Car Insurance

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Nearly 215 million U.S. drivers carry car insurance, and many may ask themselves, “Why is my car insurance so high?” If you’re one of those Americans, know that there are ways you can take control of the situation and reduce your insurance premiums. 

We’ll guide you through why your car insurance may be higher than normal and ways you can proactively work to lower the costs. 

1. Credit Score

Most insurance providers consider your credit score when determining insurance rates. Maintaining a good credit score can help individuals maintain a lower insurance premium. However, those with poor credit scores often need to pay more since they are seen as being higher risk. 

Factors that impact your FICO® credit score include:

  • Length of credit history
  • Payment history
  • Credit mix
  • Amount owed
  • New credit 

Keep in mind that credit score is only one factor used by insurers to set premiums. 

2. Driving Record 

Your driving record can significantly impact your insurance premium costs. Those with clean driving records without any traffic violations or accidents tend to pay lower insurance premiums. However, policyholders who have been in vehicle accidents and accrued traffic violations may pay for higher insurance premiums. Your insurance provider can increase your premium for:

  • Speeding tickets
  • DUIs and DWIs
  • Parking tickets

Your insurance may provide safe driver discounts to those with good driving records and who are accident-free for a required period. These discounts can decrease your insurance premiums. 

3. Coverage Levels and Types

Your insurance rates can be significantly affected by the coverage type and insurance level you opt for. Depending on where you reside, your state has regulations and criteria for minimum policy coverage. 

For example, Washington requires drivers to have the following minimum coverage:

  • $25,000 per person for bodily injury or death in an accident
  • $50,000 per person for bodily injury or death of any two people in an accident
  • $10,000 of injury to or destruction of property of others in an accident

Depending on other factors, like your vehicle type and whether it’s leased, you may require additional coverage on top of the minimum state requirements. 

4. Claim History

Similar to your driving record, you want to keep your claim history as unscathed as possible. However, accidents happen, whether they result from your actions or those of another driver. Multiple filed claims can impact premium costs, especially if they are large claims, like a totaled vehicle. Plus, claims have a long-lasting impact—an at-fault accident can increase your rates for at least three years following the claim.

5. Location 

Insurance premiums can greatly vary by location, especially if you live in a city versus a more rural area. Insurance premiums in each state are affected by various factors, including:

  • Rate of uninsured motorists
  • Frequency of filed claims
  • Minimum insurance limits

Things like road conditions and crime rates can also impact your auto insurance. For example, If you live in an area with high auto theft rates and poorly planned roads that are prone to cause accidents, you’ll likely be paying higher insurance rates. 

6. Type of Vehicle

When insurers determine insurance premiums, they consider vehicle types. Certain car models have a lower likelihood of ensuring the safety of passengers or cost more to repair in the case of an accident, leading to higher insurance rates. 

Vehicles that typically have higher rates are:

  • Smaller cars: Compact vehicles sustain more extensive damage in a crash, so they’ll usually have higher coverage rates. 
  • Leased cars: Leasing companies typically require full coverage for leased vehicles, including comprehensive and collision coverage, to cover damage in a potential accident. 
  • Cars with premium features: Trim levels and technological features, such as touch screens, can be expensive to repair when damaged. Providers keep this in mind when providing a premium. However, a vehicle with advanced safety features is at lower risk, resulting in a lower premium. 

Vehicles that typically have lower rates are:

  • Small SUVs and minivans: Safer and bigger cars tend to have the most reasonable insurance rates. 
  • Older cars: Most car values depreciate over time. In the case of an accident, your provider will need to pay out less than a newer vehicle. The exception is collector and classic vehicles. 

Overall, newer, luxurious, smaller vehicles tend to have more expensive premiums.

7. Gender or Age

Gender can impact your insurance premiums in the majority of states. However, there are states that have banned gender in insurance rating, including:

  • California
  • Michigan
  • Massachusetts
  • Pennsylvania 
  • North Carolina
  • Montana
  • Hawaii

Your age is another uncontrollable factor that impacts your insurance rates. Your insurer will likely charge you more if you have young drivers under 25 on your insurance policy. This is because they’re viewed as less experienced drivers with a higher risk of filing a claim. 

8. Insurance Company

Rates vary across insurance providers. It’s easy to stick to renewing the same policy every year, but you could be losing out on savings by switching insurance companies. Among the leading auto insurance companies across the country, the average annual car insurance rate stands at $1,547 per year. Yet, a driver with identical coverage may pay as little as $1,022 with one company or as much as $2,135. 

9. Driving Patterns

When you apply for insurance, expect your insurance provider to inquire about your occupation and residence. How often you drive and how much time you spend behind the wheel can increase your insurance premiums. 

Those with longer work commutes increase their risk of being in an accident while they’re on the road. If you work in an expensive city and live in the suburbs outside the city to save on housing costs, you could, unfortunately, be paying a higher insurance rate. 

10. Deductibles

Your deductible is the amount you would need to pay if your car is damaged and you file a claim. Your insurance provider pays the remaining total cost to fix your vehicle. For example, if you have a $500 deductible and file a claim for $2,500 in damages, you’ll need to pay the $500 and your insurance will cover the final $2,000. 

If you pay for a lower deductible on your policy, there’s more risk for your insurance provider. Therefore, you’ll likely have to pay for higher insurance premiums. 

11. Policy Add-ons 

Take a look at your policy add-ons. You may be paying for additional coverage you don’t currently need. Evaluate whether it’s necessary to cover items like:

  • Car rental coverage
  • Roadside assistance
  • Comprehensive and collision coverage

While some of these additional coverage items can be beneficial, they aren’t essential expenses. 

12. Car Insurance History

Your car insurance history can impact your insurance premium costs. If you have lapses in your insurance history, periods where you didn’t hold insurance, you can be penalized with higher premiums. Reasons for having gaps in your insurance history include:

  • Being dropped from your insurance provider
  • Your insurance expires and you can’t review your policy
  • You don’t have a vehicle and therefore don’t require auto insurance

You should always have auto insurance when you own a vehicle. Consider acquiring nonowner car insurance if you don’t own a vehicle—it provides coverage when driving cars you don’t own and prevents future premium increases when you do own one.

5 Ways to Lower Your Car Insurance Premium 

As noted above, various factors can skyrocket your car insurance costs. Luckily, there are steps you can take to help lower your premiums and keep more money in your pocket.

1. Maintain a Good Credit Score

Your credit score can greatly impact how expensive your premium is. Improving your credit can help you find lower premiums in the future. Actions that can potentially improve a credit score is:

  • Reviewing your credit report for inaccuracies and errors and correcting them
  • Paying off any outstanding revolving debt
  • Opening a secured credit card if you don’t qualify for a traditional card 
  • Completing payments on time

Improving your credit takes time, especially if you have multiple derogatory marks on your report. Be patient and smart while building your credit back up. 

2. Get Rid of Unnecessary Coverage 

Review your current coverage and evaluate whether you’re paying for add-on coverage you don’t need. For example, if you aren’t frequently renting cars, you likely don’t need car rental coverage. If you do rent a car for occasions like a business trip or vacation, your insurance should cover any damage caused to the rented vehicle.

3. Bundle Your Policies

For homeowners, bundling your home and auto policies can help lower your premiums. We recommend comparing bundling quotes from both of the providers before deciding which provider policy to cancel. Not only can you potentially save on both your premiums, but you will also be able to manage these expenses with one provider.

