Every driver needs good auto insurance coverage. Some types of auto insurance are required by law, but insurance can also help drivers avoid financial disaster in the event of a costly accident or incident.
While buying the right coverage is important, it can also be a financial burden. The premiums for full protection are sometimes quite high. The good news is that most drivers can take advantage of ways to reduce car insurance costs.
Personal finance expert Dave Ramsey suggests several tips for saving on car insurance costs.
1. Ask for a discount
Ramsey’s blog offers this: Sometimes the best way to save money on coverage is to simply ask to pay less. A number of discounts may be available for things like group affiliation, good grades, age, or vehicle safety features. Often motorists are unaware of these opportunities until they ask for them.
2. Shop for coverage
“You’re not married to your car insurance policy,” says Ramsey’s blog. He suggests shopping around regularly to compare prices. Drivers who discover a cheaper alternative can change coverage or ask their current insurer to match the lower price.
3. Upgrade to a larger deductible
A deductible is an amount an insured must pay out of pocket before insurance companies pay out covered losses.
As Ramsey explains, moving from a lower deductible to a higher deductible can lower car insurance premiums, although it increases costs in the event of a collision. For those with an emergency fund to cover the cost of a franchise, it may be worth taking on that extra risk. The premium reduction is guaranteed, and an accident resulting in a claim may not occur for years, if ever.
4. Ditch unnecessary coverage
Ramsey suggests getting rid of any insurance coverage that isn’t really necessary. Examples include collision and comprehensive coverage on older cars. These types of insurance are not compulsory and cover the vehicles in the event of an accident, theft or other loss.
If a car isn’t worth much and the insurer wouldn’t pay much to replace it, it may not be worth paying premiums for this type of protection.
5. Buy the right car
The savings can come from an insurance-friendly vehicle, which can include smaller cars and older, cheaper used vehicles. Ramsey’s blog also suggests contacting car insurers before buying a new vehicle to find out how the cars the driver is considering will impact insurance premiums.
6. Pay premiums differently
As Ramsey points out, paying premiums in full once a year rather than monthly can be cheaper with many insurers, as can setting up automatic payments. It’s easy to switch to one of these payment methods, but do your research to make sure the insurance company actually offers a discount for doing so.
7. Improve your driving habits
Travel violations and accidents increase the risk of covering drivers, so Ramsey suggests driving carefully to avoid black marks that can result in higher premiums. He also points out that there is often a discount for taking a defensive driving course.
Ramsey is right about these suggestions and offers more money-saving tips. These include bundling multiple policies with the same insurer to qualify for loyalty discounts and keeping insurers informed of life changes that may affect insurance rates.
The more these measures are taken by drivers, the greater the impact on premiums – so it is worth trying as many as possible to reduce insurance costs and pocket the savings.
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