10 Auto Insurance Hacks to get the Cheapest Policy:
Auto insurance policies are one of those unavoidable necessities of adulthood. It comes along with the territory of having a car. With the wheels comes the responsibility of now managing your driving record and the financial responsibility of your auto insurance policy. This can be murky waters for most people. But it doesn’t have to be. Here are 10 Auto Insurance Hacks to get the Cheapest Policy:
Piggyback on a mature policy
This may sound counterintuitive if you’re trying to establish your own auto policy, but if you are under the age of 25 years old it is the best option for you. The insurance company considers younger drivers as riskier policy holders. They have no proven track record (10 or more years) of good driving record or of being financial responsible. Parents can add the younger driver to their policy and it will count in the young person’s favor when they go to start a policy on his own at 25 years old. This is the same principle some parents use with credit cards to help their kids establish a good credit score by adding them on to the parents’ credit card accounts.
Location is key
You wouldn’t think this would be a primary factor in determining your auto insurance rate, but with all insurance it comes down to evaluating the risk of each aspect. If you live in a highly populated area (such as a city) there is a higher risk of an incidence occurring here and therefore auto policy rates are higher. While in rural areas the rates will be cheaper. Consider where you live before starting your auto policy.
How often will you drive your vehicle?
The same as with location, a vehicle that is used more frequently has a higher chance of an incident occurring and is considered higher risk. An incident can be a car accident or moving violation of any sort. Some insurers may not ask this outright. You may need to specify to them what you intend to use the vehicle for and how often (i.e., ‘I plan to drive it only on the weekends’).
Are you a good driver?
Many people ignore this easy way to get close to 10% discounted off their auto insurance premium. Some mistakenly believe that their driving record is independent from their auto policy, but this is incorrect. For example, most insurance companies penalize drivers with moving violations the same way they would if you had numerous car accidents by giving you a higher premium. While if you have a stellar driving record you are rewarded with a premium discount. Make sure to tell the auto insurer about your awesome driving record and reap the benefits.
The defensive driving course is not only for new drivers
Another, often overlooked, easy discount can be had by taking a defensive driving course. Yes, it’s inconvenient. But worth the additional 10% discount from the sacrifice of a few hours of your time.
‘A’ students get ‘A’ rates
If you’re a good student you can earn an additional discount of up to 10% off of yours or your parents’ auto insurance policy. The good student discounts apply to anyone enrolled as a full-time student, in the 16 – 24 age group, and earns a scholastic average of B or higher.
Bundle your insurance policies
Most insurers offer more than just auto insurance policies. Throughout your adult life you will need other insurance to protect our livelihood, such as life, homeowners, umbrella, and even renters insurance policies. Insurers offer incentives for policyholders to bundle all of their insurance needs with the same company. They offer a discounted premium on all lines of insurance. Ask your insurer to find out what features/discounts they offer for additional lines of business.
Credit score is a factor
In considering an individual’s financial health, a credit check has become common practice. You may be surprised to know that insurance companies check your credit score when instituting a new auto policy. Similar to applying for a credit card or a loan, having a poor credit score will cause you to have a higher auto insurance premium.
Are you affiliated?
Most insurance companies honor member affiliations. Check your jobs. Employers often have discount programs with various retailors, insurance companies, and gym programs as an added benefit to their employees. Some other affiliations that may offer discounts include college alumni programs, sororities and fraternities, and even wholesale establishments (such as Costco, Sam’s Club, and BJ’s).
No policy lapses
A major factor in good financial management is staying current with your payments. This applies to all bills, creditors, and utility payments. When you stay current you are building a record of on time payment history which bodes well in your favor. It shows you are reliable and responsible. On the other hand if you frequently miss payments or make late payments this negatively effects your credit rating. The consequences are even more severe for missing an insurance premium payment. This can lead to a cancellation of your policy, which forces you to start a new policy (typically at a hire a rate). In some cases the insurance company may refuse to insure you. To avoid this risk, make those auto insurance premium payments on time. Also, there’s a discount off of the premium balance if you pay for the full term upfront instead of on a monthly basis.
Review your auto Policy
Auto insurance is a necessary evil of having and owning a car. But that doesn’t mean you have to pay out the nose to have a good auto coverage. The list above is a good starting point to review your current policy in light of these available discounts and reap the benefits.
Stasie Tillman is a writer & an investment and personal finance analyst. She oversaw the Analytics department for a prominent Long Island bond brokerage firm for many years. She’s the founder of AStoicLife.com a faith and lifestyle website that focuses on encouragement and inspiration to lead a balanced life in all aspects (mind, body, and spirit). She writes on various topics but mainly on practical matters such as finances, parenting, faith, & current events. Contact her on the Work With Me page on AStoicLife.com or via LinkedIn.
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