Most states require that drivers maintain at least auto liability coverage. And opting for a full coverage policy provides more protection but costs quite a bit more. According to the National Association of Insurance Commissioners (NAIC), the average liability-only policy in the U.S. costs $650.35 per year compared to the $1,204 per year that it costs on average to have liability, collision, and comprehensive coverage. While it may feel like insurance companies pick rates out of thin air, insurers consider your risk level when giving you a quote. Factors like your age, gender, driving record, and where you live contribute to your rates. However, there are steps you could take to get lower rates when shopping around. Here are eight ways to land a deal.
1. Work on your credit
In most states, credit scores can be considered to calculate credit-based insurance scores insurers use to determine what rates you’ll pay. The higher your credit score, the better shot you have at landing a competitive insurance rate. These five factors affect your FICO Score:
Payment history (35%): You’re history of on-time payments on credit accounts. Amounts owed (30%): The amount of debt you owe in total and your credit usage on revolving credit lines, i.e. credit cards.Credit history length (15%): How long you’ve been using credit. Credit mix (10%): The different types of credit accounts you have.New credit (10%): The number of new credit accounts and hard inquiries you have.
The best way to grow and maintain a strong credit score is to make on-time payments on all loans and credit cards. If you have missed payments on your credit reports that are incorrect, disputing records with credit bureaus and having them removed could improve your score. Another way to improve your score is to keep your revolving credit usage low, and you could do this by paying down some of your credit card debt. Applying for new credit sparingly can also keep hard inquiries from docking your score.
2. Look into low-mileage deals
Using your car less frequently means there’s less chance you could get into an accident, which may reduce your insurance premiums and help you save on gas. For example, Nationwide offers a SmartMiles program (opens in new tab) where your costs fluctuate based on how much you drive. A flexible plan like this could make sense if you carpool, use public transportation, or work from home. With hybrid work schedules becoming more common, it’s worth checking the odometer to see how many miles you’re logging and ask your insurer if you’re eligible for low-mileage deals.
3. Pay your premium upfront
Typically, you get the option to pay insurance premiums in monthly installments, but paying for the insured term all at once could help you lock in a “pay in full” discount. Allstate (opens in new tab), Amfam (opens in new tab), and Progressive (opens in new tab) are examples of insurance companies that may offer discounts for paying upfront.
4. Decrease your coverage and lower your deductible
An insurance deductible is an amount you pay out-of-pocket for a covered event before your insurance kicks in to help cover damages up to the coverage limit. The lower your deductible is, the higher your insurance premiums will be. Increasing your deductible by several hundred dollars could reduce your rate, and taking your deductible up to $1,000 or higher could keep even more money in your pocket. Lowering your coverage amounts—the limit that your policy will pay for a covered event—is another potential way to lower your premiums. Just make sure that you have the financial means to fill any gaps in coverage if an accident happens.
5. Drive safely to minimize claims
There’s no way around it—safe drivers get better insurance rates. Having a history of car insurance claims and traffic violations can increase your rate because insurers see you as a high-risk driver. Also, find out if you can add accident forgiveness to your policy because it could help you avoid a rate hike if you get into an at-fault accident. Since insurance companies review your past claims and driving history when deciding to approve you for insurance and set your rate, it could be a good idea to check your own history. You have the right to request a C.L.U.E claims report (opens in new tab) from LexisNexis, and you can also ask for your driving record from your state.
6. Lock in student discounts
If you’re a student driver or want to get insurance for a student dependent, buying an insurance policy from a company with student driver discounts could offer savings. For example, Progressive offers discounts to students (opens in new tab) under 23 who maintain a B average or higher, and the average discount is 10%. Geico also offers high school and college students discounts that could save (opens in new tab) you $100 to $200 (opens in new tab).
7. Remove kids from your policy
Student discounts can help reduce your rate when kids are on the policy, but premiums for policies with young drivers can still cost much more than policies without them. When it makes sense to remove kids from your policy depends on your situation and whether they have the funds to make their own insurance payments. But if your kids have left the nest and bought a car, the right time may be now, and cutting the cord could greatly reduce your rate.
8. Bundle multiple policies
Getting homeowners insurance and car insurance from the same company could help you land insurance discounts. Allstate (opens in new tab), Geico (opens in new tab), Nationwide (opens in new tab), Progressive (opens in new tab), and State Farm (opens in new tab) are examples of insurers where bundling policies could save you money. These discounts can vary by the insurance provider, and shopping around could help you negotiate the best deal.
Don’t be loyal to one insurance provider — shop around
To wrap up, remember that the insurance provider that offered you the best rate three years ago might not be the one with the most competitive rate today. If you can find a better deal elsewhere, show that deal to your current insurer to see if they can match or beat it. If the first person you speak with at your insurance company doesn’t budge on the price, asking to speak with a manager and letting them know that you might take your business elsewhere could get them to make you a better offer. Comparing rates and negotiating this way every year can help make sure your insurance rates are always competitive.
