9 Top Money-Saving Hacks for Car Insurance Premiums You Must Know
Car Insurance premiums can become a headache because as much as you need protection against life’s unforeseen moments, you may not always be able to afford comprehensive coverage.
However, if you understand the factors that influence car insurance premiums, you could be paying much less. Let’s dive into the pool that is the insurance industry and explore the best ways to save on insurance premiums.
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Today’s guest post comes courtesy of Daniel Robinson from MarketWatch Guides. Daniel is a MarketWatch Guides Team writer based in Greenville, North Carolina.
He has written for numerous automotive news sites and marketing firms across the U.S., U.K., and Australia, specializing in auto finance and car care topics.
Daniel is a Guides Auto Team authority on auto insurance, loans, warranty options, auto services and more. To learn more about Daniel, check out his site at www.marketwatch.com/guides
Let’s dive in!
Understanding Car Insurance Premiums
Let’s talk about what an insurance premium is. Simply put, it is the amount of money you pay an insurance company in exchange for coverage.
Whether you’re insuring your car, home, health, or other valuable assets, your premium is the price tag you must attach to that peace of mind.
Why Do Car Insurance Premiums Increase?
Several factors contribute to car insurance premium increases. One of the most significant influences on rising premiums is the cost of claims. If insurance companies experience an influx of claims, they pass the extra expense on to policyholders by raising premiums.
If there’s an increase in natural disasters or an unexpected global pandemic, you can expect to pay more for your insurance.
Disasters and pandemics are out of your control, but premium costs also fluctuate based on circumstances you may be able to change. For example, your personal risk profile plays a significant role in insurance payments. An insurer will calculate your car insurance premium according to your age, gender, location, and driving record.
If you are young, a new driver, or live in a neighborhood known for car accidents and auto theft, you will pay more for insurance. Similarly, if you have a history of accidents or traffic violations, your car insurance premium will reflect that.
Bad Credit Scores Mean Higher Premiums
Credit scores have a direct impact on insurance premiums. When you apply for coverage, the insurer will evaluate credit-based insurance scores to determine the likelihood that you will file a claim.
Poor credit history may increase your insurance premium. Always try to maintain a balanced, positive credit score. Doing this will potentially help you reduce insurance costs.
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Technology Makes a Difference
Technology makes a difference in insurance coverage. Companies use advanced data analytics and telematics to assess risk accurately. For instance, it is commonplace for insurance companies to offer devices to monitor driver behavior.
The benefit of these technologies is that you may be eligible for discounts if it detects that you practice responsible driving habits. As insurance technology advances, your premium may be even more personalized and tailored to suit your requirements.
How Can I Pay Less for Insurance?
Now that you know which factors will likely influence your insurance premium, let’s explore how you can pay less.
One of the easiest ways to qualify for lower premiums is to join an insurer’s health and wellness benefit. Many health insurers offer incentives for policyholders who lead a healthy lifestyle.
Join the gym or wellness program if your health insurer recommends them. By participating in programs that keep you healthy, you may pay less for your insurance.
Shop Around to Save on Car Insurance Premiums
It doesn’t matter what type of insurance you search for; you will likely find several options. One way to save money on premiums is to shop around and compare quotes from different insurance providers.
Premiums may vary significantly, so it’s worth investing the time to find a good deal. You can use an online comparison tool to simplify the process.
Bundle Up to Save on Car Insurance Premiums
Many insurance companies offer discounts when customers combine policies. Bundling your insurance plans by purchasing auto and home insurance plans, you may save a substantial amount on your premium.
Maintain a Good Driving Record
Ideally, you want an accident and traffic violation-free driving record to demonstrate to insurance companies that you behave responsibly on the road. If you keep up good driving behavior, your premiums may decrease. You may want to consider doing a defensive driver course to help you improve your skills.
Secure Your Home
If you want to insure your home and car, take steps to improve the security of your property by installing an alarm system, smoke detectors, and deadbolt locks. When your home is less risky, it may lead to reduced premiums.
Raise Your Deductible
Another surefire way to decrease your insurance premium is to raise the deductible for each policy you have. Remember to set aside funds to cover these deductibles should you need to file a claim.
The Bottom Line
As you can see, several factors affect insurance premiums and discounts. If you take some time to explore your options and make informed choices, you will save money in the long run.
What else have you done to save on car insurance? Let us know in the comments below!