4. Raise Your Deductible  

Opting for a higher deductible on your car insurance can help lower your premium rate. Your deductible is what you would pay “out of pocket” in a claim. However, you should be able to pay your deductible in case of an accident. If you increase your deductible too much, your insurance won’t cover smaller damages and repairs. 

5. Compare Multiple Quotes

Has it been a while since your insurance premium was set? Shopping around at different insurance providers is the easiest way to get a lower insurance premium. If it’s time to renew your policy and you have a clean driving record, it may be a good time to compare quotes and see if other providers can provide a lower premium. 

FAQ

Below are frequently asked questions about car insurance expenses and factors. 

Does My Credit Score Affect My Car Insurance Rates?  

Your credit score is factored in when your provider calculates your insurance premiums. Those with poorer credit scores (below 580 on the FICO scale and below 601 on the VantageScore® scale) tend to pay higher rates than those with good credit scores. Improving your credit score will help you secure favorable insurance rates and in other financial situations, like when you’re applying for a loan. 

How Can I Lower My Auto Insurance Premiums? 

There are a few actions you can take to potentially lower your insurance premiums, including:

  • Purchase a smaller, older vehicle
  • Remove unnecessary policy add-ons
  • Improve your credit 
  • Raise your deductible 
  • Bundle your home and auto policies
  • Shop around for rates 

Why Does It Cost More to Insure an Expensive Vehicle? 

There are several reasons why auto insurance costs are higher for an expensive vehicle. Luxury cars have more expensive parts, such as high-tech and advanced safety features. Also, if your vehicle is severely damaged and declared totaled, your insurance provider will need to cover the value of your car. 

View New Car Loan Rates With Credit.com

Now that you know why your car insurance is so high, it’s time to take steps to reduce your premiums. Credit.com can provide you with a free credit score and credit report so you can see where you need to start working on your credit and lowering your premium rates. 

If you’re shopping for a new auto loan, Credit.com offers custom  that won’t impact your credit. Get prequalified and see your rates today.

Source: credit.com

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This article originally appeared on RickOrford.com and has been republished here with permission.

Car owners throughout the U.S. almost always need to have a car insurance policy. With the financial considerations involved and the risks drivers face on the road, it’s important to weigh the cost of car insurance carefully. Do you think your car insurance is too high? If so, you can find cheap car insurance by shopping around. 

In certain ways, your car insurance costs may be a reflection of you and your driving habits. Auto insurance providers often base the rates they charge on important factors. Some of these include your credit score, where you live, your driving record, and the type of car you drive. Therefore, if your premiums recently shot up or seem too high, you need to determine the possible reasons for it. 

Reason #1: You Have Bad Credit

In most states, auto insurance companies use your credit score when calculating your car insurance premiums. Therefore, if you have a poor credit score, you may end up having to pay higher insurance premiums. However, the cost increase may depend on the auto insurance provider you choose and where you live. 

According to the Insurance Information Institute, credit-based insurance scores are confidential ratings based on the insured individual’s credit information. Many insurance providers use credit scores in combination with other factors to help determine premiums. This is typically the case for insurance lines such as personal car insurance. 

Reason #2: Poor Driving Record

Before giving you a car insurance policy, all insurance providers will want to know your complete driving record. This includes your traffic violations and accidents you had in the past. Even if the handful of accidents you had did not happen recently, you might still have to pay higher insurance premiums. The same applies to traffic violations. 

However, if you have a clean driving record, you should enjoy lower insurance premiums. When it comes time to renew your policy, your insurance provider will check your driving record for DUIs, accidents, speeding tickets, and other traffic violations. 

Your premiums may increase by as much as 20% after a speeding ticket. A DWI or DUI will cost you significantly more. You will also have to pay steep fines and attorney fees, in addition to an average premium increase of up to $800. 

The reason for this difference in rates is that drivers with poor records are more likely to make more claims in the future. 

Reason #3: Coverage Levels and Types

The type of coverage you choose and the level of insurance you have can greatly influence your insurance rates. Every state decides its own rules and requirements for minimum coverage requirements on any type of policy. 

For example, some states have basic minimum requirements for property damage and bodily injury coverage. Others require additional coverages such as underinsured and/or uninsured motorists and personal injury protection or medical payments coverage. 

A state like South Carolina, for instance, requires drivers to carry the following:

  • A minimum coverage of $25,000 per person for bodily injury
  • $50,000 per accident
  • $25,000 in uninsured motorists’ coverage and property damage coverage within the same limits

Since the minimum requirements for drivers differ by state, you may start with different rates and coverages just on a basic liability insurance policy alone. Furthermore, if your car has a lien, you may need to have additional coverage or higher limits, which would affect your annual rates. 

The answer to the question “Why is my car insurance so high?” may lie in the type of coverage you have. Generally, the more coverage your car has, the more you should expect to pay.

For example, do you have a full coverage insurance policy, which includes collision and comprehensive coverage? If so, it may cost you about 170%  more in premiums than a policy with liability coverage only. 

Reason #4: Your Claim History

Even if you only have a couple of accidents on your driving record, the resulting payouts will impact your insurance premiums. Of course, a driver with a couple of minor fender benders is a significantly lower risk than one who previously totaled several cars. 

Whether the accidents were your fault or not, the number of claims you file will have an impact on your insurance rates. A no-fault accident can lead to a 10% increase in your premium and remain on your record for up to three years. 

However, some states do not allow insurance providers to increase premiums after a no-fault accident. However, filing a claim for such an accident will still count towards your total number of claims. 

Related read: How an Accident Can Affect Your Credit Score

Reason #5: Your Car

When setting premium rates, car insurance providers consider the type of car to be insured. Some types of cars are more likely than others to keep occupants protected in the case of an accident. This results in lower insurance rates.

However, drivers of high-powered cars such as sports cars are statistically more likely to drive recklessly. This makes these drivers more likely to cause accidents, resulting in higher insurance rates. 

According to some studies, safer and bigger cars, such as small SUVs and minivans, tend to have the most reasonable rates of insurance. Smaller cars, on the other hand, have surprisingly high rates. One reason for this could be because they tend to sustain more extensive damage in a crash. 

Reason 6: Where You Live

Car insurance costs vary widely across the United States. If you reside in Michigan, one of the most expensive states for auto insurance, you can expect to pay several times more than people living in Maine, for example. 

Various factors affect insurance rates in each state. These include the number of uninsured drivers, condition of the road network, minimum coverage amounts, and more. That said, you need to understand that insurance rates can vary within a state or city as well. 

For example, if you live in an area with narrow roads that frequently lead to accidents, you may have to pay more for insurance than you would if you lived elsewhere. Those who live in areas with high rates of auto thefts tend to pay more for car insurance as well. 

Reason #7: Your Age or Gender

“Why is my car insurance so high?” This is a question many younger drivers tend to ask. According to the Insurance Information Institute, mature drivers tend to have fewer accidents than less experienced drivers, especially teenagers. This is the reason less experienced drivers pay more for car insurance. 

Also, your insurer will charge you more if you let teenagers and young adults below 25 drive your car. If you have young drivers on your insurance policy, you may end up paying higher premiums.

Your gender may also affect how much you pay for car insurance. Statistically, men tend to get into more accidents and have more DUI-related accidents. Furthermore, they tend to have more serious accidents than women. These are the reasons why women tend to pay less for car insurance than men. 

Young men are likely to pay a lot more for auto insurance. A 20-year-old man, for example, may have to pay about 16% more on his insurance premium than a woman of the same age.

