Car insurance is an important purchase, despite the perception that it’s a just another mandatory expense: in the event of an accident, you’ll realize why almost every jurisdiction requires it. However, just because it’s required by law doesn’t mean it has to be so expensive. There are several steps you can take to find the lowest premium, and with just a little effort, you can save hundreds or even thousands of dollars a year on your insurance policy.
Shop for the Best Rate
By far the most crucial step to saving money on your insurance policy is shopping around for the lowest rate. Different insurance companies have different risk pools, and as a result, the rates between companies vary quite a bit. For example, if “Company A” had more claims than usual last year, their rates for next year might increase in order to recuperate some of these losses. “Company B” on the other hand had less claims than usual last year, so they’re able to adjust their rates down.
These differences in rates are significant and could allow you to save instantly. Be sure to use an online car insurance quoting tool to make sure you’re getting the best rate possible.
Choosing the Right Vehicle
Insurance companies have several different rating factors that determine what each of their customers will pay, and the vehicle you choose is an important one. Generally, the more expensive the vehicle, the more expensive it will be to repair, and therefore will cost more to insure.
Furthermore, insurance companies know that sports cars are designed to be driven aggressively, so they charge more premium for the increased risk of an accident. Also, if the vehicle is a known target for thieves or vandals, the vehicle will be rated more expensive than a vehicle that isn’t.
Bundle Your Policies
A quick and easy way to save money on your insurance policies is to bundle them together with the same company. These companies usually offer multi-vehicle and multi-line (e.g. home and auto) discounts to the tune of around 10-20 per cent.
Often times, insurance companies offer other benefits to bundling your policies, such as free increased liability limits, free disappearing deductibles (your deductible is decreased by a certain percentage every year you’re claims-free), and combined deductibles for a single claim across both policies. Be sure to ask your broker about bundling to save!
Ask About Discounts
Insurance companies offer a ton of different discounts for various things: snow tires, good grades, being claims-free, belonging to an alumni or professional organization, etc. Telematics, a relatively new technology to the insurance industry, generally provides a 15 per cent discount just for signing up, and then more of a discount if you avoid hard braking and aggressive acceleration or cornering.
Keep a Clean Record
Claims and convictions are probably one of the biggest reasons for an increased insurance rate, in addition to cancellations by the insurance company for non-payment of premium. Speeding is one of the most common convictions, as well as one of the easiest to avoid. Always follow posted speed limits, and always pay your premium every month!
Get the Right Coverage
Finally, you should make sure you’re only paying for the coverage you need. For example, if you’re insuring an older car, you can consider dropping collision coverage, as the premium for it might not even be worth paying. Also, increasing your deductible puts more of the risk in your hands, so the insurance company will usually offer a lower price.
Whatever your insurance situation, shopping for the best rate is still the best way to save money on car insurance. Comparing premiums from different companies will provide you with a concrete number of how much you’re saving, so you’ll know you’ve made the right choice.