How You Can Save Money on Car Insurance
26.04.2019 by Jack H
It’s illegal to drive without being properly insured, and for good reason. Regardless of whether you were the victim or the perpetrator in an accident, your insurance will cover you and that way, even if you were hit by someone who was uninsured, your vehicle and expenses will still be paid for in full, having insurance is non-negotiable, but that doesn’t mean you can't negotiate on the price.
There are plenty of ways that you can save money on your car insurance, but you’ll need to start working on a strategy and putting the steps into action today.
Benefits of Saving Money on Car Insurance
Having great car insurance for a low price is the dream. It means you can reduce the monthly costs you need to deal with and therefore free up more money for savings or for leisure. Then, if you need to use Loan On Your Car to secure a loan, you can easily get the money you need and still be eligible to drive your car around. With lower monthly costs, you can even work out a better deal and pay off your loan faster.
Having too much money tied into your insurance is not in your best interest, but you don’t automatically want to choose the cheapest option on the market. You want great value for a great price, so follow this guide to get it:
How Can I Save Money on My Car Insurance?
When it comes to shopping for new car insurance, there are a few ways to ensure that you have found the ideal provider and insurance policy for your budget and needs. If you have a lot of disposable income, for example, choosing a policy that has a low-interest rate that can be paid off in two years is more favourable in the long run. If you are working with a tight budget, then you need one that allows you to spread costs out as much as possible.
Shopping Around For Your Car Insurance
The last thing that you want to do is to choose the first policy you see. There are many different providers out there and an additional plethora of ways you can reduce the amount you pay for this policy. Rushing into a policy is a foolish move, and will almost always mean that you pay more than you need to. Instead, you’ll want to do your due diligence. When shopping for car insurance, you’ll want to do four key steps every time:
Get At Least Three Quotes
You should get quotes from three different providers. This can help you not only pick the best one for you but give you leverage to negotiate a deal. If a close competitor offers a better deal, but you want another provider due to their experience, you might be able to negotiate the price down to the competitor’s rate.
Understand Your Insurance
Always go through the full policy to make sure you understand it. Knowing you are covered is entirely different from knowing how you are covered. Which policy you choose depends on more than price, but on what it offers.
Don’t Automatically Go for the Lowest Price
The reason why you need to understand your insurance policy offers is that the lowest option isn’t always the cheapest. For example, if you were to choose the lowest price you might not be covered adequately. Therefore after an accident, you would end up needing to spend more out of pocket than if you were to choose a policy that costs a little bit more per month, but provided better service.
Fully compare policies so that you know for a fact that you have the best value option. For insurance to be worthwhile, for example, your vehicle must be worth more than 10x the insurance premium to be worthwhile.
Ways to Reduce Your Car Insurance Further
There are ways you can reduce your car insurance further once you have chosen a policy that you believe is right for you. Some ways to do this include:
Choose a Higher Deductible
The deductible is the amount you will pay out of pocket before your insurance company steps in. By choosing a higher deductible, you can personally take care of small repairs and costs yourself without increasing your premium. Obviously, if the damage was caused by another vehicle you do not need to worry about this threshold, as it is the other driver’s insurance that will cover you.
See if You Can Bundle Your Insurance
If you already have home insurance or contents insurance from another company, see if they would be willing to offer a bundled deal if you were to get a car insurance policy with them as well. Bundling insurance is a good way to reduce costs all around, especially if you were happy with their service in the past. Proving to be a loyal customer is a great way to entice them to offer you a deal on a bundled policy.
Can You Group Your Insurance?
You might even be able to group your insurance together in the same way that you could bundle insurance on your own belongings. See if your employer offers a group insurance deal. Other groups that can apply are, for example, alumni, so if you and your graduating class all wanted to apply for a group insurance deal you could save on costs.
Make Use of How You Drive
Another way to reduce your insurance policy is to use how you drive in your favour. For example, if you don’t drive far or regularly, and only use it for the occasional trip, you can negotiate with the agency for a low-mileage plan that will cover this at a reduced rate.
Similarly, using your driving history is a great way to negotiate the price down. If you have been driving for 20 years and have never been in an accident that was your own fault insurance agencies will be much happier to insure you at a reduced rate, because you have proved to be a lower risk.
