How to Save on Car Insurance

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By Jessica Mehta

Many drivers, regardless of age, don’t comprehensively shop around for car insurance. Even fewer establish a relationship with their agent. Sometimes simply asking if there are avenues to lower insurance premiums is all it takes! However, drivers will usually want to avoid “liability only” insurance. It can look like a great way to save on premiums, but when you have “liability only,” your insurance will only pay for costs and repairs due to the other driver in an accident. You’ll be stuck with all the bills related to your medical care and repairs. That’s a big but legal gamble few should take.

The good news is there are many ways to legally lower your insurance premiums without taking such a big risk. For starters, shop around—and keep doing so even when you already have coverage. There are various third-party comparison sites that give you un-biased answers. However, many of these sites might actually have a bias that isn’t advertised, might not ask all the questions that will determine a better rate, or might not include all of the premiums you’re eligible to enjoy. Try a few comparison sites, but also check out various insurance companies directly.

Mehta_Insurance2Young drivers might be especially averse to talking to an agent on the phone or in person, but this can often be the best way to secure lower rates. Talking to a qualified and reputable agent instead of depending on forms or email will let you explain your situation. Agents are often aware of special discounts that might not be advertised, and they’ll ask the right questions to make sure you’re getting the best rate. Remember, agents don’t get commissions or bonuses for inflating your insurance premiums. It’s in their best interest to make you happy with an affordable rate that still serves your needs. Comparison sites and algorithms, on the other hand, aren’t particularly interested in building a relationship with you or saving you money.

What Kind of Discounts Can I Get?

Every insurance agency might offer different discounts, but popular ones include discounts for having multiple policies or multiple cars. Young drivers who can be added onto a family member’s policy (while still paying their own premium) can often get a great deal. If you have an anti-theft device like an alarm, that might also score you a discount. There are also discounts for having passive restraints like airbags, daytime running lights, or even for having a newer vehicle because they’re inherently safer.

If you drive a green vehicle like an electric car or a hybrid, you might qualify for a discount. Being accident-free for a certain amount of time or otherwise, low-risk might be beneficial. Military members, drivers who keep low mileages, and even being a good student often comes with discounts. “Distant students” who are attending school far from home can sometimes get a discount, and homeowners might also qualify for lower rates.

Enroll in paperless billing and/or pay your premium in full instead of in monthly payments, and you’ll likely qualify for discounted coverage. Kind of like changing smartphone carriers, if you switch agencies before your policy is up, the new agency will likely pay off your remaining policy and give you a discount for switching.

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Always ask about loyalty discounts if you’ve been with an agency for awhile, and check to see if belonging to a certain organization or being an employee of a specific company qualifies you for a discount.

You can also lower your premiums by improving your credit score. Many times, agencies look at credit scores as an indicator of how “safe” a customer you’ll be. Younger drivers usually have lower credit scores because they haven’t had time to establish a solid credit history. However, if you focus on improving your credit score, your insurance premiums may slowly go down and you’ll also qualify for better rates on everything else from a mortgage to a credit card.

Ensure that your agent knows your current and correct address. Oftentimes, drivers stick with their original policy for years, automatically re-enrolling annually. This can be completely fine as long as there are no better rates out there, but if you have an old address listed you might be overpaying. Part of what determines insurance rates is where you live. After all, living in a high-crime area where car theft or break-ins are relatively more common means you’ll be paying a higher premium. Having the correct address can make a big difference in your premiums.

Most importantly, establish a relationship with your agent and talk to them about ways to lower insurance costs. The worst they can say if you already have the best possible rate—but keep accident-free and improve your credit score, and next year you might get a lower quote.

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