However, as drivers age, the difference in rates tends to even out. Often, older women pay slightly more for car insurance than men of the same age. However, in this case, the difference in rates is quite small. 

Reason #8: Your Insurance Company

Your car insurance may be expensive because your insurance provider charges higher rates. Rates vary dramatically among different insurance providers. Therefore, you could be paying significantly more than necessary. 

According to one study, among the top ten auto insurance providers nationwide, the average price of basic coverage for a good driver is about $440 for six months. However, that same driver could be paying just $309 from one company or as much as $625 from another of the top companies.

Therefore, if you have a good driving record, you could save up to 51% in insurance savings by switching companies. 

Reason #9: Your Driving Patterns

Simply put, you and your insurance provider are at higher risk the more often you’re on the road and the further you drive. If you travel great distances to and from work, driving your car may eliminate some of the inconvenience. You just listen to your favorite music or podcasts to pass the time as you drive to work every day. 

However, you may be paying a higher insurance premium for that convenience. When you apply for insurance coverage, your insurance provider will want to know where you work and where you live. This will help them have a better idea of how far you drive regularly. 

Reason #10: You Have Low Deductibles

When buying car insurance, car owners typically choose a deductible. This is the amount they would need to pay before the insurance provider picks up the tab in the event of theft, an accident, or any other type of vehicle damage. 

Depending on the type of policy you choose, your deductibles may range from $250 to $1,000. However, there’s a catch. Generally, the lower your deductibles are, the higher your annual insurance premium is. 

Reason 11: You Pay for Coverage You Don’t Need

If you think your car insurance is too costly, you need to take a closer look at your policy. Do you need to pay for things such as car rental coverage and roadside assistance? Although such coverage can provide some convenience, they are not the most important things to pay for. 

Reason #12: You Have Gaps in Your Car Insurance

Many auto insurance companies consider the continuity of a car owner’s auto insurance. If you’ve had lapses or gaps in your car insurance history, you may be pegged as a high-risk car owner. As a result, your premium rates may increase by as much as 8% per year. The rate increase goes up to 35% if the coverage lapse extends beyond 30 days.

These penalties may also vary depending on your auto insurance provider. Make sure you ask your provider about how an insurance lapse would affect your premium rates.

The Bottom Line

To find out why your insurance rates seem to be expensive, you must first understand how auto insurance companies determine your rates. Fortunately, in most cases, you can do something about your unnecessarily high car insurance premiums. This may involve adjusting your driving habits or filing fewer claims, if possible.

In addition to shopping around for the best auto insurance rates and the right policy, you should look for discounts as well. These discounts may be applicable to drivers with good records, student drivers, and members of the military. Check your provider’s website to determine the types of discounts they offer. 

The more information you have, the easier you can identify the factors contributing to your car’s high insurance rates. 

Source: credit.com

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Apache is functioning normally

In the United States, it’s illegal to drive a car without car insurance. Depending on the state you’re driving in, the consequences of doing so can range from a fine to a misdemeanor on your record. So, if you’re planning on hitting the road anytime soon, be sure to purchase car insurance to avoid penalties. 

In this article, we’ve researched the average cost of car insurance by state to give you a better idea of how much to budget.  

Key findings: 

  • According to AAA, the national average cost of car insurance for a full-coverage policy was $1,588 in 2022.
  • On average, the cheapest states for full coverage car insurance are Ohio, Maine and Idaho, while the most expensive states are Florida, Louisiana and Michigan. 
  • USAA, Geico and State Farm offer the cheapest minimum coverage plans, while USAA, Geico and Nationwide offer the cheapest full-coverage insurance. 
  • The average cost of car insurance tends to decrease with age, but starts to rise again around age 70. 
  • Individuals with high credit scores pay lower car insurance premiums on average compared to those with poor credit. 

How much is car insurance?

According to AAA, the national average cost of car insurance for a full-coverage policy was $1,588 in 2022. This figure is based on an under 65 years old driver who lives in the city or suburbs, has over six years of driving experience, and has not been involved in any accidents. 

Average cost of car insurance by state

When calculating the cost of car insurance, the state you live in plays a role in how much you can expect to pay. This is because factors like population density, climate, road conditions and crime rate in your area can play a part in the likelihood that you’ll file a claim.  

According to insurance.com, the cheapest states for car insurance if you’re looking for minimum coverage are Iowa, South Dakota and Wyoming costing an average of $263, $267, and $293, respectively. Meanwhile, the cheapest states for full coverage auto insurance are Ohio ($1,023), Maine ($1,116), and Idaho ($1,121). 

The most expensive states for car insurance in terms of minimum coverage are New Jersey, Florida, and New York where drivers pay an average of $989, $908 and $875, respectively. For full coverage insurance, drivers in Florida ($2,560), Louisiana ($2,546), and Delaware ($2,137) pay the most in the country on average. 

State

Minimum coverage

Full coverage

AK

$336

$1,359

AL

$420

$1,542

AR

$422

$1,597

AZ

$494

$1,617

CA

$582

$2,115

CO

$467

$1,940

CT

$773

$1,750

DE

$821

$2,137

FL

$908

$2,560

GA

$567

$1,647

HI

$389

$1,306

IA

$263

$1,321

ID

$326

$1,121

IL

$484

$1,578

IN

$384

$1,256

KS

$389

$1,594

KY

$717

$2,105

LA

$726

$2,546

MA

$523

$1,538

MD

$607

$1,640

ME

$330

$1,116

MI

$711

$2,133

MN

$479

$1,493

MO

$525

$2,104

MS

$434

$1,606

MT

$389

$1,692

NC

$396

$1,368

ND

$340

$1,419

NE

$350

$2,018

NH

$411

$1,307

NJ

$989

$1,901

NM

$376

$1,505

NV

$683

$2,023

NY

$875

$2,020

OH

$308

$1,023

OK

$352

$1,797

OR

$551

$1,244

PA

$398

$1,445

RI

$648

$1,845

SC

$628

$1,894

SD

$267

$1,581

TN

$368

$1,373

TX

$520

$1,875

UT

$526

$1,469

VA

$469

$1,321

VT

$306

$1,158

WA

$505

$1,371

WI

$375

$1,499

WV

$474

$1,610

WY

$293

$1,736

Average cost of insurance by company 

Another factor that’s going to influence how much you can expect to pay for car insurance is the specific company you purchase your plan through.  

According to U.S. News & World Report, USAA, Geico and State Farm offer the cheapest minimum coverage plans, while USAA, Geico, and Nationwide offer the least-expensive full-coverage insurance. 

Farmers, Progressive, and Nationwide offer the most expensive minimum coverage rates while Allstate, Farmers, and Progressive offer the most expensive full coverage plans. 

Insurance company

Minimum coverage

Full coverage

Allstate

$1,961

$2,138

American Family

$1,327

$1,388

Farmers

$1,782

$2,059

Geico

$1,064

$1,238

Nationwide

$1,347

$1,338

Progressive

$1,440

$1,650

State Farm

$1,191

$1,348

Travelers

$1,290

$1,448

USAA

$948

$1,056

Average cost of insurance by age 

According to CarInsurance.com, the cost of both minimum and full coverage car insurance tends to decrease with age, as seen in the chart below. However, there is an uptick around age 70 where rates start to go back up.  

