Save money on car insurance: 6 Ways to Reduce Your Bill

Learn these 6 ways to save money on car insurance

By understanding the factors influencing your premiums and implementing smart strategies, you can significantly reduce car insurance costs. This guide will provide various tips and methods for saving money on car insurance.

1) Save money on car insurance by paying the full-year premium

Paying in installments costs you more

I know it’s hard to cough up a full year’s car insurance premium when the bill arrives. Car insurance companies know that, too, so they make it easy for you to pay the premium in installments. But they’re not offering “easy” installment payments to be kind. Car insurance companies charge extra for that service. You’ll pay 12% to 20% more for your insurance if you pay your premium in monthly installments. If you can sock away extra money each month and get into the habit of paying the car insurance bill in full, you can save about $60 per year.

2) Take advantage of “pay early” discounts

Some car insurance companies offer a “pay-early” discount if you pay the entire invoice within ten days of receiving it instead of waiting until the due date. The discount varies by insurance company, but it can be as much as 10%. If your company offers this type of car insurance discount, it pays to juggle your bill-paying schedule to pay your car insurance premium ahead of other bills that don’t offer a pay-early discount.

3) Save a lot of money on car insurance by paying on time

Paying your car insurance premium late not only costs in terms of late fees and a hit to your credit rating, but it also raises your insurance risk rating. Insurance companies equate paying on time with personal responsibility. They interpret late payments as a clue that you’re irresponsible, affecting your future rates.

Worse than that, however, is that letting your insurance lapse costs even more. Car insurance companies charge almost 20% more to reinstate a lapsed policy if they decide to reinstate you (they don’t have to). Plus, they’ll charge that higher premium for several years. So, a single lapse can easily cost an extra $1,000 over the years.

If you’re nearing the payment deadline and suspect your check won’t arrive at the insurance company by the due date or the last day of the grace period, contact your agent and ask if you can drop off the payment at their office. If the office won’t accept payments and you can’t pay online by credit card, mail the check overnight by Express Mail from the U.S. Post Office. Express Mail costs $20, but that’s a lot less than the cost of a lapse.

4) Shop early to save money

Car owners should get competitive quotes from several companies every three years. But don’t wait until the last minute to do it. Last-minute shopping (less than ten days before your current policy expires) raises a red flag for insurance companies. They view last-minute shoppers as financially irresponsible and desperate, so they quote a higher price. But they also reward early shoppers (at least 30 days before your renewal date) with lower rates. You can save almost $50 just by shopping early.

5) Reevaluate your coverage and find ways to save money

Have you changed jobs since the last renewal? Is the new job closer to home? If so, contact your insurance agent and let them know you’re putting on fewer commuting miles now. That’ll lower your rates.

If you have a child on your policy who is away at school without a car, ask for a discount.

And, if your vehicle is older than ten and in fair-to-poor condition, you can save money by dropping some coverage. Check your vehicle’s current value online at nada.com, kbb.com, or Edmunds.com. Then, talk to your agent to see if it makes sense to discontinue collision coverage.

6) Track your tickets

Insurance companies routinely check your driving record and raise your rates at your next renewal if you receive a moving violation. But they’re not always so quick to remove the extra charges once the ticket falls off your record. If you track the dates of your tickets, you can call your agent and ask for a reduction as soon as the ticket is removed. Check the status of your driving record

Avoid these insurance mistakes:

• Don’t reduce your liability coverage in an effort to save money— You risk your home, savings, and garnishment on future earnings if you injure someone and you’re underinsured.

• You can settle fender-bender accidents on your own, but you still have to report the accident to your insurance company. They won’t increase your rates since you’re paying out of pocket. However, if you don’t report the accident and the other person files a claim later on, your company can deny coverage.

• Check out the fine print of policies that promise “accident forgiveness.”—  That feature sounds good. Still, you’ll probably pay more upfront or face a huge premium increase if you get into a second accident or receive a moving violation.

• Think twice about canceling your comprehensive coverage— You might be tempted to cancel your comprehensive coverage on an older car. However, with catalytic converter theft at an all-time high and replacement costs running into the thousands, it’s still wise to keep your comprehensive coverage to protect you if your converter is stolen. The coverage is usually the lowest portion of your total car insurance premium.

• Inquire about new car replacement coverage— If you’re buying a brand new car, it usually pays to purchase new car replacement coverage. If you don’t have it and get into a major accident within a year or two, you’ll only receive actual cash value, which isn’t enough to buy the same car again. Some companies don’t offer actual cash value, but others do, which doesn’t add much to your premium.

Finally, ask for car insurance discounts. Search for the following types of discounts:

Discounts for teachers
Discounts for nurses
Discounts for recent college graduates
Discounts for disabled persons
Discounts for state employees
Discounts for government employee
Discounts for new drivers
Discounts for good grades

©, 2015 Rick Muscoplat