According to NerdWallet’s 2021 rate analysis, American car owners spend an average of $1,592 on car insurance premiums every year. That’s equivalent to around 30 full tanks of gas, 10 new quality tires, or one thorough paint job.
And that’s just for car owners with a clean record. Coverage rates can go upwards of $3,000 annually for drivers who have a history of DUI, one of the many reasons car insurance rates are expensive.
But you don’t have to pay hundreds of dollars every month to get your car covered. Below, we share ways to reduce your car insurance costs.
Take advantage of discounts
From enrolling multiple vehicles to memberships in certain organizations, there are plenty of ways to get discounts for your insurance premiums. Some of the discounts you may qualify for include:
- AAA membership
- Certain professions, such as being an educator or doctor
- Military service
In addition, you may also get discounts by enrolling multiple vehicles for insurance policies under the same provider, “bundling” your car and home insurance policies, or choosing to pay your annual total at once instead of opting for monthly premiums.
To know which discounts you qualify for and which ones your provider offers, consult with your insurance company.
Get rid of coverage you don’t need
Insurance coverage can be confusing. On top of that, providers will convince you that you need coverage for different things, resulting in higher premiums. So it’s best to review your policy and the add-ons included that you’re currently paying for and may not need.
Some types of coverage you can drop include collision and comprehensive coverage, especially if you’re driving an older car. These add-ons cover the cost of your vehicle in today’s market, not what you paid for at the time of purchase. And because car value depreciates, paying for coverage may only end up costing you.
Increase your deductibles
Deductibles are what you pay for out-of-pocket before your vehicle insurance kicks in. For example, let’s say you have a $500 deductible. This means if you get in a wreck and the repairs cost $2000, your policy will only cover the $1500 while you pay the $500 out-of-pocket.
If you have a low deductible, your provider is more likely to set your monthly premiums higher to offset the risk of covering a large percentage of car repair costs. But if you raise your deductibles, you can get lower insurance rates.
Keep in mind that insurance premiums are what you pay every month, while paying for your repairs is a one-time out-of-pocket expense. If your monthly premium is high, eventually, what you’re paying for it will surpass the amount you would have paid for repair costs.
Always practice road safety
A clean driving record means lower insurance rates. This is because your provider understands you don’t take risks when driving and are therefore less likely to get into an accident.
The same concept applies for when you have higher deductibles. If you’re less likely to get into a wreck, you’re also less likely to need car repairs that will cost you out-of-pocket expenses.
Car insurance is a necessary expense to keep you safe on the road, but it doesn’t mean you have to break the bank to get coverage. Use our methods above and save on your car insurance from now.