Age

Minimum coverage

Full coverage

20

$1,109

$3,532

30

$539

$1,785

40

$520

$1,682

50

$496

$1,581

60

$482

$1,511

70

$554

$1,661

Average cost of insurance for young drivers

Young drivers are the most expensive age group to insure. Although there are a few exceptions, insurance rates decrease with age among young drivers. 

Age

Minimum coverage

Full coverage

16

$2,402

$7,203

17

$1,971

$5,924

18

$1,706

$5,242

19

$1,234

$3,874

20

$1,109

$3,532

21

$884

$2,864

22

$794

$2,593

23

$736

$2,415

24

$690

$2,267

Average cost of insurance by credit score 

According to the Insurance Information Institute, your credit score is a good indicator of how many insurance claims you’ll file. As a result, insurance companies use credit scores to determine risk, and those with a good credit score pay cheaper premiums. The Zebra found that individuals with poor credit pay approximately 114% more than those with great credit. 

Credit score

Average annual rate

Very poor (300-579)

$2,887

Average (580-669)

$2,296

Good (670-739)

$1,912

Excellent (740-799)

$1,606

Exceptional (800-850)

$1,350

What factors affect your car insurance rate?

As you can see from the above charts, the cost of car insurance varies by the following factors: 

  • Age: Typically, young drivers under the age of 25 and senior drivers over the age of 65 are charged more for car insurance. 
  • State of residence: Since the minimum coverage required varies by state, your location is one of the factors that will influence the price. 
  • ZIP code: In addition to your state of residence, your ZIP code will also play a role in the cost of insurance since your vehicle is more likely to be damaged in certain areas, such as ZIP codes with high crime rates. Typically, the cost of car insurance will be greater in cities than in rural areas. 
  • Marital status: Statistically, married drivers are less risky than single drivers resulting in a lower insurance cost. 
  • Gender: Based on risk, male teenage drivers tend to have the highest cost of car insurance of any demographic. 
  • Credit history: Those with a low credit score tend to pay higher premiums than individuals with good credit. 
  • Driving record: Since car insurance premiums are based on risk, individuals with a good driving record can expect to pay lower premiums, while those with a poor driving record may experience increased rates. 
  • Car make and model: You may pay less if you drive a vehicle that insurance companies deem safe. On the other hand, you’re likely to pay more if you drive a small sports car since they pose a higher risk. 
  • Mileage: Higher annual mileage increases the risk you’ll get into an accident and will likely raise your premiums. 
  • High-risk violations: Driving under the influence and at-fault accidents are examples of violations that may result in you being considered a high-risk driver. 

What’s the difference between full and minimum coverage? 

Minimum coverage car insurance — liability coverage — is required in most states and is used if you’re at fault in an accident. This coverage will pay for damages and injuries of the other party when you’re responsible for the incident. 

On the other hand, full coverage insurance, or collision coverage, includes liability coverage plus damage caused to your own vehicle. Keep in mind that lenders often require you to obtain full coverage insurance before you get an auto loan. 

FAQ

Below, we’ve answered some common questions regarding the cost of auto insurance. 

Can my driving record affect my car insurance rate? 

Your driving record is one of the factors that affects your car insurance rate. As a result, those with traffic violations or accidents on their record can expect to pay higher premiums. 

Does your car insurance cost go down after you pay off your car?

Your care insurance cost doesn’t typically go down after your pay off your car. However, you do have the option to decrease the amount of coverage on your vehicle once it’s paid off. 

Which car insurance company is the cheapest?

As mentioned above, insurance companies that offer the cheapest plans include Geico, Auto-Owners, USAA and Erie.

Does car insurance decrease annually? 

For young drivers in particular, car insurance rates decrease each year you renew your policy without filing a claim. You can expect to see the biggest drop in price at age 25. 

The average cost of car insurance varies by factors including state, age, insurance company and credit score. Some factors, such as your age, are beyond your control, but other factors, such as your credit score, can be improved. 

Check your credit score for free today to see if it’s a reason your car insurance is high. 

Source: credit.com

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Apache is functioning normally

Car insurance can be confusing. First, there are all the policy considerations: Do you want a policy with comp and collision? How much liability should you carry? Do you need uninsured motorist coverage? Even once you make decisions on all these things, the bill that arrives can be difficult to understand—exactly what goes into the pricing for your car insurance premium? Here’s what car insurance companies don’t want you to know about premium pricing.

  • Your car insurance may not be tied to the driver.
  • The type of car you drive matters.
  • Prior claims and questions raise rates.
  • You can check your report for errors.
  • Your credit score impacts your car insurance costs.
  • Where you live impacts your premium account.
  • Your age affects your car insurance premium.
  • Gender, marital status, job and education level can affect premiums.
  • If you bought your car with a loan, your premium may be higher.
  • You can lower your insurance rates.
  • You have options if insurance denies your claim.

Is Car Insurance Tied to Car or Driver?

Technically, car insurance is tied to the car. That means if you let someone else drive your car, your insurance may kick in if there is an accident. Not all insurance policies cover all uses of your vehicle, though, so read the fine print on yours before you allow someone else to drive it. You may also be able to exclude drivers who live with you from your policy if you don’t ever want them driving your car and don’t want them impacting the cost of your policy.

>> Find Car Insurance Quotes. 

Does It Matter What Kind of Car You Drive?

The total value of your car, what type of vehicle it is and what type of safety rating it has all factor into the cost of your policy. Other factors can include how many miles you drive each year, where you park your car, and how many expensive extra features your car has.

Does Your Driving Record Affect Your Insurance?

Every claim you make—and even if you ask an insurance agent about making a claim—gets entered into a database that your current and future insurance carriers can access. If you have had any recent accidents or traffic violations, you may be more expensive to insure than someone with a clean driving record. If you’ve made any recent claims, your insurance premiums will likely go up. And if you shop around for a new company, they’ll have access to your records and will take your driving record into consideration.

Can You Check Your Insurance Reports?

Your insurance companies share information with two databases: the Comprehensive Loss Underwriting Exchange (CLUE) and the Automated Property Loss Underwriting System (A-PLUS). These databases are run by outside agencies—LexisNexis runs CLUE and Verisk Analytics runs A-PLUS—and any claims you make stay in your report for five to seven years, depending on the database.

The Fair Credit Reporting Act entitles you to one free copy of your report every 12 months. You can dispute inaccurate or incomplete information on your report. You are also entitled to notice about any negative decisions based on information in your report. Requesting your reports does not affect your credit score.

  • Request your CLUE report from LexisNexis online or call 866-312-8076.
  • Request your A-PLUS report from Verisk by calling 800-627-3487.

Does Credit Score Impact Your Car Insurance Cost?

In most states, your credit score can impact the cost of your car insurance. The only states that don’t allow car insurance companies to use credit score as a factor in pricing are California, Massachusetts and Hawaii. Statistical studies from the Federal Trade Commission and other research organizations show a correlation between credit score and how much a person is likely to cost a car insurance company. In short, someone with a poor credit score is seen as a greater risk, so the insurance company may charge more for the insurance to help cover expenses related to future claims.

Does Where You Live Impact Your Premium Amount?

Where you live can impact your car insurance cost. In 2018, for example, the average car insurance premium in Michigan was 64% higher than the national average. Other states with car insurance premium averages on the high end included Louisiana, Florida, Rhode Island and Connecticut. States with the least expensive average car insurance premiums included Vermont, Ohio, Virginia, Idaho and Iowa.

Does Age Impact Your Premium?

When it comes to what car insurance companies don’t want you to know, this one isn’t super secret. Age does impact your premiums, with the youngest and oldest drivers typically paying the most on average.

