Everyone has to buy car insurance, but it doesn’t always have to be expensive. You know the most obvious ways to save on auto insurance, like keeping a good driving record and paying attention to your claims history. But we combed through thousands of potential risk factors to uncover a few you might not know about. By keeping these in mind, you might just find a little extra money in your monthly budget.
Many people don’t like insurance companies using credit score as one of the factors in determining what you pay for car insurance. Certain states (California, Michigan, Hawaii, and Massachusetts) don’t take credit scores into account when figuring premiums, and others have strict limitations (such as Utah, Oregon, and Maryland).[1] Most of us, though, still have our credit analyzed when getting car insurance rates.Â
The good news is that each time you move up a tier (from Average to Good, for example), you can save hundreds of dollars a year. If you started from the bottom (Poor) and now you’re here (Exceptional), you’d save $1,408 each year.
Buying insurance for your car and your home can lead to big savings, and you don’t have to own a house to see the benefits. On average, bundling home and auto insurance coverages saves you 8% on car insurance, whether you rent, own or reside in a condo. Homeowners see the biggest benefit (about 10% off their car insurance), but condo owners (8%) and renters (5%) get in on the action, too.
The math on this one is easy: The longer you are insured, the lower your rates will be. It only takes six months of coverage to see savings of approximately 8%.
Pro tip: After six months, and then again after your 1-, 3- and 5-year marks of continuous coverage, shop around for insurance. Your good track record can lead you to lower rates. And also, don’t drop your coverage along the way, even for a day! Insurance companies hate it when you have a gap in coverage.
If you can pay for your entire term of coverage up front, it will pay off down the line. Payment in full, rather than installments, can save you 12%. Think of it as paying $9 less per month. Doing business digitally is a bonus, too.
If you’re OK with using an app or a small device that plugs in under your dashboard to track your driving habits, it could pay off with savings. It’s called telematics, where your speed, mileage, and total driving time are tracked and used as part of the formula that determines your insurance premium.
Nearly every state (except for California, Hawaii and Wyoming) shows some benefit for using telematics. In some states, choosing this type of usage-based insurance and then being a safe driver can save you more than 3%.
Beyond those five ways that nearly everyone can take advantage of, here are a few more savings opportunities that are more specific:
Compare car insurance rates today.
These stats were taken from The Zebra’s State of Insurance report, which analyzes more than 73 million car insurance rates to examine how risk factors affect pricing. Insurance is regulated differently in each state, so car insurance prices also vary substantially by location. And with hundreds of insurance companies using myriad rating factors, any given person could conceivably choose from millions upon millions of car insurance quotes. The Zebra’s annual report explores rates across all U.S. ZIP codes to identify trends and critical factors impacting rate changes, and what that means for the 250 million U.S. drivers.
Credit-Based Insurance Scores. NAIC
