An individual searching for car insurance may get a different quote from different auto insurance providers.
Simply put, if you only get one quote, how do you know if you are overpaying for insurance?
To help you understand the market and your options, we recommend you shop around for quotes from at least three insurance companies.
How do you do this?
There are 2 primary ways to purchase a coverage policy:
- Use an agent
- Use an independent agency
Try any and all methods to secure the most bang for your buck.
If you are still not convinced on why you should explore the auto insurance market, here are 7 additional reasons:
- Save Money
- You Have a Good Driving Record
- Insurers Rates Change Frequently
- You Are A Better Driver
- Your Vehicle Has Lost Value
- Your Credit Has Improved
- Shopping is Free
7 Reasons You Should Try To Lower Your Auto Insurance Burden
When you are shopping for insurance coverage for your car, there are significant factors that influence your rate. Click here to read about some of these factors.
Despite the elements that are out of your control, there is still a lot you can do to lock in a lower premium.
You Want To Save Money
You can save money on the premiums you pay your insurance company by taking advantage of discounts. Some of these auto insurance discounts include:
- Insure more than one vehicle with the provider.
- Combining multiple policies (auto insurance with homeowners insurance) with the same carrier.
- Good driving discount
- Good grade discount
You Have A Good Driving Record
To help reduce your car insurance premium, simply follow basic traffic laws such as:
- Always using the turning signals
- Stopping at all stop signs
- Keeping to your lane
- Maintaining the speed limit
Being careful on the road reduces the chances of being involved in an accident, breaking road traffic laws and receiving a ticket.
Drivers who receive tickets for speeding are considered a higher risk group by insurance carriers.
You should expect to have auto insurers evaluate your driving habits when calculating your policy premium.
Insurers Adjust Their Algorithms Frequently
Various insurers offer different policies and rates. However, they all factor in risk to calculate premium rates for policyholders. As the level of risk changes, their algorithms change.
Algorithms are founded on important indicators about a client and evaluated against set information that weighs risk.
Underwriters then estimate the risk that a policyholder may file a claim against their policy.
Typically, an insurer’s algorithm is a combination of all factors that affect and determine your car insurance rate.
Some of these factors are:
- Marital status
- Credit history
- Your address
- Driving record
- Driving experience
- Type of vehicle
- Coverages and deductibles
- Vehicle use
As algorithms change frequently (and without notice), we recommend getting periodic quotes. What’s to lose by looking for lower rates?
Your age is a determining factor when it comes to car insurance premiums (in terms of risk). Insurers consider teenage drivers a high-risk group, so their rates are higher than usual.
However, the high premiums decrease as the driver reaches 25 years depending on their driving history.
Young drivers are more likely to get a speeding ticket or be involved in a car accident than older motorists.
Older drivers are highly experienced, and they are known to drive at moderate speeds on the highway. Therefore, they are less likely to cause an accident.
On the other hand, when senior drivers are over 75 years, their premiums start to shoot high.
Unfortunately, in the aging process, we lose our ability to react quickly and think as sharp as we used to when we were younger. Thus, from an insurance carriers perspective, we are less likely to act fast to avoid an accident from happening.
Your Vehicle Has Depreciated
Unfortunately, you might have been paying premium rates that are higher than what your car is worth. You may want to consider opting out of comprehensive and collision car insurance for old vehicles.
There is a simple way to find out whether your comprehensive and collision policies are worth paying. Add up the two insurance premiums and multiply the total by ten.
If your car is worth more than the total, you should keep paying both policies. If it is below, then it is time to stop paying the premiums.
You can use this as a general rule, but it is best to consult with a professional before making any decisions that may leave you vulnerable.
Your Credit Has Improved
Insurers take into account your credit history when calculating your rates. When you have a bad credit history, you might be paying up to 50% more than a person with a good credit score.
Shopping Is Free
If an agency tries to charge you for a quote, tell them to take a hike.
As the insurers frequently change their rates, you may be able to pay less for your auto insurance.
Therefore, it is wise to shop around for the lowest premiums you can find.
So if you are wondering how to save money on your auto insurance, there you have it. We hope that one or more of the factors above encourage you to do some free shopping to find the lowest car insurance rates.