The youngest drivers pay the most for insurance. Premiums are highest at the age of 18 and decline steadily until the driver turns 25. In the eyes of carriers, drivers then enter adulthood, during which time premiums stay pretty flat for the next 30 years or so, until the age 55. Premiums inch up slowly between ages 55 and 65 before jumping way up around the age of 75.

In addition to your age, your gender, marital status, education level and even your job can affect your insurance rates.

If You Bought Your Car Via a Loan, Is Your Insurance Cost Higher?

If you don’t own your vehicle outright, then you may pay more to insure it. If you own a vehicle outright, you’re only required to carry liability on it. Liability is the part of your insurance policy that kicks in to cover damage caused to other people’s cars or property in an accident you’re at fault in.

When you have a loan, the bank is concerned about protecting its investment. That means it may require you to carry comp and collision as well. This is the part of an auto policy that covers damage to your car in an accident you’re at fault in. A policy with this added coverage is more expensive than one without it.

How Can You Lower Your Car Insurance Costs?

No matter your age, gender, or location, you can potentially lower your car insurance via a variety of methods. Here are some tips your car insurance company doesn’t want you to know to put into action to save on premiums.

  • Drive carefully. Not only does driving carefully help you avoid rate-raising accidents, but many companies also provide good driver bonuses when you haven’t had an accident or filed any claims for a certain amount of time.
  • Pay your bills on time. Paying your bills on time goes a long way toward improving your credit score, which can improve your rate depending on where you live. Paying your bills on time also demonstrates trustworthiness to your insurance company, which means you may be able to negotiate for a lower rate.
  • Ask for discounts. When it comes to your insurance rates, it doesn’t pay to be shy. Ask your insurance company about discounts, including multi-driver or multi-car discounts, good student discounts or safe driver discounts. You may be able to score a large portion off your premium because you’re a good student or you follow all the traffic laws.
  • Review your credit report. Know what’s on your credit report and what you can do to drive up your score. Once you’ve improved your score, ask for a new quote for car insurance.

>> Need to review your credit report? Sign up for the free Credit Report Card.

  • Consider a higher deductible. Look carefully at your coverage and consider whether you can tweak anything in your policy. If you can afford to cover $2,000 in damages if you get in an accident, consider changing your deductible from $500 to $2,000 to save on your monthly premium.
  • Shop around for a better rate with other insurance companies. The insurance market is highly competitive, and you may find a better rate with an online company or through a broker that works with multiple companies. If you find a better rate, go back to your current company to see if they’ll match or beat the offer.
  • Choose your next vehicle carefully. Because the type of car you drive affects your insurance rates, do your research before your next purchase. Look for a car with plenty of safety features (but without too many other bells and whistles) that will get you a lower rate.

What Happens When Car Insurance Denies a Claim?

Of course, you don’t just pay for car insurance for the fun of it. If you get into an accident, you expect the insurance to step in and help cover the expenses. If your insurance company denies your claim, you have some options for appealing the claim.

  • Contact the insurer. After you’ve reviewed your claim denial, reach out to the insurance company directly. You may be able to explain your claim better or gather additional information to help you understand the reason for the denial.
  • File an official appeal. Most insurance companies will have an appeals process clearly set out online. You’ll want to write a clear, direct letter that explains why the evidence you originally gathered and submitted with your claim contradicts the insurance company’s decision to deny the claim.
  • Talk to a legal professional. If you feel that your insurance company is denying your claim in bad faith, talk to a legal professional about your options.

Bringing Down the Total Cost of Car Ownership

Car ownership is expensive. Make sure you pay attention to all the potential expenses to get the best possible deal overall—and don’t forget to shop around for the best rates before locking yourself in.

>> Ready to buy? Find your rates.

Source: credit.com

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Apache is functioning normally

This article originally appeared on The Financially Independent Millennial and was republished with permission.

When consumers purchase a car, there are several things to think about. While the primary process has been handled entirely with test drives and dealerships or private sellers, it’s up to you to continue further down the checklist to get the most out of a used car.

People might think that there’s nothing left to do after buying a car, but don’t forget to take the steps needed to keep a used car on track.

1. Get the Car Insured

When you buy a car, the first thing to always do is to get insurance before leaving the car lot. Getting into an accident just after leaving is a terrifying possibility after spending hard-earned money on a car, even if it’s a used car. Either way, it’s an investment, and buyers need to protect themselves.

It’s a good idea to call around before purchasing the car model you have in mind to get a quote. If that didn’t happen before, getting the best car insurance must be the top priority to get taken care of once a vehicle is purchased. Some dealerships require buyers to have insurance before leaving, so being ready with insurance is imperative for a good experience.

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2. Check for Existing Recalls

Recalls happen in brand-new and used vehicles as technology changes over time. Sometimes, manufacturers will send out information for a recall because of a necessary update, too. Certain recalls can also affect driver or passenger safety, so recalls cannot be ignored.

After the purchase is complete, buyers can find information about recalls from the National Highway Traffic Safety Administration. Get the vehicle identification number or VIN from the car to complete a search. It’s also a good idea to check for recalls multiple times a year because new recalls are released periodically. 

3. Transfer the Title

If a car is purchased from a dealership, the dealership typically handles the title transfer. The title is the official document that proves ownership, so if you buy privately, it’s critical to get this taken care of as soon as possible after purchase.

When purchasing from a private seller, buyers need to verify liens do not exist from the previous owner. If there are, those need to be handled immediately. Buyers need proof that the seller has documents that prove any loans have been paid as required. If a buyer has any questions about transferring a title, the DMV needs to be contacted for state-specific answers.

4. Get the Car Registered

Once a car has been purchased, it must be registered with the DMV soon after. Car dealers will typically handle getting the vehicle registered in the buyer’s name, but it’s different when working with a private seller. Private sellers should provide documentation to the buyer to show to the DMV to get the registration done.

Some of the documents needed include the bill of sale showing the purchase price, the title that has been signed over by the previous owner, the VIN, proof of insurance, odometer reading, sales tax if applicable, and evidence of passed inspections. Buyers also need to contact the local DMV to find out if any further documents are required.

5. Find a Trusted Mechanic

Finding a mechanic can be challenging, which is one reason that buyers may prefer to purchase from a well-respected dealership. Dealerships have mechanics on staff that are responsible for conducting an inspection and doing any preventative maintenance before the purchase.

Private sellers are different, and buyers need to be aware of getting a used car with issues. Ideally, the vehicle should be checked before purchase, but it needs to have a thorough inspection done when that’s not possible. When in need of a trusted mechanic, buyers should research reviews and request recommendations from local groups to get an idea of who to trust.

6. Schedule Any Necessary Repairs

Once the mechanic has had a chance to complete an inspection, it may be recommended to replace spark plugs, belts, or any frayed wires, along with any other issues. There may also be cosmetic issues that may need to be dealt with if the buyer deems these repairs are essential.

Some repairs may be more critical than others, so depending on what the mechanic says, there may be a list that needs to be followed. It’s possible that the new owner might need to prioritize repairs to get things done over time. If that turns out to be the case, working out a schedule with a trusted mechanic will be a great way to get things done.

7. Read the Owner’s Manual 

It’s a good idea to read the owner’s manual to get to know your newly purchased vehicle inside and out. It may not be full of entertaining reading, but knowing what the lights on the dashboard mean can be helpful should they come on. Buyers can also read about any potential existing warranties that might still apply to the car.

