6 Ways to Lower Auto Insurance Rates
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UPDATED: Jan 19, 2022
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There are many factors that contribute to your insurance rates, which means that there are many ways you can go about lowering those rates. Certain factors, such as your age and gender, may be far beyond your control.
Other factors, however, may be easily amended to keep your insurance premiums as low as they can be. The folks who save the most money on insurance rates are those who bother to seek out the possible savings.
Shopping around for insurance is a prime way to start, as rates can vary dramatically for the same type of coverage from one insurance company to another.
Other ways to lower your rates include asking for discounts, knowing what factors affect your rates, picking a quality vehicle, and paying attention to the type of coverage and coverage limits in your policy.
Make sure to ask about those discount, or you might be missing out on saving that are ripe for the taking!
Possible Insurance Discounts
Discounts can be an instant way to lower your insurance rates, as long as the insurance company offers those that are relevant to you. The Idaho Department of Insurance points to a number of discounts that many companies offer.
You may be able to get a good discount by being a good driver, being a good student if you are still in school, or being a mature driver between the ages of 55 and 60.
Defensive driving or other driving courses are often taken into account when it comes to discounts.
Safety devices frequently merit discounts, and many newer cars already come with anti-lock brakes and airbags. Additional safety features that may increase the discount include daytime running lights and automatic seatbelts.
Security devices are typically another discount-grabber, with the more the merrier. The National Insurance Crime Bureau recommends a four-layer security plan to help deter theft.
The first layer, common sense, may not merit you a discount but it can help prevent your car from being stolen. Common sense means always locking your cars and ensuring you take your keys away from the vehicle.
The other three layers of protection come from warning devices, immobilizing devices, and tracking devices, all of which may play a part in earning you discounts. Warning devices include alarms and other audible security measures.
Immobilizing devices include things like kill switches and fuel cut-offs that shut off your vehicle if the key is not in the ignition. Tracking devices consist of technology that allows law enforcement to track your vehicle if it’s stolen, providing the ability to recover it.
Vehicle Type and Usage
Your annual mileage is a factor for setting your insurance rates, as is the type of vehicle you drive. You may be able to lower your rates by lowering your annual mileage if you opt for using public transportation or carpooling instead of driving to work every day.
Vehicles that have a low theft rate and low cost to repair are more likely to earn you lower rates than those frequently stolen and expensive to repair.
The National Insurance Crime Bureau issues an annual car theft report that outlines the most common cars stolen each particular year.
Those high on the list in 2010 include the 1994 Honda Accord, 1995 Honda Civic, and 1991 Toyota Camry. The 1999 Chevrolet full-size pickup and 1997 Ford F150 series pickup also made the Top Five list.
Note that the most popular vehicles on the list are models that are at least ten years old and may not yet be equipped with the latest security technologies.
Newer, more expensive vehicles are typically going to cost more to insure than older vehicles, the Insurance Commissioner of the State of Delaware points out. You may be paying a very pretty premium if you go for a costly luxury car.
How you use your vehicle may play a part in setting your premiums.
Using your car every day for your delivery job, for instance, is going to put more wear, tear, and risk on the vehicle than using it only to get to work and back.
Other Factors that Affect Insurance Rates
It can help you lower your auto insurance rates if you understand what factors affect the rates you are offered. The Insurance Commissioner of the State of Delaware points out a number of factors that come into play, some of which are under your control, while others are simply the luck of the draw.
Your driving record is a major contributor in your car insurance rates. The more accidents and violations on your record, the higher your premiums will typically be.
Higher rates for bad driving are not necessarily a punishment per se, but rather it’s a way for the insurance company to offset the higher risk of having to pay out a claim based on your history of driving.
You may not be able to do anything about past driving issues or infractions, except to make sure all are paid and up to date. You can pay attention going forward and try your best to obey all traffic laws and drive in the safest manner possible.
