How to Save Money on Car Insurance

Do you want to know how to save money on car insurance? Read our easy, money-saving tips for how to cut back on your car insurance bill (even with teenage drivers, a poor driving record or other factors that may increase the rate).

The first tip (and probably the most important) to help save money on car insurance is to shop around for the best rate. Just like the price of gas, car insurance premiums can vary greatly for different insurance companies. In addition, insurance companies offer different rates in different locations. For instance, a State Farm in Idaho may offer the best insurance premiums in that area, while Allstate’s premiums may be the cheapest option in Florida. The process of comparing prices can be done over the phone (by calling the local office or toll free number), in person (by visiting local offices) or online (by receiving a rate quote from each possible insurance company or by getting a side-by-side comparison of some of the major insurance companies’ rates and  coverage plans). The rates can also change throughout the year, therefore, it’s a good idea to check the rates every six months – to be sure, you’re getting the best deal.

Finding (and qualifying) for the appropriate discounts is another way to save money on car insurance. Most insurance companies offer great rates to good students, part-time drivers, safe drivers and more. The secret to receiving these discounts is to know that they exist. The best way to find out more about the various discounts offered by different companies is to ask insurance representatives or to investigate online. In addition, it also helps to pay annually rather than quarterly or monthly, if possible, to receive an additional discount.

For households with teenage drivers, the insurance premiums are typically, sky high. However, if there are fewer cars than drivers in the household, it may be a good idea to list the teen as a part time driver to save money. If each driver in the household has a car then, the cheapest method is to list the teen as the primary driver on the car that offers the lowest rate. However, keep in mind that the oldest car (or the cheapest) does not always mean that the rate will be the lowest. If the price is still too high, then another way to cut back on the price of the premium is to buy an older car that offers a low rate (even if it stays put in the driveway) to list the teen as the primary driver. This way, the teen will still be covered on the other vehicles, but the rate will stay low, because of the cheap vehicle.

Insurance companies use many different factors to determine the premium such as, a person’s age, gender and driving record. Moreover, while the first two factors cannot be changed, it is possible for a person to improve their driving record. In many states, the DMV uses a point system (with points being assigned for accidents, speeding tickets and traffic violations), which is given to the insurance companies to determine a person’s driving history and ultimately, their car insurance rate. The more points a person has on their license, the higher the insurance rate will be. However, the points can be removed if a person attends defensive driving classes or traffic school. In addition, the longer a person goes without having an accident or receiving a ticket, the more the rate will drop. Therefore, even drivers with a poor driving record can get cheaper rates — it just takes some time.

Another great way to reduce the premium is by taking a higher risk, which can be done by lowering (or dropping) collision coverage on an older vehicle, if the vehicle’s worth is lower than $2,000. Another tip to lowering the premium is to change the policy by asking for a higher deductible (the money the driver is required to pay before the insurance company will pay their part). This allows the policy owner to pay for the small or minor problems, but lets the insurance company pay for any major claims.

In this economy, it helps to save money wherever you can — especially when it comes to major bills like, car insurance.

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