Getting to know more about the car is helpful because new owners can learn about what to expect regarding the engine and other internal components of the vehicle. It also gives the owner a chance to become familiar with some of the more specific details about different parts of the car.

8. Create a Maintenance Schedule

Using the manual, buyers can also get to know what the regular maintenance schedule is for the car. Each manual contains a suggested maintenance schedule, so a buyer knows what to expect and plan for in the future. Sticking with the recommended schedule can help in saving money over time, too.

Maintenance is a crucial part of being a responsible car owner. That includes keeping an eye on the wear and tear of tires, keeping up with oil changes, and getting regular tune-ups. Finding a trusted mechanic is essential in keeping car maintenance from becoming overwhelming.

9. Consider an Extended Warranty

When purchasing a used car, buyers may also want to consider a used car warranty. There are many different options available for warranties that range from expensive repairs to bumper-to-bumper coverage. Buyers should still do research to figure out the best options available.

Keep in mind that some warranties appear to be scams, so researching is vital in making the best selection. Buyers should also check for any specific fine print regarding repairs and coverage. Some warranties are only effective at particular mechanics, so those might be ones to steer clear from.

10. Get Familiar with Features

Once the car is ready to go, buyers need to familiarize themselves with the car’s features. Learning what all of the buttons do is vital because the last thing anyone wants to deal with is trying to figure out how to open the gas tank at an inopportune time. Knowing how to program the dashboard is helpful, too, to enjoy driving to the perfect soundtrack.

Features go beyond the buttons, though, and include levers for seats and the position of latches if installing a car seat is an essential aspect of the car. Finding out where all of the power outlets are is also important so owners can charge their gadgets as needed.

A Few Last Words on What to Do after Purchasing a Used Car

There’s a lot to think about after purchasing a used car. Getting car insurance and title transfers are essential to getting started. Finding out about recalls is critical to keeping the car safe for drivers and passengers. Once registration is complete, it’s time to get the car inspected by a trusted mechanic.

After that, it’s all about creating a schedule for repairs or maintenance to get the most out of a newly purchased car. Getting familiar with the features is also essential to feel comfortable with a new car, even if it’s a used car, because it will be new to you.

Once all of the necessary tasks are done, it’s time to get down to the fun stuff, like finding the accessories that reflect your personality. Adding some exciting goodies to a vehicle should be a part of what it means to have a new car. Taking care of it with regular car washes and giving the car some character is the icing on the cake. When everything is squared away, it’s time to take a drive and enjoy your new car experience.

Source: credit.com

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This post originally appeared on The Financially Independent Millennial and has been republished with permission.

Okay, so you’re tired of puttering along in that same 1996 Honda Civic with which you picked up your Homecoming date during your senior year of high school. How do you even begin? No doubt, you’ll have questions to ask when buying a used car. Well, first, you need to narrow it down to which car you want, what options you want/can live without, your budget, etc. Once you’ve gotten that down and have taken a few cards for a spin, it’s time to get down to business. 

I bought my first car just about ten years ago and have bought and sold seven cars within that time frame. Except for one, I made a profit off every single one of them. For example, My INFINITI G37 just stole my heart. I got such a good deal on it (I bought it for $4,700 under dealer internet price) that I made the conscious decision to take a loss by keeping it longer and thus having to deal with depreciation.

However, it never needed any maintenance for the six years I had it other than $40 oil changes periodically. So, considering all costs (parking, annual registration, gas, car insurance, and depreciation), the car probably cost me $150 per month over those six years. That’s well below what some friends spent on the luxury of ride-sharing.

What to Ask When Buying a New Car

When you’re ready to buy a used car, you want to come armed with questions. Ensure you’re informed, and then you come across as a knowledgeable buyer and ward off any unscrupulous sales tactics.

#7. When Is the Best Time to Buy a Used Car? 

We’ve all seen those charts on the best time to buy everything from winter apparel to laptops. But did you know there is a sweet spot for buying cars, as well? Buying towards the end of the month and even the end of the year is your best bet. Why? Because dealerships have quotas to meet, salespeople are hungry to get one last commission for their paycheck. 

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As far as the end of the month, most dealerships close the books, project that month’s sales amounts, and try to move inventory to keep the interest fresh. You may know that when new models come out and leases get returned, the used car market is usually more flexible, which means more selection and a better price for you. 

If you’re daring, go into the dealership on a Sunday evening during unpleasant weather when they’re hungry to meet quotas. If you’re paying cash, and you’re there with money in hand, they’re much more likely to get you a good deal. Make sure you come with evidence of comparable models elsewhere.

#6. Why Is Buying Used Better Than New? 

While many people justify their decision to buy new as having a more reliable vehicle and spending less on repairs than an older car, cars have markedly improved their dependability over the last 10-15 years. 

Plus, many online tools help you with price transparency, find service records, and owner/expert reviews. You’ll find anything you want to know about the car you’re considering over the last decade. 

According to a recent report, new cars lose up to 20% of their value after the first year. And then they depreciate more than HALF their value after five years. On a $32,000 car, that’s almost a $7,000 hit after just a year of driving! On the other hand, you can easily buy a car that’s just a few years old and let someone else take the depreciation hit. 

Besides houses, cars are generally the most expensive purchases you’ll make. Buying used enables you to strategically get a reliable vehicle that can last you years without breaking the bank. My neighbor once bought a 4-year-old Honda Accord for $12,000 and still drives it ten years and 90,000 miles on the odometer later!

#5. Why Is Buying Better Than Leasing?

According to Consumer Reports’ comparison for buying versus leasing, the average cost of a new car has now topped $38,000. You might think to yourself, “I don’t have $38,000 laying around!” Well, take a step back and a deep breath, realizing this is average. Meaning, you can easily find cars for less than this amount. Plus, just another reason to look at a mint used car! 

Leases can be appealing because they enable the consumer to drive a new car for a monthly lease payment. Lenders are happy to collect the interest! And then, you return the vehicle at the end of the lease without worrying about maintenance or repairs. Leasing is ideal for people who like to have the newest car (and can afford it) or deduct leasing expenses like realtors. And yes, if you’re wondering about this question, you can lease a used car as well. However, there are mileage limits, and if you lose your job or have a child, you typically can’t just hand the keys back without penalty.

Buying a car means you can drive it freely and have something of value that you can sell when the need arises. With leasing a vehicle, you typically have to either return it, have nothing at the end of the lease, or pay off the car at an agreed-upon amount when you lease the vehicle. For these reasons, buying a car is the best option for most people. 

#4. How Many Miles Should a Used Car Have?

Congratulations, we’ve convinced you to buy used! Well, hopefully, you’re empowered to ask questions and find and buy a quality used car, over lining the dealership’s pockets with a new one. Mileage is an essential factor to consider, and the lower mileage, the better. Think about it, cars don’t run forever. So, there’s a cap on mileage before the vehicle is pretty much worthless. (though if you want to see some impressive machines with millions, yes millions of miles, check out this car.)

Most people drive about 10-12,000 miles per year. And with ever-changing technology, it might be best to keep it under 100,000 if you plan to keep the car for a while. After 100,000 miles, more expensive servicing like timing belt change, transmission replacement, and electrical repairs come along. 

Consumers who question a used car’s value can turn to The Kelley blue book as an excellent resource when buying or selling. I have found that buying cars with low-mileage, i.e., under 30,000, is the sweet spot if you can snag a good deal because it still feels new. These cars usually come with the balance of a new or extended warranty and yet have decent value locked in. Bonus points if you flip it a year later for a profit as I did! 

