Nine Ways to Reduce Auto Insurance Premiums

By Darrell Victor

Just as you service your vehicle frequently, you should 'tune-up' your auto insurance policy at least once a year. Several variables change from year to year that can lower your auto insurance premium. However, you do not need to sacrifice good coverage for lower rates. There are at least nine easy ways to reduce your auto insurance rates:

1) Comparison shop

2) Increase the deductible amount

3) Reduce coverage for older vehicles

4) Reduce auto-theft risk

5) Include safety features

6) Maintain a good credit record

7) Monitor your claim history

8) Take advantage of discounts

9) Choose low-risk vehicles

1) Comparison-shop

Whether you are purchasing auto insurance for the first time or renewing your coverage, it is important to comparison shop. Insurers have different rates, discounts and coverage options. Comparison-shopping allows you to take advantage of them. The most important thing is not to shop around on premium alone but on the value that you get for your premium and how well it suits your needs.

2) Increase deductibles

The deductible on an auto insurance contract is virtually a self-insurance amount. The insurer does not compensate for damages below the deductible amount. If you raise your deductible, the insurer will reduce your premium rate because you reduce your likelihood of making a claim. Even so, the deductible should represent what you can comfortably afford to pay out of pocket.

3) Reduce coverage for older vehicles

As a rule of thumb, if your insurance premium is more than 10% of the compensation you are likely to receive from the insurer, you should reduce the amount or type of coverage. You can dispense with insurance coverage like collision or comprehensive coverage for older vehicles or those with a low market value.



4) Reduce auto-theft risk

If you install anti-theft devices- keyless entry remote controls, car alarms or steering wheel locks- you will provide deterrents for car thieves. In addition, you can save as much as 10% on your auto insurance premium (and prevent inconvenience) simply by doing this. Car recovery systems may not prevent theft, but will increase the likelihood of your vehicle being found- leading to a reduction in premium as well.

5) Include safety features

Anti-locking brake systems, parking sensors and air bags are some features that help to prevent accidents. In the case of airbags, you lessen the risk of bodily injury in the event of an accident. Insurers recognise your effort and reduced risk with lower premiums.

6) Maintain a good credit record

Insurers consider drivers with good credit better insurance risks. Paying your auto insurance premium on time will assist in maintaining a good credit score as well. If you need to switch auto insurance providers, you should do so in writing. Cancelling a policy because of non-payment will reduce your credit score, which may inflate your premiums.

7) Monitor your claim history

You should report all accidents/ damage to insurers without necessarily making a claim every time. Insurers use their claim experience and your claim history to determine insurance rates that are applicable to you. A poor car insurance claim history will increase your premiums.

8) Take advantage of discounts

Insurers are not always forthcoming about the discounts that they offer or they highlight some discounts over others. You can significantly reduce your auto insurance premium by asking about and taking advantage of one or more discounts offered.

-Multiple-policies discount: Insurers typically offer discounts if you have another type of insurance with them or with an affiliate company within a group.

- Student discounts: Some insurers offer discounts to high-performing students or if your child is in college.

-Safe driver discount: If you maintain a good, unblemished driving record over time, insurers reward this with savings. Defensive driving certificates can also help you qualify as a 'safe driver'.

-Membership discounts: If you are a member of a listed association (e.g. a motor club) or purchase your insurance through an affiliated institutional agent, you can save a lot on your premium.

-Low mileage discount: If you drive less (for whatever reason), your insurance classification may change from 'drive to work' to 'occasional driver' or 'drive for pleasure'. You would not only save on fuel, but on your insurance premium.

-Baby on board discounts: Drivers who have children generally drive more safely.



- Other discounts include renewal (for renewing your policy with the same insurer), age, driving experience and marital status.

This discount-list is not exhaustive. You must check with insurers to determine what they offer and for which discounts you qualify.

9) Choose the right vehicle

The risks of theft, safety and the cost of repairing and replacing parts differ among car models. According to carinsurance.com, models that are high-risk for theft include Honda Accord, Toyota Camry, Ford F-150, Acura Integra, Nissan Sentra, Toyota Corolla and Toyota Pickups. High-tech cars are costly to repair or replace and attract higher premiums. In addition, cars with more in-built safety features yield lower premiums.

Purchasing auto insurance is unavoidable. However, you can and must avoid paying too much for it. By following a combination of premium-reducing methods, you will reduce your risk of damage, bodily injury or theft. More mundanely, you can save up to 50% on your car insurance premiums!

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