How to Get the Maximum Discount on Car Insurance
It's unlikely that the rising rates within the car insurance market will cool anytime soon. According to Bankrate's True Cost of Auto Insurance Report, rates are expected to remain elevated until 2025. And while you can’t stop or slow the progression of premium increases on auto insurance, you can maximize discounts as a strategy to lower your insurance costs.
How to Compare Car Insurance Quotes: The First Step to Savings
Collect your personal information. Since most insurance companies all require the same information to generate a quote, it's important to have the following information handy: vehicle Identification Number (VIN); make, model and year of vehicle; vehicle mileage and safety features; current car insurance information, including the coverage levels, other individuals listed on the policy; ticket and/or accident information from the past five years; and finally, driver's license numbers for each person listed on the policy.
• Know the type and amount of car insurance you need. Different coverage types that may be available to you include liability insurance, collision insurance, comprehensive insurance, uninsured motorist coverage, medical payments coverage and personal injury protection. Remember, lenders may require you to carry certain insurance coverages on any vehicle you have a loan on. Also, keep in mind that each state has specific auto insurance coverage requirements.
• Determine extras. Do you need gap insurance or roadside assistance with your auto policy? Come prepared, knowing the full scope of your needs before you begin comparing quotes.
• Pick your preference for receiving quotes. There are several options to choose from when it comes to getting auto insurance quotes. Many people prefer to use agents from insurance companies or independent insurance brokers. You can also get quotes directly from a insurance company's website, for example—or use an online comparison tool to get quotes from several companies at once.
• Begin comparing quotes. Make sure that each quote has the same deductible, limits and coverages. After you compare coverages and rates, consider the significance of customer service, quality ratings and claims processes in your final decision.
Understanding Types of Auto Insurance Discounts
• Multi-policy discounts are a type of discount that can apply when you buy more than one type of insurance from the same company. It's also called a “multi-line discount” and commonly referred to as “bundling.” Bundling car insurance and home insurance is usually one of the easiest paths to saving between 5% to 25%. Even if you’re not a homeowner, you can typically still take advantage of multi-policy discounts by bundling car insurance with other insurance such as a condo, renters, motorcycles, boat, RV and life insurance.
• Safe driver discounts, also known as “good driver” discounts, are rewards in the form of discounts for responsible drivers who’ve not had any accidents, comprehensive claims, points on their driver's license, or traffic violations in the past three to five years. The definition of a good or safe driver can vary by carrier and affect insurance rates differently. To qualify for and maintain safe driver discounts, you have a few different options:
Car insurance telematics – This is a type of usage-based insurance that uses an app on your phone or a plug-in car device to monitor your driving habits and calculate any available safe driver discounts more accurately.
Defensive driving courses – You can take a course that teaches defensive driving techniques to potentially lower your insurance rate. This discount may only apply to drivers of a certain age, typically 50 or older.
Additional Types of Discounts for Auto Insurance
• Security system discounts are frequently available to vehicles with certain factory-installed and aftermarket-installed anti-theft features.
• Good student discounts are offered by certain insurers to those with full-time high school or college-enrolled student drivers. To receive the discount, your student driver must usually maintain a B average.
• Pay-in-full discounts can range between 6% to 14% to those who pay their full policy term up front versus monthly billing.
• Electronic billing discounts are generally small, ranging from 3% to 6%, but are often available to those who pay their installments using automatic withdrawals.
As always, check with your insurance carrier on the availability, requirements and rate of all additional types of insurance discounts. Discounts can vary by location, insurer and standard risk factors.
Strategies to Maximize Your Auto Insurance Discounts
• Regularly review and update your policies. Stay familiar with the common types of auto insurance coverage and conduct periodic reviews to make any needed adjustments and inquire about new discounts.
• Improve driving safety. Consider enrolling in a defensive driving course, follow safe driving tips offered by the NIH, and stay up-to-date on the driving laws where you live to maintain a safe driving record that could potentially lower your premium.
• Maintain a good credit score. In most states, your credit score can impact your car insurance rate. According to Bankrate, the rationale behind this practice is supported by actuarial research, which suggests a correlation between one's credit management and the likelihood of filing an insurance claim. Some tips to improve your credit score include paying your bills on time, staying aware of how much credit you have available compared to how much you use, maintaining old lines of credit, monitoring your score regularly, and several more tips.
• Follow through on your tasks. If you receive a discount that requires you to take a specific action—such as downloading an app to your phone and activating it or providing a report card as evidence of good grades—be sure to do it. Because if you don’t, that discount will likely disappear without warning and your premium will go up, even in the middle of your policy term.
Put the Work in to Potentially Save on Car Insurance
To fully maximize car insurance discounts and special insurance incentives as a savings strategy, a little work is required. Since most people are not aware of the full range of available auto insurance discounts, assistance from an insurance agent can be helpful.
Take small steps now to shop around, compare quotes and review insurance company ratings for things like customer service, claims processing and reliability. Everyone wants to know how to get cheaper car insurance, but if an insurance company lacks a good reputation, you may not be getting the best value for your money. Start exploring your car insurance discounts and savings options today.