#3. What Are the Benefits of Buying a Used Car from a Dealer?

You can compare buying a certified pre-owned (aka used car) from a dealer instead of a private party to purchasing a laptop from the store versus a seller on Amazon. You typically get more hand-holding and a concierge process with inspection of the car, service and registration assistance, etc. Yet, that comes with a price. 

Buying a used car from a dealer means there’s no question: they have to stand behind that car and not sell you a lemon because their reputation lies on that. So, peace of mind is a big plus when it comes to buying from a dealer. Also, you can typically find more variety in what you want and have someone reach out to you when they get something closer to what you’re looking for. You can also negotiate free service for a year, a multi-point inspection, printouts of service records, and things like replacing the tires at a reduced cost. Moreover, suppose haggling, negotiations, or dealing with salespeople make your stomach churn. In that case, you can always pay a slight premium for peace of mind by using a service like Carvana or Carmax.

Buying from a dealer can also help you make sure you get your title and tag done correctly. One thing to look out for is some dealerships charge a Dealer or “Document Preparation” fee, which can be hundreds of dollars in some states. Be sure to understand what value they’re providing for that fee and where it goes. Few waive them and even charge their employees that fee.

#2. What Are the Benefits of Buying a Used Car Privately?

How do you save the MOST amount of money when buying a car? Well, you buy a pre-owned vehicle that already got whacked with depreciation and cut out the middleman. By middleman, I mean the dealership. 

Now, you read about the perks of buying through a dealer and all the peace of mind it brings. So, why bother dealing with the hassle and uncertainty of a private party? Well, the significant cost savings, of course! There’s no dealer doc prep fee, no markups to pay for payroll or overhead, and no burdensome certification process. Buying a used car privately gives you the best chance of getting a great deal if you ask the right questions.

In simpler times, a handshake and trust were all we had to go off before things like CARFAX reports and AutoCheck. When you find a private seller, you can find out the vehicle history. For example, if they were the original owner, who drove the car, why they bought it, and how it’s been treated over the years. Also, you’ll have to make sure they have the title free and clear. Otherwise, you’ll want to go to the bank and have them call the company that holds the title to make sure the loan gets paid off before any other money changes hands.

 #1. What Are the Best Ways to Find a Used Car?

Now how do you go about finding a used car? There are many more online tools at our disposal than ever before. Do you remember the times when you would flip to the classified section of the newspaper to find boxes of 6 point font describing a car for sale? Or you saw a car parked on the road with a “For Sale” sign? How times have changed.

Now, you can easily find any car you want online, know everything about it, see high-resolution pictures of its every angle. And you don’t even have to limit yourself to your geographic area!  

The thing to know is most private-party sellers will usually try to sell their car for free or cheaply. So, be sure to start your search by scanning Craigslist, Cars.com, and Facebook Marketplace. 

Now, if you’re looking to expand your search across the state or nation, check out cars.com, Cargurus.com, and Truecar.com. All of these sites provide decent vehicle descriptions and history, such as accident reports. 

Cars.com has a very user-friendly interface and easy navigation filters for color, features, cloth/leather, etc. It also has a price analysis tool to let you know if that particular car is a “good” or “great price” as compared to other vehicles for sale.

CarGurus is also user-friendly and has a similar price comparison tool. Also, it’s got a cool little “negotiation” section in the description. It tells you how long the car has been on the market and its different price changes. It can give you a glimpse of how motivated the dealer is to get rid of the vehicle. I love CarGurus because it answers the most basic questions I’d ask about the used car I’m thinking about buying.

Finally, TrueCar has a unique pricing analytics report that will tell you what you can expect to pay based on what similar vehicles have sold for. They also can offer a unique “personalized offer” on a car, which might be lower than other sites, in exchange for inputting your contact information. It might be an easy trade to shave a few hundred off your car purchase!

Final Thoughts about Buying A Used Car

Consumers looking to buy a used car certainly have to ask a lot more questions than when buying new. But, the extra work will save them thousands in unnecessary depreciation. The key is to do your homework and get the car inspected. That way, you’ll come out ahead by knowing the car’s history. And don’t be afraid (ever) to walk away from a bad deal!

Source: credit.com

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Apache is functioning normally

At the start of every new year, people set goals. Many of the most common resolutions set during the new year are financial in nature. For instance, some people resolve to pay off their debt before the year ends. Others want to decrease their spending and save money. 

If you’re one of those people who want to save money, decreasing your car insurance premium is one way to get closer to your financial goals. Here are seven hacks to help you save on car insurance this year.

1. Review Your Car Insurance Every Year

One of the simplest ways to reduce your insurance premiums is to shop around once a year. It may seem unnecessary, but comparing rates from a variety of insurance companies can be beneficial. Firstly, it gives you a sense of how much your car costs to insure on average. Secondly, doing your research lets you determine if you have the best car insurance for your budget. 

Remember to compare quotes from at least three providers before making a decision. But what if your current insurer is the cheapest option?

2. Get Rid of Coverage You Don’t Need 

Another way to decrease your car insurance costs is by dropping unnecessary coverage. In most states, drivers are legally required to have liability coverage and personal injury protection, or no-fault coverage. In states like New York and North Carolina, drivers must also have insurance that protects them against collisions with uninsured or underinsured motorists. Beyond that, rates vary by state and personal preference.

Types of Car Insurance to Consider

  • Liability Coverage: This coverage protects you against the costs of covering the medical bills of other drivers after an accident. Liability insurance may also reimburse you for damage to your car. If you don’t have a significant savings cushion or other assets to cover the cost of large claims, liability insurance will protect you financially in the event of an accident.
  • Collision Coverage: If you’re financing your vehicle, chances are the bank will require this coverage as well. Collision insurance will pay for damage to your car resulting from a collision with another vehicle. It does not cover car damage from potholes, broken windows, fire, or theft.
  • Comprehensive Coverage: This is like collision insurance, but it covers damage from non-collision incidents. The most common kinds of incidents are floods, vandalism, hitting an animal, or striking a non-moving object.
  • No-Fault Coverage: This type of insurance protects you against the medical bills of other drivers after an accident. Unlike liability insurance, your own insurer pays your claim; it then submits a claim to the other driver’s insurer. If you have this coverage, maintaining a high deductible can be beneficial because it reduces your premium.

As you review your vehicle insurance, make a list of your state-mandated coverage, bank-mandated coverage, and ones that make sense for your location. For instance, if you live in a town that is known for seasonal hurricanes, floods, or fires, dropping comprehensive insurance might not be the best idea. Consider working with an agent who is familiar with your area.

If your car is older, consider dropping collision and comprehensive insurance. Then, set aside an emergency fund that amounts to your car’s market value.

3. Ask Your Insurance Company about New Discounts

Your insurer may provide discounts for a variety of reasons. For instance, some insurers offer a “good student” discount for teens with good grades. Others may give discounts to drivers who are members of the military or attend certain types of college. If you are enrolled in an accredited driver’s safety course, contact your insurer about getting a discount for completing the class.

Save on Car Insurance by Paying Your Premium Annually

Payment methods can also affect your car insurance premiums. Most insurers offer a discount if you pay a year’s worth of premiums upfront. If you can’t afford an entire year’s worth of premiums at once, pay at least the minimum amount necessary to qualify for this discount.

4. Downsize Your Car

The most effective way to save money on car insurance is by driving a car that costs less to insure. The type of car you choose will depend on your budget and preference, but there are a few things to consider.

