You must have insurance if you drive a car — there’s no way around that. Well, technically there is, but you have to be fabulously wealthy to do it.
If you have yet to attain that status, read on. As millions drive during holiday seasons, these tips for saving on auto insurance will benefit you greatly.
Feel free to move on if you are fabulously wealthy. Unless, of course, you also like saving money, which, after all, is how one stays fabulously wealthy isn’t it?
1. Drive Like You Bought It — Not Like You Stole It
Drive crazy, get tickets, have accidents, run up a negative driving record and you’ll pay high insurance premiums — that is, until they cut you off altogether. Be cool, mind your record… you’ll see better rates.
Many insurers also give discounts after observing your driving habits firsthand — if you’re willing to allow the presence of an electronic watchdog in your car. These devices use the onboard computer in your car to measure your throttle and braking inputs along with the cornering loads you impose upon your automobile to create a profile of your driving style.
Your insurance premiums will then be priced accordingly.
2. Pay Your Annual Premium in Full
Paying your insurance all at once typically gets you a pretty nice discount. Insurers treat monthly payments as if they’ve extended you a loan and charge “interest” on each payment.
Let’s say your premium is $900 annually and your insurer imposes a service charge of $9.00 with each monthly payment. You’ll pay an additional $108 for your coverage. Ask if you can get a deal if you pay semi-annually instead, if paying the whole thing all at once will be a strain.
3. Avoid Buying More Than You Need
You will be required to carry maximum coverages in all categories when you lease a car. This is to ensure the leasing company’s posterior is suitably swaddled if you’re involved in an injury accident.
You can typically get by with lower limits of liability when you purchase — if you’re willing to take on more risk. This is one of the key differences when it comes to leasing vs. buying a car.
Further, you can usually do without collision coverage if your car is older — as long as you carry liability to fix anything you might hit. Other drivers are required to carry liability too, so if they hit you, your car will get fixed. With that in mind, why pay for insurance you don’t really need?
Basically, the more risk you’re willing to accept, the less liability the insurance company is asked to assume. In turn, they’ll ask for less money to have your back.
Which brings us to—
4. Carry Higher Deductibles
Again, it’s all about risk vs. reward. Your insurance company will reward you with lower premiums If you agree to pay more on your own to resolve claims.
However, you have to be careful to make sure you can afford to come up with your deductible if something happens. Otherwise, you could find yourself twisting in a very stiff breeze.
5. Choose Your Ride Carefully
All other factors being equal, a Corvette costs more to insure than a Honda Fit.
Why?
Profiling.
The stereotypical Corvette driver is looked upon as being performance oriented, while a Fit driver is considered more likely to be governed by frugality. Also, Corvettes tend to be involved in more claims, which makes them more of a risk than a Fit.
Again, it’s all about the insurer’s perception of the potential for risk.
6. Maintain a Good Credit Score
Statistics show deadbeats tend to behave consistently overall. In other words, if you treat your creditors with minimal regard, you can expect insurance companies to take note of the way you roll and demand more cash.
They know the likelihood of cleaning up behind you at some point is high.
These are tried and true tips for saving on auto insurance. However, you can bypass all of this with a cash deposit at the Department of Motor Vehicles in your state. The amount varies, but it’s typically around $35,000.
