How To Lower Car Insurance Premiums
You drive a modest vehicle. You are safe on the road, always executing the proper traffic signals, staying within the speed limit and allowing for a safe following distance. You have operated your car without major incident.
And yet, your car insurance rates are going up.
This is a familiar tale for American consumers, but there are ways to flip the script. There are actually methods to save money on car insurance. It requires a continued commitment to safety, paying attention to details, living in the right area, avoiding complacency with your coverage and, by all means, not being responsible for a teenage boy’s driving (more on that one later).
Average Car Insurance Premiums
First, some sobering background.
According to “Your Driving Costs,’’ a report by the AAA Motor Club, the average annual insurance premiums for a middle-age man rose 10% last year to approximately $1,200.
Insurance costs can add up to about 25% of a car payment, perhaps slightly less if it’s a new car, according to the Insurance Information Institute. That might seem counterintuitive, but carriers often have new-car insurance discounts because of the vehicle’s safety features.
It also can be more costly if you finance a car instead of owning it outright by paying cash. Some lenders require low deductibles, driving up the premiums.
And, of course, there are financial consequences if you make an insurance claim. Matt Caswell, an independent insurance agent in Dunedin, Florida, said you can expect a spike of at least 25% on premiums after filing a claim when you were the driver at fault.
Insurance carriers say the increases are inevitable. According to the Insurance Research Council, the average cost per payout rose 32% from 2005 to 2013 (the latest data available), while the number of claims for bodily injury actually fell 14.5%. Meanwhile, auto fatalities rose an estimated 8% in 2015, the largest annual increase in 50 years according to the National Safety Council, making it more difficult for insurance companies to offset costs.
“I’m not at all encouraged by what I’m paying for car insurance and how it keeps going up,’’ said Kristin Bell, an elementary-school teacher.
But Caswell said there’s hope for educated consumers who are willing to challenge the status quo.
How To Save On Car Insurance Premiums
- Comparison Shopping: According to a 2014 Consumer Reports survey, 68% of respondents said they had not shopped around for less expensive car insurance, while 53% had been with the same insurer for at least 15 years. Sometimes, annual discounts of a few hundred dollars can be found. But Caswell cautioned against too much activity.
“It’s fine to seek a better deal for yourself, but not every single year,’’ Caswell said. “It will send up a flag that you’re not loyal. They will recognize that. A lot of times, if you’re with a good carrier, it’s not worth jumping in the long term just to save a small amount.’’
- Insisting On Higher Deductibles: Instead of the common $250 or $500 deductible, ask for a $1,000 or $1,500 deductible that will lower your premiums.
“Always try to raise your deductibles,’’ Caswell said. “Chances are you’re not having accidents or you haven’t had accidents. The money you save over the years will pay for that deductible (in an accident).
“You should never buy the cheapest deductibles because you’re afraid you’ll have an accident. You probably won’t.’’
- Combining With Homeowners Insurance: Bundling is a surefire way to save some cash, but it’s becoming increasingly difficult in some areas to find carriers who offer car and homeowners insurance.
- Location, Location, Location: Low mileage discounts are available, a handy option for drivers who don’t have long commutes. Your ZIP code will generally influence the rates and there’s nothing to be done about that. Common sense tells you that living in a gated community or keeping your car in the garage — anything that decreases the odds of your vehicle being stolen — will help your premium.
- Improving Your Credit Score: A higher credit score indicates dependability and a decreased chance of filing a fraudulent insurance claim, qualities that are valued by all insurance carriers.
- Hidden Tips: Ask around. There are other ways to save, mostly by using your common sense. Here’s one: Make sure you’re not doubling down on roadside service and towing. Many consumers allow that to be part of their insurance policies, even when they already have it through AAA membership or a credit-card feature.
Lower Car Insurance For Teenage Drivers
Remember that earlier reference to being responsible for a teenage boy? Time to revisit that one and it’s not pretty.
Adding a teenager of either gender means an average annual increase of 79% to your car-insurance premium. But for boys? That’s a whopping 92% increase!
There’s no fighting the statistics and perceptions about the potential for trouble when a teenage boy gets behind the wheel. The Centers for Disease Control and Prevention says that car accidents are the leading cause of death for Americans between the ages of 15 and 19.
Still, Caswell said there are a few measures that could decrease the sticker shock.
- Good Student Discount: Most carriers reward teenagers who are academically sound. A 3.0 grade-point average or higher should get you discounts of up to 10%.
- More Education: Accordingly, students who take driver’s education classes or attend driving school will have a chance at discounts. It’s all about the effort toward accident prevention.
- Sorry, Sport: If you have a teenage son who’s the adventurous type, no doubt he has his eye on a souped-up sports car or a jacked-up truck.
Don’t … do … it.
Do not buy him one!
In addition to the fact that those vehicles are exorbitant investments, when it comes to insurance, giving those high-level keys to your teenager is like placing a “Kick Me’’ sign on the seat of your trousers.
“Carriers live in mortal fear that a teenage boy is going to hit somebody else,’’ Caswell said. “Your son might want that four-wheel drive or sports car, but you should know that you will pay for that in ways that you hadn’t anticipated — and you will pay dearly.’’
Fried, C., (10 May, 2016), Car Insurance Rates Are Going Up, Consumer Reports. Retrieved from http://www.consumerreports.org/car-insurance/car-insurance-rates-are-going-up/
NA, (2016), Insurance Information Institute. Retrieved from http://www.iii.org/fact-statistic/auto-insurance
Gorzelany, J., (23 September, 2014), The Staggering Cost To Insure Teenage Drivers, Forbes Magazine. Retrieved from http://www.forbes.com/sites/jimgorzelany/2014/09/23/the-staggering-cost-to-insure-a-teenage-driver/#42ee45d3a6e2