Auto insurance is a mandatory purchase for drivers, both to comply with the law and to provide important financial protection. But since motorists have to pay for this coverage year after year, it’s important to try to keep costs down without compromising essential coverage.
The good news is that there are five things drivers could do today that could potentially lead to an immediate reduction in premium costs. Here is what they are.
1. Increase your deductible
When purchasing auto insurance, drivers have a choice of how much their deductible should be. The deductible is the amount the insured must pay for covered repairs before the insurer pays the difference. For example, if a driver has a deductible of $1,000 and there is $5,000 of covered damage, the driver will pay $1,000 and the insurer will pay $4,000.
A higher deductible can lead to lower premiums, even if it means having to pay more if something goes wrong. For motorists with emergency savings who believe the chances of a claim are slim in the immediate future, it may be a good idea to increase the amount of the deductible.
2. Ditch unnecessary coverage
It’s important not to compromise on essential protections just to save money. No driver wants to end up paying a fortune out of pocket after an accident or other covered incident because they didn’t have enough insurance.
But motorists also don’t want to pay for protections they don’t need. For example, if a driver has a AAA, it would make little sense to pay additional premiums to obtain roadside assistance from an auto insurer. Likewise, motorists with old cars that aren’t worth much may find that paying for collision coverage isn’t worth the money.
Getting rid of unnecessary coverage can eliminate the premiums that were due for that protection, providing immediate savings.
3. Bundle insurance policies
Insurers give discounts to loyal customers. Therefore, taking out several policies with the same insurer can save money. This could mean insuring multiple cars with the same company, or even bundling other types of coverage such as renter’s or homeowner’s insurance with car coverage.
4. Reduce the miles traveled
When a car is not driven as much, the risk of a traffic accident decreases. Therefore, drivers should inform their insurer if they drive fewer kilometers than in the past. By reducing the kilometers traveled and alerting the insurance company, motorists can reduce their premiums.
This is especially relevant for the many people who have transitioned to remote work during the pandemic. Once a car is no longer used for travel, it should be less expensive to purchase insurance for it.
5. Ask for discounts
Finally, many auto insurers offer several savings opportunities, including for those taking a defensive driving course, for teenagers with good grades, or for people who work for specific companies. Setting up automatic payments or opting for paperless statements can also reduce premiums.
Drivers should ask insurers for discounts they are not currently receiving to see if they can reduce premiums. Asking for savings opportunities, combined with the other steps on this list, could make auto insurance coverage much cheaper. It’s worth taking these steps now to realize immediate savings and reduce ongoing costs in years to come.
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