How to Save on Car Insurance

Insurance companies have their own processes and procedures to calculate the premiums you will pay. Here are 10 things they take into account and actions you can take to save on car insurance costs.

  • Insurers will examine your credit record because studies have shown that the more stable the record, the lower the chances of the policy holder filing a claim. A stable person who pays on time and has maintained the same accounts for a long period is a careful person. Your credit score forms the basis for your “insurance risk score” which determines your premium. If you have had a lot of recent activity, wait a month or two for thing to settle down and then apply for insurance. Also make sure your credit history is as clean as possible.
  • One of the most important car insurance tips is that insurance companies have a rating system for every car and model which is based on the cost of the car, safety features and theft frequency. The higher your car’s rating, the more the premium. To save on car insurance, check with your insurance company about the premiums on the car you are planning to buy. Also search for the most and least expensive cars to insure so you know what the range is like.
    You can save on car insurance by paying in full. Insurance companies offer installment payment plans but add an administrative fee on the installments. Paying in full saves you from this.
  • If your car is totaled, you may not have to pay sales tax when you buy a new one. Many states mandate that the insurance company pay the sales tax for replacement cars. Among the auto insurance tips you need to keep in mind is that the companies will not offer to pay. You must ask about it. And even in states that do not mandate it, there no harm in trying because the policy says that your loss must be made whole and some companies take this to mean that the sales tax must be paid by them.
  • Save on car insurance by not adding your teenager’s name to the policy when they reach driving age. If they will not be driving, you can wait until they need and get a license. Make sure that when the teens start driving you inform the insurance company immediately or you may have to pay back premiums.
    A great car insurance tip is to avoid including personal items that are normally in your car in your car insurance. In most cases these will be covered by your home insurance policy at lower premiums. However, if you carry expensive things like laptops with you, then get a rider to cover them.
  • After your first at-fault accident (where you were responsible for it) your insurance premiums will go up, often by as much as 40%. One of the many car insurance tips that most people don’t know about is that many companies have an unpublicized “forgive the first accident” system whereby the first at-fault accident is ignored for premium calculation. Ask about this – you may be able to save on car insurance by lower future premiums.
  • Another way to save on car insurance is by being careful whom you lend your car to. If your friend crashes your car, not only will you have to pay the deductibles, your future premiums will go up. It’s difficult to say no, but if you think the person is not a good driver, it’s the safest thing to do.
  • Everyone knows that it makes sense to shop around before buying insurance. But the most important car insurance tip of all is to not be tempted only by low premiums. List out all the coverage you require – comprehensive coverage, rental car coverage and the like – and then compare the policies that offer you what you need. Not having the right type of coverage can cost you a lot in the long run and nullify any initial savings.
  • If your car has been repaired after an accident, it may be worth less, in market terms, than it did prior to the accident. In some states not only can you file a claim for the loss of value, your future premiums should reflect that lower value. Your premium will probably increase because of the accident, but the lower value of the car may help to compensate for this.
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