Car insurance policies can be expensive, and if you have a poor driving record, a history of traffic violations, or have made insurance claims in the past, be ready to pay a lot more for insuring your car. Auto insurance policy is mandatory in almost every state in the US, with the exception being Virginia and New Hampshire. But is it mandatory to pay a lot of money for these policies? Is there no way to get great auto insurance coverage at affordable prices?
With a little bit of effort and a few tips and tricks, you can save hundreds of dollars in auto insurance. It is surprising to see how many people are spending unnecessarily on coverage and policies that they hardly need. So with a little bit of streamlining, here are some money-saving car insurance hacks you need to know to make a smart purchase and save money.
Choose Between General or Pay-Per-Mile Insurance Policies
The first and most common mistake we see people committing is making the wrong choice in the insurance policy. Why should you pay the same amount for an auto insurance policy as someone else who drives ten times more than you do? The rates of auto insurance depend on how much risk you possess to the insurance company.
People with higher risks of getting in an accident and making an insurance claim will be charged more. But if a person drives more, he/she is more likely to be in a car accident than someone who rarely gets out of the car. So why should both of them pay the same rates?
If you have a car but rarely take it out or if your commute is very short, perhaps because you take the public transport often or you work from home/ are self-employed, then why pay hundreds of dollars for a general auto insurance policy? Get yourself a pay-per-mile auto insurance policy and pay only for how much you drive.
Pay-per-mile insurance has a per-mile rate that is calculated based on your driving record and other factors. This per-mile rate is then multiplied by your monthly mileage and you get your auto insurance rate. If you drive less than 600-800 miles a year, then getting pay-per-mile auto insurance would help you save as high as 45% of what you’d be paying for a general auto insurance policy.
Don’t Get Recommendations, Compare Plans Yourself
Just because your friend prefers an auto insurance company or someone in your extended family had a pleasant experience with the insurance claim process is not a strong factor to make you choose that insurance company. Different people have different driving patterns and requirements, so if one company fits someone, it does not mean that it will be fit for you.
What you need to do before getting any auto insurance policy is compare as many different auto insurance companies and their policies as possible. Look at their deductible requirements, coverage, price of collision and comprehensive coverage, premium rates, no-claims bonuses, accident forgiveness, roadside assistance, and everything relevant to you.
It might be a little tedious, but not as much as you think. Only after a rigorous comparison, you’d be able to get the most competitive price for the right auto insurance policy. This prevents you from overpaying and at the same time getting coverage that’s tailored to your needs and preferences.
Keep Deductibles High, But…
A deductible is the amount of money that you need to pay first before the auto insurance company pays the rest. So if you have kept the deductible for a policy to be $1,000 and the cost of repairs comes to around $5,000, if you make an insurance claim, you’ll have to pay $1,000 first, and then the insurance company will pay the remaining $4,000.
If the cost of repairs is less than your deductible limit, then there’s no point in making a claim. But here’s how you can save money with deductibles. Keeping your deductible limit high will reduce the premium rates by a considerable amount. The higher the deductible, the lower the premium rates. Over time, this reduction in premiums will help you save hundreds, if not thousands of dollars.
But there’s a catch. While higher deductibles will help you save money on insurance premiums, if you get in an accident, you’ll end up paying a lot more from your pocket. So after you have increased your insurance deductibles, drive carefully to prevent any accident, both financial and physical.
Keep Changing Policies, But…
Why should you stick to the same auto insurance company when you can find better and more affordable ones? Whenever your policy period is about to be over and you get notifications to renew your current policy, you should spend at least a few hours looking and researching for the latest and best auto insurance policy. What if you find a cheaper policy that’s better than your current one?
Compare the prices you’ll be paying for renewing your current policy and what you’ll be paying for the new policy. Contact the insurance company and get a quote and if the prices are lower than your current insurance policy but with the same or better coverage, then it is time to switch. But, there are a few things you need to tick before you switch.
First, look for no-claims bonuses that your current insurance company might offer. These are discounts you get for not making any insurance claim. If with the discounts the rates you are getting are lower or the same as the new policy, then don’t switch.
But if you are not getting any no-claims bonuses, then before making the switch, first get the new policy and then cancel the old one. If due to some reason your new policy is not activated and you cancel your previous one, this will create a coverage gap that increases insurance rates.
These were the auto insurance hacks that are very easy to follow but will save you some serious money.