5 Ways to Lower Your Car Insurance Costs

Buckle up, friends, because it's time to talk about the cost of car insurance. Car insurance protects you, your passengers, and your investment — your car. And in most states, it's required. But if your monthly premiums are putting a dent in your wallet, and you're looking to put a little more budge in your budget, there are ways to lower your monthly car insurance payments. Hi there, I'm Amanda Mushrow, and at AutoInsurance.com, we'll tell you everything that you need to know about lowering your car insurance payments without sacrificing coverage. You ready to start saving? Well, here's how you do it. Number one, raise your deductible. Your auto insurance deductible is the amount of money you agree to pay before insurance contributes to coverage damages. The higher your deductible, the lower your insurance premium. So with a higher deductible, you'll need to pay more out-of-pocket in the event of an accident. Most car insurance policies include deductibles on collision and comprehensive coverage only. Collision coverage pays for your property damage from an accident, regardless of fault. Comprehensive coverage pays for damage from theft, weather, vandalism, and wild animals. So really, any event aside from a collision. Typically, collision coverage costs more than comprehensive coverage, so your collision deductible might affect your insurance premium more than your comprehensive deductible. You can choose different deductibles for collision and comprehensive, and that's also known as a split deductible. If you live in an area with a high risk of natural disasters, you may consider a lower deductible for your comprehensive insurance, for example. However, if you're a safe driver and you have never caused an accident, choosing a higher deductible for collision coverage will keep your auto insurance premium low. When you sign up for auto insurance, you'll pick the amount of your deductible from several options. It can range from $0 up to $2,000, with the average deductible for collision coverage being around $500. The most important rule when choosing a deductible is to select an amount that you feel comfortable paying within 24 hours. So run the numbers on your auto insurance deductibles with your car insurance provider. If your savings account has a good amount of cushion, a higher deductible might be a good way to save money on your insurance premium. Number two, bundle your home insurance and auto insurance. Many companies provide discounts on your auto insurance premium if you bundle your auto insurance policy with another policy from the same provider, like homeowner's insurance or rental insurance. Bundling is also known as a multi-policy discount. Talk to your insurance agent about bundling. You might be surprised at how much you can save. Number three, drop coverages. One way to reduce your car insurance rates is to drop unnecessary coverages. There's six basic types of auto insurance. Bodily injury, property damage, medical payments or personal injury protection, uninsured or underinsured motorists, collision and comprehensive. Depending on where you live, some of these coverages are required. However, no states require collision or comprehensive insurance. In most cases, it pays to purchase them. However, reducing coverage to the minimum on an older car might lower your car insurance costs. Insurance payments for collision and comprehensive coverage are limited to the car's actual cash value. If you total an older car in a covered collision, the maximum amount your insurer will pay you to replace it is the car's depreciated value, which could be lower than the cost of your premium. A rule of thumb is that if your car is worth less than 10 times the premium, purchasing collision or comprehensive coverage might not be cost effective. Also, take a look at your policy to see if it contains any features that you don't need or you can live without, like rental car insurance or roadside assistance. Eliminate them to save some money. Number four, get car insurance discounts. One of the easiest ways to reduce car insurance costs is to take advantage of auto insurance discounts. These discounts differ between companies, but some of the most common include installing anti-theft devices, having safety features like airbags, daytime running lights, and anti-lock brakes, taking a defensive driving course, avoiding accidents and traffic violations, being a long-time customer, insuring more than one car. Some auto insurance providers offer discounts based on affiliation, such as if you're a senior driver or you're in the military. Parents of teen drivers, be on the lookout for discounts for your teens, like being a good student or taking a driver's training course. You can also save money by switching to pay-as-you-drive programs. If you plan on driving fewer miles, this might be a good option for you. Number five, lower limits. An insurance limit is the maximum amount your insurance company will pay for a covered claim. Each type of coverage you purchase with your policy has a limit. Liability coverage limits are determined by state law, and comprehensive and collision coverage max out at the cash value of your car at the time of your accident. Lowering your limits will decrease your monthly premium because you'll be on the hook for more money in the event of an accident. Once you reach your coverage limit, you will pay out-of-pocket for additional expenses. So think carefully about how much you would be able to pay in an emergency before you decrease your coverage limits. Hopefully these tips will help you get the insurance coverage you need without stressing about your budget. To learn more about saving money on your car insurance, head over to the Budget Hub at autoinsurance.com slash budget. It's linked in the description, and you'll find lots of information about buying and budgeting for car insurance. Be sure to like and subscribe to our channel. We upload and post new videos every week.