That being said, over time your health could also increase premiums. If your eyesight has become worse, or if your reflexes are dulled, this could make them increase. If the policy increased automatically after you reached a certain age, you should consider getting a check-up and then bringing your doctor’s results to negotiate your policy back down.
Car Insurance For Young Drivers
When it comes to insuring your children, there are a few ways you can reduce their insurance policy and therefore save you a significant amount of money:
Take a Defensive Driving Course
Have them take a defensive driving course when learning how to drive. These certified courses teach students more than just driving skills, but can help them learn how to anticipate accidents and avoid them as necessary. It is a proactive stance that will help protect them and save you money.
Renegotiate When they Leave
If they go off to uni and won’t be using your vehicle for most of the year, you can use this in your favour and get a reduced rate, as they are not a primary driver.
Improve Your Credit History
Another great strategy to help you reduce your insurance premiums is to simply build your credit rating. Companies are more willing to give you a better interest rate when they have assurance you are likely to pay it back.
Credit Building Loan
If you need to build up your credit fast consider taking out a credit-building loan. This essentially works as a savings account that allows you to build credit. It is a good way to tackle two birds with one stone.
Pay Off Debts Fast
Another way to build up your credit score is to simply pay your debt off as soon as possible. If you keep forgetting to make payments on time, set up a direct debit. If you can, get a credit card and put your regular expenses on that, and then immediately pay it off at the end of the month, rather than use your credit card for large expenses.
Negotiate With Credit Agencies
In some cases, you won’t physically be able to work. Perhaps you were in an accident or were otherwise hospitalised for a significant period of time. You won’t be able to work during this period, and the money you receive would be limited. When this happens, it is wise to contact your credit agencies and let them know what happened. That way you won’t go into arrears and can work out a suitable compromise that works with everyone.
Know What Lenders Look For
A good credit score isn’t the only thing that creditors look for when giving out a loan or considering premiums. If you move around a lot this could indicate that you are not financially secure, if you have high levels of debt (even if you are paying them back on time) this could impact their decision, and so on. Know what they are looking for and then try to make your application as perfect as possible.
Building your credit score can help you reduce your premiums, but more importantly it can help you reduce the interest rate on your car repayments. Reducing costs on both can free up a lot of money over time.
How to Reduce Your Risk of An Accident
Once you have chosen the best policy for you and then negotiated it down as much as possible the next step is to simply reduce the risk of an accident occurring. As soon as you have an accident your premiums are likely to go up unless you have accident forgiveness as part of your policy, in which case you often only have one accident that will be wiped off the slate.
To help you keep costs low, you will want to:
Keep Your Car Well Maintained
Proper maintenance is essential for a few reasons. One, because it can help the warranties on a new vehicle go further. Two, because it will help keep your vehicle in tip-top condition and therefore safe to drive. Three, because maintenance can help prolong the life of your vehicle.
Keeping your car well-maintained means doing a few things. It means keeping it clean, it means taking it in for an oil check-up, washing it down if travelling through an area in winter where they have salted the roads, and so on. If you notice something wrong with your vehicle, get it tuned. Making minor improvements will always be far more cost-effective than an outright replacement, and keeping it in great condition means your car responds perfectly when it needs to.
Know the Common Car Accident Possibilities
Know the most common car accidents and possibilities so that you can watch out for them. Knowing what is likely to happen can help you prioritise dangers and take the right steps to avoid them.
Adopt Defensive Driving Tactics
Defensive driving is the perfect way to avoid common accidents. It means keeping your eyes alert on the road and knowing easy tactics you can use to reduce damage and the risk to your life. For example, when you stop always check your rear-view mirror in preparation to ensure the driver behind you isn’t so close that your stop will result in an accident. If they do hit you, it won’t be your fault, but it will certainly hurt and can even put your life at risk.
Similarly, say you are driving along a community road. Check underneath vehicles while passing and have your foot hovering over the brake just in case a child or adult were to exit onto the street from behind a tall vehicle. You would only be able to see their feet underneath the wheels.
Adopting defensive driving tactics like this is ideal for anticipating accidents, avoiding accidents, and reducing the impact of an accident. Driving safely could save your life, and it will definitely save you money.
There are so many ways that you can reduce your car insurance price, but you need to be prepared to renegotiate your terms or to search for a new provider when your previous contract runs out. Only then can you make your strategy translate into a better deal.