How to save money by keeping car insurance costs low
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Trent Hamm Guest blogger
There鈥檚 already a ton of great information from Jeff in聽聽about shopping around for auto insurance 鈥� how to choose it and how to optimize it.
Rather than just rehashing my own experiences with auto insurance, I wanted to look at it from a different angle. Obviously, my choices helped define what kind of auto insurance I chose, but how does auto insurance actually alter my choices once I already have it?
What do I mean by that?聽Most auto insurance policies offer reductions in rate for customers who conform to certain behaviors.聽In other words, if you do certain things, your insurance rate will go down.
For the auto insurance company, this makes sense.聽Insurance companies profile you.聽They look for aspects of people that are found in good drivers because good drivers are the ones who make money for the insurance company. If people are very rarely making claims, then the insurance company is going to clean up on you as a customer.聽
So, what do good drivers do? They don鈥檛 get in accidents, obviously, but there are other factors to consider.
Improve your credit score.聽Most insurance companies use your credit score as a component in figuring out your rate quote. The better your score, the lower the rate they鈥檒l offer you. Why? As a whole, people with good credit tend to get into fewer accidents.
I鈥檝e witnessed this in my own life. After improving my score in 2006 and 2007 (it wasn鈥檛聽bad聽to begin with, but it wasn鈥檛 great), I started shopping around for insurance rates again (after my first shopping around in 2004). I was stunned as to how much lower the rates on offer were.
Don鈥檛 get pulled over.聽The impact of a traffic ticket can be painful enough. You can get dinged $100 for even the slightest traffic infraction.
That鈥檚 just the first cost, though. Often, the real cost comes with the increase in insurance rates that comes with the traffic ticket. The next time your policy is renewed, brace for a rate increase. It won鈥檛 always happen, but it often does.
A similar logic applies when it comes to traffic accidents. Get in an accident and you鈥檙e likely facing a rate increase.
Buy a low-profile and reliable car.聽If you choose a car that鈥檚 associated with speed and flashiness, your insurance company will take that into account. So will thieves.
Avoid flashy cars. Avoid cars known for speed. Look for cars that are reliable and won鈥檛 attract undue attention.
Drive less.聽One of the things you鈥檒l always be asked when applying for auto insurance is how much you drive. The less you drive, the lower your quote will be.
If you can, use mass transit to get into and out of the city for work instead of driving your car. Stop for groceries and other items off of mass transit as well.
The fewer miles you put on that car, the lower your insurance for that car will be. You鈥檒l also save money on fuel and maintenance.
Have a good credit score. Drive safely and within the speed limit. Buy a reliable car. Drive less by using mass transit and your bicycle more.
These aren鈥檛 just good pieces of insurance advice. They鈥檙e good pieces of聽personal finance听补诲惫颈肠别.聽Each of these tactics will save you money even聽without聽considering auto insurance.
These aren鈥檛 just good pieces of insurance advice. They鈥檙e good pieces of personal finance advice.
If you take steps to improve your auto insurance rate, you鈥檙e likely taking steps that will save you in other aspects of your financial life. You鈥檒l get fewer traffic tickets. You鈥檒l see lower interest rates. You鈥檒l have fewer repair bills. You鈥檒l have lower auto maintenance and fuel bills.
These steps become a 鈥渄ouble win.鈥�
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