10 Steps to Affordable Auto Insurance

Auto insurance, to many, is a necessary evil. We don’t want to pay for it, but in order to drive, we have to have it. And when things go wrong out on the road or in the driveway, it sure is nice to have it there to help with expenses. The trick is getting an affordable rate, and there are many ways to accomplish this. Here are 10 steps to getting affordable auto insurance.

1. Shop around

Comparison shopping will give you a good idea of your options.

It will give you a jumping off point. It has been estimated that comparable policies can range up to $500 or more difference in cost. Get three or more good estimates for your rate. The more estimates you get, the better your savings will be.

There are some websites that can help you with the process of comparison shopping. It’s a good idea to make use of these, especially if you’re not used to comparison shopping.

There are different people you can talk to in order to get quotes. They are called agents, and there’s three main types.

Direct agents

These are in-house employees of insurance companies. They do not work on commission, but they can help you find an estimate. You will probably get the best rates from this type of agent, as there’s no “middleman” earning a commission on your policy.

Exclusive agents

These are independent contractors that work on commission, mainly for one company. They provide good customer service, but as they work on commission you may not get the best rate available.

Independent agents

These folks work as independent contractors, on commission, for more than one insurance company. They may be able to help you compare some quotes from different companies.

Although you may get the best rates from direct agents, they can be picky. If your driving record isn’t stellar, you may want to start looking at the big insurance companies first.

2. Use All Discounts Available to You

You can save a lot on your insurance rates using discounts that companies have made available. There is a great variety of discounts, depending on which company you choose. Some discounts are listed here, along with a description for each.

Combination Discounts

Also referred to as “bundling”, these discounts apply when a customer has both auto and home insurance with one company. Companies like loyal customers, so they sometimes offer a discount for doing this.

Defensive Driving Classes

If you sign up and attend a defensive driving class, your rates may be reduced by about 15% (if you’re 16 – 25 years old), or by only 5% if you’re over 55 years old. If you don’t fall into either category, you may still get a discount on your insurance, depending on the company’s policies. Another bonus from these classes is that some states may have a mandatory reduction in your premium for attending classes, or the state may reduce or eliminate points on your license.
These classes will give you a refresher on your state’s driving laws, and also teach you how to deal with driving emergencies. They may also teach you how to use anti-lock brakes the safest way, how to pass other cars safely, and other essential driving skills.

Good Student Discounts

Very welcome by anxious parents, this discount applies to students who maintain a GPA of (usually) 3.0 or higher. It can offer up to 15% off insurance rates, and it’s a great reward for hard-working new drivers.

Retirement Discounts

When older drivers retire, many companies will give them a discount due to the fact that they just aren’t driving as much as they used to when they had to commute. Therefore, they’re less of a risk for the insurance company. This is a discount you have to ask for, though, as it’s not advertised as much as the other, more common, discounts are.

Association or Group Discounts

These are discounts offered to a group or an association. AAA often has discount auto insurance to offer to its members. If you are part of a group or association, it would be worth it to ask if they have any discounts available.

Safety Discounts

When you have a good driving record, insurance companies often offer a Safe Driver discount.
One company offers it in the form of a “vanishing deductible”: For every year you are accident-free, your deductible is reduced by a considerable dollar amount.

Loyalty

When you stick with one company for a long time, they often reward you with a discount. Also, if you refer someone to them, they may give you a discount as well.

Other discounts can include (but are not limited to) passive restraint discount (up to 30%), anti-lock brakes discount (10%), and anti-theft devices discount(10%).

3. Increase Your Deductible

This can really reduce your rates. Since the deductible is there to cover things that you can’t cover yourself, it may be cost-effective to increase the deductible. If you have a good driving record, and continue to do so, it may work out quite well.

4. Improve your Credit Report

As with credit card rates, your insurance rates will go down if you have good credit and good financial habits. It is a good idea to stay on top of your credit, and clean it up if you have marks against you.

5. Maintain a Clean Driving Record

If you have a clean driving record, and maintain it, you’re not as much of a risk for your insurance company as if you did not have a clean record, or were a reckless driver. It’s not only good for your rates, but for your safety and the safety of everyone else on the road.

6. Drive Cars that are not Theft-Prone

If you drive a car that is not listed as likely to be stolen, or targeted for thieves, your rates will be lower than if you did drive a car that was likely to be stolen. Also, having anti-theft or tracking devices installed on your car can help lower your rates.

7. Carpooling

Good for the environment and good for your insurance rates! Since some companies track mileage, a low mileage on your car will give you a lower rate than a high mileage. It’s along the same lines as the retirement discount. Also, if you move to a place where stores are closer to your home, this can have the same effect: Less mileage means lower rates.

8. Buy only what you need

Older cars may not need as much coverage as newer cars. You can save quite a bit by dropping coverage you no longer need. An older car may not need collision insurance anymore, as comprehensive gives you all the coverage you need.

9. Make sure you’re only getting the coverage you need

For example, some policies offer personal injury coverage. Check with your medical insurance policy – you may already have coverage for this sort of thing.

10. Think Twice about Roadside Assistance

You may already have some kind of roadside assistance, as through AAA or another auto group. It may be more cost-effective to use auto clubs for this type of coverage, instead of including it in your auto insurance.

Before you decide on which affordable auto insurance to choose, make sure you use our free auto insurance comparison tool to find the coverage that fits you best.

Your choice of auto insurance is a big decision for you and your family, and it must be made with care.