Motorists must have auto insurance to operate a vehicle. And driving without one can result in hefty fines in most states and jeopardize future eligibility for coverage.
Besides, if an accident occurs, coverages such as collision insurance, comprehensive insurance, property damage liability, and bodily injury liability can help cover the costs of costly claims. Auto insurance protects you, your family, passengers, and other drivers.
But how do you get the best auto insurance rates and save costs on premiums? This report analyzes various practical strategies to lower your auto insurance costs.
How Much Does Car Insurance Cost?
According to a few analyses of car insurance prices for 2023, full coverage costs an average of $2,014 annually, compared to $622 for minimum coverage. This rate is about $168 monthly for full auto coverage, while minimal coverage costs $52 on average.
Your premium, however, depends on where you live. For example, drivers looking to compare Vermont car insurance rates can expect to pay an average Vermont of $764 annually or $63 monthly. Other factors insurers consider include your driving record, credit score, age, and the type of car you drive.
Five Ways To Get Lower Auto Insurance Rates
The primary benefit of purchasing the cheapest auto insurance policy is that you will have to pay a lower monthly premium. Some drivers believe they can use the money saved each month to cover other expenses.
Here are five popular ways to lower your auto insurance costs:
1. Shop Around and Compare Costs
Comparing car insurance policies can help you get the coverage you need at the best possible rate for your situation. However, according to a Statista study, 39% of drivers in the United States never shop for lower car insurance rates.
Insurers frequently change underwriting criteria, which can help drivers qualify for lower rates or better coverage. It may mean higher premiums if you stay with the same provider. Insurance costs can also vary from year to year. Drivers who have yet to shop for better policies between these years may be overpaying for their insurance, emphasizing the importance of regularly re-evaluating your rates and comparing quotes.
Most experts recommend shopping around for car insurance every 6 to 12 months or when your policy is up for renewal. Shopping for new car insurance at least once a year can help you save money and adjust the policy to fit your current lifestyle.
2. Bundle Your Insurance Policies
Purchasing multiple policies from the same company or "bundling" typically results in a discount. Consider it a simple and popular way to save money without sacrificing coverage. The good news is that many insurers provide the option to combine multiple products. Bundling may also mean a multipolicy, multiline, or multiproduct discount, depending on your insurer.
You can spend a lot less by combining your purchases each year. The majority of people combine their insurance policies primarily for this purpose. The policies you choose will determine how much you can save.
Insurance bundles can also make billing and renewals easier - and if the unthinkable happens and you need to file a claim involving multiple policies, you can streamline the process.
3. Maintain a Good a Credit Record
Insurance companies use credit-based insurance ratings for underwriting, grouping customers according to risk, and rating, determining whether to raise or lower premiums. According to the Insurance Information Institute, you'll usually be eligible for lower rates if you have a better credit-based insurance score, a stellar driving record, and no claims on your record.
Insurance companies evaluate the risk they will assume by insuring you based on your credit score. People with higher credit scores are less likely to submit insurance claims, while people with lower credit scores are more likely to do so. As such, an individual with a comparatively high credit score, for instance, might pay a lower premium than an individual with a relatively low credit score.
4. Ask About Multi-Car Discount
A multi-car insurance policy covers multiple vehicles garaged at the same address. This discount is available to drivers who insure multiple cars with the same insurance company. Multi-car policies are often less expensive than purchasing separate policies for each vehicle in the household.
This discount is a great way to reduce the cost of insuring multiple vehicles. For instance, if you and your spouse own a car and have the same insurance policy, you'll be eligible for a multi-car discount. You will receive an additional discount if you purchase a vehicle for your teen driver and add it to your policy.
When you apply for a quote, you will provide vehicle information for each car you want to add to the policy and driver information.
5. Have a Good Driving Record
Also known as Motor Vehicle Record (MVR), a driving record is an official document containing your driving history and personal information issued by your state's Department of Motor Vehicles (DMV). One of the main requirements for low insurance rates is to keep a clean driving record.
Driving while intoxicated, reckless driving, and over speeding are serious violations that can negatively impact your MVR. In addition, driving without valid car insurance and a license may put negative points on your MVR. Other violations relating to driving include distracted driving practices such as texting or calling with a handheld device. These violations and at-fault accident cases can cause MVR ratings to plummet quickly.
Insurance companies will consider you a lower-risk driver to insure if you have no tickets, at-fault accidents, or traffic-related convictions.
Maintaining a spotless driving record, upholding a high credit score, and looking around for specialized deals are all requirements for drivers to lower car insurance costs. In addition, consider the sort of car you'll be buying when you visit auto dealerships in person or online. The cost of insurance varies by type of vehicle. The tips in this report will also help you get started on more affordable auto insurance.