All car owners in the U.S. are required to have automobile insurance in order to protect themselves and other drivers. Unfortunately, car insurance costs can be significant, but you still have some power to take action to reduce the costs of insuring yourself as an automobile owner. Although insurance is highly regulated you should know not all insurance companies and insurance policies are the same. The following are various tips to help you save money on automobile insurance.
Shop around
There are many different insurance companies offering automobile policies, each with varied pricing and benefits. This means if you put in the effort to check out numerous insurance companies and compare their product to each other, you might be able to save yourself money by finding the best deal possible for your needs.
Shopping around can really make a difference if you have recently been in an accident, have a low credit score or have an insurance claim on your record. Each insurance company will treat these items differently in their assessment of your insurability. However, if you do have a perfect driving record and good credit you should still shop around for a good deal.
Avoid purchasing too much coverage
More is not always better when it comes to buying automobile insurance. You should understand the more coverage your insurance policy offers, the higher premiums you will be paying each month. For example, if your car is older you may want to skip paying for certain kinds of coverage, such as comprehensive insurance which covers damage to your vehicle from incidents other than accidents on the road. Another provision you may want to forego is collision insurance which provides coverage for damage to your car resulting from a collision in which you were deemed at fault.
Think about increasing your deductible
Another option for reducing your insurance costs is to consider asking for an increase in your deductible. Your insurance policy’s deductible is the amount of money you will be required to pay on a claim before your insurer starts paying for damages. When your deductible is higher this generally coincides with a lower monthly premium charge. For example, if your policy provides a $400 deductible you will receive $2,100 for a $2,500 claim.
Bundle different insurance policies
Insurers commonly offer various types of insurance besides automobile coverage. You can usually obtain lower premiums if you bundle these different types of insurance policies with the same insurer, allowing you to obtain a bulk discount. For example, you can bundle your car insurance with your home insurance for lower total monthly costs.
Determine your insurance needs
How much insurance you need and what particular coverage you require will depend on circumstances specific to you. This is why making decisions on insurance should be integrated into your overall comprehensive financial planning. Hiring a professional financial advisor will put these types of decisions into the proper context with a broader perspective on your overall financial planning.