How to Save on Auto Insurance

The great thing about auto insurance is that there are literally hundreds of auto insurance providers to choose from. This means that auto insurance companies are in fierce competition for consumers. Unfortunately, insurance companies are not giving insurance away, but they will offer lower premiums for certain reasons. Auto insurance companies are more than willing to offer lower premiums if you:

• Have good credit
• Drive a low-risk model vehicle
• Pay your premium in full
• Have a good driving record
• Opt for a higher deductible
• Stay insured

Have Good Credit

Most insurance companies will review your credit report as one way to help assess your risk. Based on your credit score, the insurance company will assign an "insurance risk score." The higher your credit score the lower your insurance premium will be.

Drive a Low-Risk Model Vehicle

This may sound strange, but auto insurance companies have a rating system for all car makes and models. Depending on factors such as cost of the vehicle, safety, and theft data, your car will receive a rating from 1 to 27. The higher your number, the higher your premium. Sports cars, antiques, and luxury cars will always receive a higher number.

Pay Your Premium in Full

When you pay your premium in installments, your insurance company will tack on a "fractional premium" fee or administrative fee. Just about every auto insurance company charges a fee for installments and they charge more if you break up payments over six months than if you pay your bill in full, or in a shorter amount of time.

Have a Good Driving Record

If you are prone to auto accidents, you will pay dearly on your premiums. In fact, the industry standard for first-time at-fault accidents is a 40% increase on your premium. Avoiding accidents, speeding tickets, and other moving violations will almost guarantee a lower rate.

Opt for a Higher Deductible

Opting for a higher deductible is simple—the higher your deductible the lower your premium. Raising your comprehensive and collision deductible might have a significant impact on your premium. However, it is important to keep in mind that your deductible is the amount you will have to pay out of pocket in case of an accident. Be careful not to select a deductible that is too high for your budget.

Stay Insured

Most insurance companies will offer lower premiums if you stay insured continuously for a period of 4-5 years, although lower premiums are offered for one year of continuous coverage as well. Continuous coverage means that there are no lapses in coverage whatsoever.

Other Ways to Save

Insurance companies also offer good student discounts, low mileage discounts, vehicle safety discounts, and senior discounts. Ask your auto insurance company what discounts they offer that you might be eligible for.