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Tips for Saving on Auto Insurance

08/29/2022

For most people, driving is a fact of life—which means auto insurance is a necessary expense. Although it’s required if you get behind the wheel, that doesn’t mean you have to overpay for it. Here, we’ll offer some information on premiums as well as a few tips to cut auto insurance spending without sacrificing coverage.

How are Auto Insurance Premiums Calculated?

Auto insurance premiums are a measure of risk—in this case, the likelihood that the insurance company will have to pay claims. The carrier’s level of risk rises as coverage limits do, which means you’ll pay more.

Certain driving behaviors also create risks. For instance, if you’ve had an accident or received a speeding ticket, the cost of insurance services will likely increase. By using the following tips, however, drivers can keep those increases to a minimum.

Shop Around

In some cases, the easiest way to cut insurance costs is to change carriers. These companies all use the same rating factors when determining premiums, but each factor may be weighed differently. For example, if your credit isn’t the best, one company may quote higher premiums at renewal, while another may not. Other factors, such as geographical location and age, also play a role. In any event, it makes sense to compare coverage rates every year or so to ensure that you’re getting the lowest rate.

Research Coverage Before Purchasing a New Vehicle

There are few things better than the feeling of driving home in a new car. The cost of coverage, however, can vary significantly, even among vehicles from a single automaker. Multiple factors affect the cost of coverage, including vehicle value, theft rates, and repair costs. A little preparedness goes a long way! Before signing a purchase contract, get a few quotes to ensure that the cost of coverage is budget friendly.

Monitor Your Credit

While it may seem unfair and discriminatory, it’s legal: in most areas, auto insurers can use a person’s credit history to determine their premiums. It’s been suggested that policyholders with bad credit are more likely to file claims, and only a few states bar insurers from using drivers’ credit scores as a factor. Check your credit often, act to remove inaccuracies, and find other ways to improve your score—you may save hundreds or even thousands.

Bundle if Possible

Most auto insurance companies offer other types of coverage, and almost all offer discounts for policy bundling. For example, if one buys home and auto insurance from the same company, they’ll get a discount on both. While discounts vary, several combinations can help a driver earn additional savings.

Drive Less

The events of the last several years have changed the way we think about work. As many people are still working from home, we’re driving less—which offers numerous advantages. Not only is there no commute to stress over, but there are also significant insurance savings to consider. The average American drives 15,000 miles per year, but many companies offer discounts for those who cut that number in half. With some adjustments to your driving habits, you can save on auto insurance.

Pay for What You Need

Some companies offer usage-based coverage, which matches rates to risk factors based on measurement technology. Known as telematics, these companies use devices and smartphone apps to monitor mileage and driving habits. A few insurers offer by-the-mile coverage, while others combine traditional rating factors with discounts based on reduced risk and usage. When drivers take basic steps to improve safety and reduce risk, they can earn significant discounts.

Consider the Need for Optional Coverage for an Older Vehicle

Most states require liability insurance, while others may also require bodily injury coverage. Collision insurance isn’t legally required, though. If your car is older and it’s paid off, it may make sense to omit comprehensive and collision coverage.

Search for Other Discounts

Many insurers offer various ways to save, but most strategies require action on a driver’s part. Ask the company if there are discounts for the completion of defensive driving courses, good students, and other factors. A little bit of digging may bring big savings!

Look at the Big Picture and Save on Auto Insurance

When cutting auto insurance costs, it’s tempting to start at the top and work downward. Rather than reducing limits and eliminating coverage categories, it may be better to look for discounts, consider mileage-based insurance, monitor your credit, and adjust your driving habits. A local insurance agent can review various options and explain how a policy’s parts work to protect vehicles, their owners, and other motorists. Academy West is a top insurance provider in Fresno, CA, and our agents are here to help drivers find the right coverage at the right price. Call or click today to discuss coverage choices.

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