For instance, the cost of repairs and parts for some vehicles can be high. Secondly, there are insurance companies that offer discounts to drivers with hybrid cars or vehicles that use alternative fuel.

When you’re looking for a new vehicle, find a safe one with the lowest possible insurance rates. Talk with your insurer, and get online quotes from other car insurance providers to compare costs.

Related Read: What Credit Score Do I Need to Buy a Car?

5. Drive Safely to Save on Car Insurance

Driving safely is often underrated. If you’re a cautious driver, you might qualify for a reduced premium. When calculating your rate, insurance companies consider the following factors:

  • Age
  • Gender
  • The type of car
  • Your driving history

Improving your driving habits could save you money each month. Plus, it’s safer for everyone on the road. If your current vehicle doesn’t have an accident history, you might also want to consider increasing your deductible, which can save you money.

6. Increase Your Car Insurance Deductible

If you drive safely, you could lower your monthly premium by raising your deductible. Increasing your deductible from $200 to $500, for example, will decrease your monthly premium. And since you know how much your deductible is ahead of time, you can set aside the amount in an emergency fund.

7. Consider Usage-Based Programs

Another way to save on car insurance is by participating in usage-based programs. With this type of coverage, you put a device in your car that records your mileage and driving habits. This data is then sent to your insurer, who can use it to determine how much you should be paying for coverage. Among the common usage-based options are:

  • Pay-as-you-drive: This program charges you for the miles you drive. Your insurer will typically take mileage into account when calculating your premium.
  • Pay-how-you-drive: With this program, you pay for your insurance based on safe driving behavior. In some cases, your insurer might offer discounts if you’re an ideal driver.

Takeaway: Saving Money on Car Insurance

There are plenty of tactics to help decrease your monthly insurance costs if you take the time to assess your habits and your vehicle insurance needs. Once you know what must stay and what needs to go, contact your insurance company to make the necessary adjustments.

Source: credit.com

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Save more, spend smarter, and make your money go further

According to the National Highway Traffic Safety Administration (NHTSA) there were more than 5.6 million police-reported crashes in the U.S. in 2013. No doubt these crashes can take a huge emotional and financial toll on those impacted – and you might be surprised to learn what your policy covers, and doesn’t cover. The price tag for those crashes: $871 billion in economic loss and societal harm in 2010 also according to the NHSTA.

If you find yourself in an accident, it’s easy to feel frustrated, overwhelmed and scared. But there are a few things you can do to protect you and your money before and after an accident.

Prevention Before an Accident

Consider purchasing rental car coverage. This will pay for you to have a rental car for the time your car is in the shop being repaired. The coverage is inexpensive, but paying for a rental during a long repair can add up quickly.

Many car insurance policies offer coverage that you may not know about, so make sure your auto insurance policy is up-to-date and provides the right amount of coverage for you and your vehicle. Many minor details can make a huge difference when you need to file a claim after a collision.

Keep copies of your insurance policy and registration in your vehicle at all times.

Steps to Take After an Accident

Safety is paramount. Get you and all passengers to a safe spot and wait for help to arrive.

Get everything documented as quickly as possible and share information with the other driver including make, model and license plate. You’ll also want to get the other person’s contact and car insurance information so the claims process will go much more smoothly.

Take photos and gather witnesses. If you have a smartphone, it can be helpful to take photos of the damages, especially if you know you weren’t at fault and want to prove it. If you can find eyewitnesses and collect their contact information to give to the police and to your insurance company, that’s even better.

You may see a rate hike on your monthly insurance premiums if you are found to be at fault. Keep in mind if you have been accident free for a long time, many carriers will forgive your first at-fault accident.

If you are working with an independent agency like CoverHound, ask them to check all of their carrier partners for a better policy. Many carriers specialize in different risk profiles, so it’s possible another carrier they represent may have a better policy for you. Not all wrecks will result in a rate hike, but being proactive and working with your insurer is important after an accident. If you’re looking to get more from your provider, then you can switch insurers to take advantage of low rates.

This article was written and sponsored by CoverHound, where you can compare car insurance rates in as little as 3 minutes.

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Whether you’re getting married, putting your teen behind the wheel for the first time, or buying your first home, a big life change can have a ripple effect on your finances.

While it might not be top of mind, one of those effects could be your car insurance. There’s a lot more that goes into calculating your rates than the standard questions about age, gender, and driving record. When you hit a major milestone in life, your new status can impact those rates in unexpected ways.

Here are five events that might trigger a change in your insurance.

1. Getting Married

Good news for honeymooners: in most cases, being married will lower your car insurance rates! Adding a partner to your insurance could spell savings for your household, especially for younger couples. It turns out that married people are less likely than single people to get into accidents. Ah, the perks of true love.

2. Buying a Home

One of the biggest milestones in life is buying your first home. While homeowners coverage is a must, becoming a homeowner might actually affect your car insurance, too.

Like married people, homeowners tend to see better rates on car insurance. Those savings could be even higher when you bundle your auto and homeowners policies with the same insurer (not to mention more convenient).

Buying a home also means that you might want to take a look at boosting your auto coverage. Look for polices that protect your assets and take care of legal costs-bodily injury, uninsured/underinsured motorist bodily injury and property damage are your best options. As you build up equity in your home, you’ll want to make sure your investment is safe, no matter what happens.

3. Adding a Teen Driver

As nervous as you may be to see your teenage child in the driver’s seat for the first time, you’ll feel better when they’re protected under your insurance policy.

Teen drivers need to be covered as soon as that driver’s license is in their hands. Your rates will probably increase, because this age group has much higher accident rates than older drivers, which makes them riskier to insure.

However, there are a few things you can do to help keep your rates low. For instance, when you add your teen to your policy, check to see if you qualify for a multi-driver discount. Likewise, if your teen has his or her own car, you could get the multi-car discount. Good students can help lighten the load as well. Many insurers offer discounts to young drivers who keep their grades up.

4. Getting Divorced

If you and your spouse are parting ways, it’s important to make sure both of you-and any dependents you might have-are still covered.

Once you’ve divvied up the cars, you and your ex will need to get separate policies. The change in circumstances makes this a good time to comparison shop, especially because you may be losing out on discounts you enjoyed as a married couple (for instance, a multi-car discount).

If you’ll be sharing custody of teen drivers, check with your insurance company to find out whether you both need to list your teen on your policy-and factor that into any quotes you get.

5. Getting a Raise

Now that you’ve got a little extra cash in your pocket (and perhaps some financial benefits, like stock), it’s time to take another look at your policy. Consider upping some of your coverages, like bodily injury and property damage, to make sure that if an accident happens, your income (and growing savings) will be protected. These policies cover medical bills as well as legal fees if someone involved decides to sue. Putting a little extra money toward your premium today can pay off big time down the road.

During a major life event, there’s a lot to think about. If you need help figuring out how to handle the big changes (insurance-wise, that is), talk to your insurer to make sure you’re adequately protected-and getting the best deal possible.

Eric Madia is Vice President of Product Design at Esurance, where he is responsible for designing the company’s personal lines products. Eric has 23 years of experience in the industry, focused primarily on underwriting, pricing, and product innovation. You can follow him on twitter @Erictheactuary.

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Teen Drivers: 10 Things You Must Know About Your First Car Insurance Policy

Teen Drivers: 10 Things You Must Know About Your First Car Insurance Policy is a post from Pocket Your Dollars.