Five Reasons You May Qualify for Lower Auto Insurance Premiums
Like homeowners insurance, auto insurance is becoming significantly more expensive, with data showing policy costs rose 11% last year, likely due to factors such as climate change, rising accident rates and higher repair costs. Under certain circumstances, you may be able to offset or at least keep your auto insurance premium steady, if not reduce it.
If any of the following changes are happening in your life, it may be time to call your insurance company and ask for a reduction in your premium.
you moved
Moving is a major life transition that can impact your auto insurance policy for the better in many ways. First, insurers factor where you park your car into their rate, so living in a less populated or safer area could potentially save you some money. Moving also gives you the opportunity to combine a renter’s or homeowner’s insurance policy with an auto policy if you haven’t already, which usually lowers the cost of both. Finally, moving can change your driving habits, which we’ll talk about next.
You drive less
Let’s say your move brought you closer to work, or you changed jobs, or you started working remotely more often, or another change in your daily routine reduced the number of miles you regularly drive. Insurance companies take annual mileage into account when calculating your premiums, so a significant reduction could save you some money.
Your family size has changed
If you have a teenager on your policy who now has their own car or their own policy and no longer lives at home, removing them from your policy could save you a significant amount of money on insurance premiums ( possibly cutting costs in half ). On the other hand, combining your policy with your new spouse’s may reduce the cost per person.
You have completed a defensive driving course
One of the many discounts available with auto insurance is taking a defensive driving course—in fact, some states require insurers to offer this discount . Typically these discounts last for several years before you need to retake the course. Discounts range from 5% to 20% of your premium.
Your insurance coverage is about to renew (or expire).
Updating your policy won’t specifically save you money, but now is the time to call your current insurer and discuss options for lowering your premium and looking at cheaper options.
Other Ways to Lower Your Auto Insurance Premium
Even if you don’t have life changes that would qualify you for a lower premium, there are other ways to lower the cost of your policy:
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Increase your deductible: Increasing your deductible (the amount you’ll pay out of pocket before your policy kicks in) can lower your premium. According to Consumer Reports , most policies have a $500 deductible, but increasing that amount to $1,000 could potentially save you 25% of the cost of the policy. However, you should consider whether you have an emergency fund to cover additional potential costs.
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Reduce some types of insurance coverage. Both collision and comprehensive coverage may be optional in your state, and omitting one or both may lower your premium. Collision may be an unnecessary expense if your car’s value is particularly low (and if your insurance premium is more than 10% of that value).
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Ask about discounts: Many insurers offer policy discounts for things like setting up autopay or paperless statements, prepaying your premium, maintaining a clean driving record, and bundling with other policies.
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Drive a cheaper car. This may not be a change you can make immediately, but when you’re looking for a car, consider the make and model that’s cheaper to insure .
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Look for usage-based policies: Usage-based insurance calibrates your policy to your actual driving habits, so low-risk drivers pay less. However, this usually requires a tracking app that sends data to your insurance company, which raises privacy concerns, and risky driving can actually increase the cost of your policy.