
You may think that agents will automatically look for every discount you qualify and apply it to you. This is not usually the case and you need to update details regularly to be eligible for more. Call the agent at each renewal and go over all the savings you can get. A good broker will ask the right questions to check eligibility for the discounts on offer.
As discussed below, you can also check different sources and it may be more rewarding than waiting and hoping that your broker will come true at the end.
- Am I Losing Out for Not Shopping for Automobile Insurance?
Make sure you shop around at each renewal so that you can find the best deals or find out if you are getting the best deal from the current provider. Here are a few reasons why you should be shopping around by getting several quotes at each renewal.
- Changes in life, cars, other listed drivers or formation of the carrier can change their competitiveness. For example, another company may be cheaper after you replaced an automobile with a different model.
- Rivals may be running promotions and offering special discounts to new customers.
- Also, there may be very attractive policy packages that are sold at cheap prices to attract more customers. So, you get more coverage even though you may be spending the same or less than if you were to stay put.
- You really can discover a great company you didn’t apply before. That is why you need to get several quotes to see who offers what.
Saving a few hundred bucks would be great and even better if it only took you less than an hour to find the cheaper policy. You are free to check as many of them as you want, abandon search whenever you want and choose whatever name at the end. This is the beauty of it and you don’t need to be scared of the Internet.
- The Way of Settling with Car Insurers Can Help Cut Premiums
Don’t be naïve by thinking that they are great because they are allowing you to spread the premium, which is technically due at the start. If you are allowed to extend the payment period you are most likely charged credit facility fees. Alternatively, they may offer you lower rates for paying upfront weather they charge for credit facility or not.
Always ask about the interest you will be charged if you spread the payment and if there would be discounts for settling in full now. If it is possible try to avoid additional charges and fees and see if you can pay less by clearing the balance at once.
10. Am I Paying too Much for Automobile Insurance Due to Lack of Money?
Your credit score is probably good if you are good at money management and you haven’t encountered a serious event like loss of job that affects ability to pay. Most companies would offer generous discounts to motorists with good credit score. You should always try to make the most of it if you have a great score. And you should try to bring down the effects of it if it is poor by looking for the best vehicle insurance with bad credit.
Being married or single, having all the cars under one policy or separately and even the college you graduate can make a difference to costs. We have only listed ten most important factors that affect quotes. Finding a reliable and competitive carrier will help a lot in the short and long run, as premiums are repetitive expenses. The savings would be substantial over many years of driving. So, this is how to avoid spending too much on auto insurance and hopefully you will benefit from these tips.