Are you among the 40 per cent of Americans making a New Year’s resolution this January? If so, the chances are that one resolution you’re considering is saving money. This is, along with getting more exercise and eating better, the most popular New Year’s resolution.
With auto rates rising for most Americans, getting your auto insurance premiums down might not be the first place you look to save money. But with a few changes to your lifestyle and habits, you might be able to find some savings next year.
1. Work on your credit score
As you may be aware, your credit score affects a lot of aspects in your life. Having a poor credit history can greatly impact your financial freedom. You could be denied a line of credit, pay higher interest on a mortgage, or even pay more for your car insurance.
In all but a handful of states, insurance companies use your credit score, among other factors, to price your auto insurance policy. Drivers with a low credit score can pay as much as twice more for car insurance than those with good credit history.
What can you do to improve your credit score? Before you attempt to fix your credit score, your first step should be to order your credit report from Equifax, Experian, and TransUnion. When you receive the reports, go through it carefully and correct any errors.
Even something as simple as making sure you pay your bills on time will help improve your credit score. You could also make an effort to pay down your debt and stop applying for credit.
Improving your credit score has more benefits than just lowering your insurance premiums. You can rent that apartment you’ve been eying. You won’t have to put down security deposits for a cell phone contract or utilities.
2. Pay attention to your bad driving habits
Your driving record is a major influence on your auto insurance rate. Being a cautious driver with good habits is going to help you avoid accidents. But it will also save you money.
Some violations, tickets, and claims are much more costly than others. Each insurance company weighs the violations differently, so the impact on your rate varies. In general, you can expect to see bigger rate increases for more serious infractions.
Getting caught driving without lights is considered a very low-impact offense and could increase your rate by 4 per cent and texting while driving could bring your rate up by 16 per cent.
On the higher end, a DUI could raise your rate by 77 per cent and leaving the scene of an accident will bump up your rate by 85 per cent.
Unfortunately, even accidents where you’re not at fault can raise your rates as well. These numbers are all dependent on your insurance provider.
The good news is that if you do have any tickets or violations on your driving record, they don’t influence your rate forever. Most insurance companies give an increased rate for three years before gradually lowering, but it does depend on the kind of ticket you receive.
You should always ask your agent if you want to know exactly how long a violation will affect your car insurance premium.
Signing up for a defensive driving course
If you want to take steps to improve your driving skills, you can always sign up for a defensive driving course. These courses will teach you how to use safe driving techniques for car accident prevention.
Often times, insurers provide a discount on the car insurance policy for drivers who take these courses since safe driving means fewer claims.
Each state and every insurance company has different rules and qualifications when it comes to defensive driving discounts. Eligibility requirements also vary so make sure you talk to your agent about it.
Sometimes, insurers provide a discount for the course itself too.
3. Use your car less
Making the effort to leave the car at home more often can have several benefits that work with some of the most popular New Year’s resolutions. Adding biking and walking to your daily routine incorporates itself easily into a fitness goal.
Using your car less can also save you money and not just because you’re paying for less gas.
Car insurance providers offer a low-mileage discount to drivers who accumulate an annual mileage under a certain threshold.
The mileage cap varies among insurers, but the range can be anywhere between 7,500 and 15,000 miles per year. If you’ve been taking public transport or walking to work, you could be eligible for this discount and should take advantage of it. If you join a carpool to go to work a couple days a week, this discount applies to you too.
The savings on your premium are differ from company to company, so you’ll have to ask your agent about it.
4. Seek out other discounts
Beyond the low-mileage discount, you should consider asking your agent about other discounts you’re eligible for. All insurance companies have several categories of driving discounts, such as customer loyalty, driving history, demographic, driving training, and car equipment.
Here are a few examples of some discounts that are offered:
- Being part of an alumni or professional group
- If you get insurance through your employer
- You decide to pay for your policy in full, you’re on auto-pay, or you went paperless
- Your car comes with anti-lock brakes or you drive a hybrid vehicle, like the Toyota Prius.
- You decided to renew your policy early or you purchased another policy with the same company
It’s important to remember that you should always ask your agent about these discounts because you never know which ones you could qualify for.
5. Making the effort to shop around
Can you remember the last time you switched insurance providers? It’s easy to stick with one insurance company, but you’ll only get the best rate if you shop around every 2-3 years.
If you’ve been with the same company for a while, make a resolution to get multiple quotes and if you find a cheaper quote, change companies.
Switching car insurance companies is a lot easier than you think. Prices vary from company to company so shopping around will ensure that you’re getting the best rate and that you’re not paying more than you should.
Getting multiple quotes from insurance companies can take some time and research, but the payoff is worth it. To make things easier, you can download the Cover app and we’ll search over 30 different providers to find the best rate for you.
Using tax refund to buy car insurance all at once
If one of your resolutions is to stop procrastinating, you can start with your taxes. The earlier you file, the earlier you get your tax refund back and you can put that money to good use.
You could apply a portion of the tax refund to upgrading your current insurance coverage. If you didn’t have comprehensive and collision coverage before, you could now pay to add it on.
Alternatively, if your renewal date is coming up, you can use that tax refund to pay off the full year of insurance, which some insurance companies give you a discount for.
Using your tax refund to purchase car insurance won’t necessarily lower your premiums, but it’s something to keep in mind for the tax season.