Alright let’s get down to brass tacks. When it comes to car insurance price is king. Now I’m a believer in the product as well. I spend all day every day explaining why insurance is important. Important as it may be, it does no one any good if they can’t afford it, so here are some tips to help you save on your auto insurance now and in the future.
How is your auto insurance premium calculated?
Auto insurance companies use something called an insurance score to help rate policies. Your insurance score is the insurance industry’s attempt to make your personal ‘riskiness’ quantifiable. There is no one calculation to come up with an insurance score. Each company determines their own. They will look at factors such as how long you’ve been with your most recent carrier, what your liability limits are and your credit score. They take these factors, throw them into their proprietary formula and that number becomes a factor for how they charge for insurance.
Car insurance carriers also look at where you live. They consider local weather, topography, crime rates, traffic, and overall claims history of your area. For instance, if you live in the city, your rates may be significantly higher than if you lived in a more rural area.
All insurance carriers look at your claims and driving histories. This stands to reason. If you have a few blemishes on your driving record, the car insurance companies will charge more until those records are a few years old. This goes for other drivers living in your household as well.
Another big part of your insurance picture is the vehicles that you own. More expensive vehicles typically cost more that less expensive vehicles. But also, insurance carriers look at vehicle performance, the cost of replacement parts, safety features, and how often a vehicle is stolen or wrecked.
So how do I save on my auto insurance?
- First of all, avoid claims.
- Obviously driving carefully plays a roll in being claims free, but also you may consider paying out of pocket for minor claims. It takes some discipline, but it may save you a bunch over time.
- Don’t wait until the last minute.
- A lot of carriers will offer an advance quote discount for shopping a couple weeks ahead of when you need the insurance. This shows them up front that you’re responsible and they should want to work with you.
- Take advantage of discounts.
- There are tons of discounts out there, but by far the most substatial comes from having your auto insurance and home insurance policies with the same company. And bear in mind, that’s a discount on both policies. It will vary from company to company, but it should definitely be explored.
- Improve your credit score.
- I can’t emphasize enough how important your credit score is to insurance carriers when calculating your car insurance cost. Good credit = Good risk. Here’s a good article about improving your credit.
- Shop around every once in a while.
- We do not recommend that you change auto insurance carriers every 6 months or every year. You may be able to save a few dollars, but it will probably be very nominal. And you won’t be helping your insurance score by jumping from carrier to carrier.
- Consider a broker like Hurley Insurance Brokers to look at multiple carriers for you.
- When you work with a broker, they will shop around to several carriers for you rather than you having the same conversation over and over again.
- BONUS: A quality broker will also keep an eye on your policies and shop them automatically to make sure you’re getting a good deal. Brokers are paid the same way your insurance agents are, so there’s no extra cost to you.
- Carry higher limits.
- Okay this one’s a little counter-intuitive, but it can have a positive effect on your insurance score over time. Initially, a carrier will charge you more for carrying higher limits, but over time, when it comes time to shop you’re likely to get better rates. Not to mention, higher limits offer you more protection.
So there’s no magic bullet, but there are definitely ways you can keep your premiums in line. Give us a call today and we’ll help you put these techniques into action!