Accidents always have a chance of happening, but you can decrease that chance with careful driving and by not driving with distractions.
Your marriage status is under your control, but getting married just to get lower insurance rates may not be the best way to go about finding true love. Married couples tend to have fewer claims than single drivers, which would give an insurance rate edge to those that are wed.
Big-city dwellers are usually going to pay more for car insurance than their rural counterparts. Owning a car in an urban location often increases the risk of theft, vandalism, and crashes due to more drivers being on the road.
You may also pay more or less based on specific accident statistics in your given area.
Your age and gender play a part in your insurance rates, both of which are pretty much out of your control.
The Insurance Commissioner of the State of Delaware says men have a history of having more vehicle crashes than women, which means the higher risk merits higher rates.
Certain age groups are considered more at-risk than others. This typically applies to young drivers ages 25 and under who are less experienced than more mature drivers.
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Lower insurance rates can come from paying attention to the amount and type of coverage you get for your vehicle.
Each state has its own minimum requirements with which you must comply to follow the law, but you are free to go above and beyond the minimum with higher limits and various forms of optional coverage.
As an example, the Illinois Department of Insurance says minimum coverage in the state starts with two forms of liability coverage. Bodily injury liability covers injury or death of someone you hit if the accident was your fault. It may extend to your own passengers if they are not family members.
The minimum limits are $40,000 per accident or $20,000 for each person involved.
Property damage liability covers damage done to other people’s property.
This includes their vehicle, as well as fences, trees, mailboxes, signs, and even damage done to their homes or garages. The state’s minimum requirements are $15,000 per incident.
While the minimum limits may keep your premium the lowest, they may not be reasonably sufficient to cover the high costs an accident can incur. Hospital treatments for severe injuries could easily rise above $20,000 for a single person.
Uninsured and underinsured motorist bodily injury coverage is also required by Illinois law. The former covers your injuries if you are hit by an uninsured motorist. The latter covers the balance of your injuries if the insurance of the at-fault driver is too low to cover the full cost of treatment.
Illinois requires uninsured motorist bodily injury coverage to the tune of $40,000 per incident and $20,000 per person. It only requires underinsured motorist coverage if you increase your limits on uninsured motorist coverage.
Optional Coverage Choices
The minimum properly damage limit of $15,000 may not be enough to cover damage if you crashed into a home. If your coverage limits don’t go high enough to cover the full extent of the damages or injury, the Illinois Department of Insurance warns that you could end up in court on the defensive end of a lawsuit to recover the additional money.
The chances of needing additional types of coverage may also be high, even if they are not required by state law. Additional coverage includes physical damage, which consists of collision and comprehensive.
Collision coverage takes care of the cost of repairs if your car is involved in a collision. Comprehensive covers the vehicle if it is damaged by other means, such as vandalism, theft, or acts of nature.
A number of other optional coverages are often offered by insurance companies. While they, too, are likely to increase your rates, it may be worth the peace of mind if your specific situation would benefit from them.
These may include custom equipment coverage, rental car or tow truck reimbursement, and uninsured motorist property damage.
You may also be able to secure an accidental death benefit rider, which pays a set amount if the insured driver dies due to an auto-related incident.
Reviewing your policy every year to make sure you still need the coverage you currently have is a good practice to keep your rates in check. You may be able to decrease your property damage coverage, for instance, as your vehicle ages and becomes less valuable.
A couple more ways to lower your rates include increasing your deductible and offering all your insurance business to a single company. Many companies offer discounts if you choose them for multiple vehicles or multiple insurance policies, such as home, life, and auto.
Low rates are an important factor for choosing an auto insurance company, but they are not always the bottom line if it means skimping on coverage you may find essential.
Finding a financially stable, reliable insurance company that offers the lowest rates on the coverage you need may be the best move, as is paying attention to the various factors involved in setting those rates.
Shop around and compare insurance rates by entering your ZIP in our FREE tool!