If you’re going to legally operate a vehicle in the United States, you must have car insurance. Unfortunately, finding the right car insurance policy for your personal needs can be especially challenging (and costly) if you don’t know what you’re looking for.
How to Find Cost-Effective Car Insurance
Did you know that Americans spend an average of $866 per year on car insurance? Or that if you live in an expensive state, such as New Jersey, that average climbs to $1,264 per year? Even without inflation and rising costs, this means you could easily spend more than $50,000 in car insurance over your lifetime – an amount that could buy you a nice, brand new vehicle. The good news is that you have some control over how much you spend.
Some factors are hard to change, while others are a bit more flexible. Demographics, for example, fall into the former category.
“Your age, sex, marital status, and location all weigh heavily on how much you car insurance costs,” Saundra Latham writes for The Simple Dollar. “That’s because your insurance company has an enormous amount of data that tells them how each of these things makes you more or less of a risk for filing claims.”
Other factors, like the car you drive, your driving history, and credit score can all be influenced by your choices and decisions. And if you want to save some serious money, here’s a little food for thought:
- Deductible vs. Premium
As is the case with almost any other type of insurance – including health insurance – you have to weigh the monthly premium versus the annual deductible.
“Generally speaking, the lower the deductible, the higher the monthly cost of the policy. While choosing the policy with the lowest cost may be tempting, the premium should not be the only decision point,” New Look Collision explains.
The problem with choosing an extremely high deductible is that an accident could cause you to pay way more in repairs than you would have spent on additional premiums. It’s generally best to find a plan that’s somewhere in the middle.
- Types of Coverage
Your auto insurance is really a collection of different policies. Some policies are required by law, while others are optional. Some of the most common forms of coverage include liability, bodily injury liability, property damage liability, personal injury protection, uninsured/underinsured motorist coverage, collision, and comprehensive.
Make sure you always understand what you’re paying. If you see a type of coverage on your policy that you aren’t familiar with, do your research and find out if you really need it.
- Discounts
Most car insurance companies offer discounts for drivers who meet certain requirements or accomplishments. These include discounts related to antitheft systems, good grades in school, multi-policy (car and home bundled together, for example), multi-vehicle, clean driving record, installation of driver monitoring systems, etc.
Discounts aren’t standard in the industry, either. One company might offer you a 5 percent discount for installing a driver monitoring device, while another company might not offer anything at all. Always compare benefits across multiple insurance providers.
- Annual Rate Checks
The worst thing you can do is stick with an insurance company year after year and never check your rate. In fact, it would be smart to do an annual rate check. This means calling your agent and asking for a better price, while also looking around at other providers. You’ll be surprised by how much variance there is in pricing.
- Life Events
It’s smart to periodically review your car insurance coverage as it pertains to life events. For example, you may see a decrease in premiums for things like:
- Buying a new car
- Moving into a safer (lower-crime) neighborhood
- Getting older
- Getting married and combining policies with your spouse
- Purchasing a new home and bundling property insurance
Then again, there are also life events that can increase your monthly premium. These include filing claims, traffic violations, or adding a teenager or high-risk driver to your plan.
Make a Smart Decision
You can’t change your age or driving history, but you can make smart, educated decisions on how you shop for car insurance and what type of coverage you purchase.
As a result, you could save thousands of dollars over your lifetime.
Author: Oliver Curtis
Hi there. I’m Oliver. I’m just a young boy from the outskirts of… Okay, that’s a lie, I’m not a young boy anymore, although I certainly feel that way at heart.