3 ways to save money on car insurance
Investments are all about getting the best return for your money. A stock that doubles in price can make a person rich, while one that loses value can cost them time and money. The same principles hold true when it comes to insurance, specifically auto insurance.
Auto insurance fees are a variable amount that can be affected by several factors. A safe driving record, the amount of your deductible and your credit rating can all affect the cost of your insurance. Managing these factors will allow you to spend less on insurance.
Insurance as an investment
By treating insurance as an investment, you can take control of the spending and create a policy that is right for you while still being within your budget. You want to maximize your benefits – in case of an accident – while minimizing your investment.
There are the limits, of course. Setting up a policy that doesn’t cover any of the factors you are concerned with is wasteful of time and money. Having too much coverage for policy issues that you do not need is also wasteful.
There are three areas that can be adjusted by the policyholder to lower your payments.
- Increasing the deductible. By having a higher deductible, you can reduce the down payment and monthly fees for your car insurance. However, if you do have an accident, your out-of-pocket expenses will be higher than for someone with a low deductible. If you, and the other drivers of your vehicle have safe driving records, it is a risk that can be worth taking.
- Combining policies. Using the same company for auto and home insurance allows you to combine policies and allows the insurance company to use a ‘low-risk’ homeowner’s policy to underwrite some of the cost of a ‘high-risk’ auto insurance policy. Bundling policies gives the insurance companies an incentive to lower your rates.
- Carry the correct coverage for your vehicle. Over insuring a vehicle wastes your money. If you don’t need comprehensive coverage – for example, if the car is paid off and older – then the money you are spending for coverage is much higher than it needs to be.
There are plenty of other factors that can affect individual insurance policies, exploring your options, as tedious and frustrating as it sounds, can save you considerable sums.
Credit rating can be important
The way your credit rating affects your insurance rate varies from state to state and it is difficult to give a comprehensive overview. Speak with your car insurance company to get an idea of how much weight your credit rating will have on your insurance.
In most cases, improving your credit rating will have a positive effect on your insurance premiums. Improving your credit rating is a valuable goal in itself but the savings you can get through insurance can increase the benefits.
Compare auto insurance companies
Educating yourself about the options you have with your current or potential insurance companies can mean an enormous difference in both your policy and your payments. Monitoring your policy and how your credit rating affects it can make a significant difference.
Getting cheap car insurance with points on your record is possible. Taking safe driver courses and keeping your driver’s record clean will help and there is a specific time limit for when points go away. Shopping around for insurance can give you an idea on which companies will give you the best rate, no matter the current state of your record.
Once you know how the factors affect each other, you can make well-informed decisions on the type and amount of insurance that is best for you and your situation. Treating the purchase of insurance like it was an investment is easy, because that is exactly what it is.