Automobile Insurance Information

If you own a car, then you should know that automobile insurance is not just an option - it is a legal requirement.

If you are involved in an automobile accident or have your car stolen, owning the right kind of automobile insurance can help to ease a difficult situation.

Most people complain about the high cost of their automobile insurance which is not surprising, given that a typical insurance policy costs at least several hundred dollars a year. Depending on your age, driving record, and other factors, your annual premium can be significantly more than that. So how can you lower your insurance premium and save yourself money?

If you own a car and drive it, going without automobile insurance is generally not an option. In most states, you are required by law to purchase a minimum amount of liability coverage. You should probably have more than just the bare minimum amount of automobile insurance if you want to provide yourself with adequate protection.

There are steps you can take, however, to reduce your automobile insurance costs without having to cancel your policy. Some or all of these steps may be appropriate for you, depending on your circumstances.

Specific ways to save money on automobile insurance:

1. Shop around.
One of your first steps should be to shop around for automobile insurance that meets your needs. A particularly good time to investigate your alternatives is when your current automobile insurance policy is about to be up for renewal, especially if you find that your premium has gone up. You may be surprised to learn that automobile insurance premiums for the exact same coverage on the same car can vary widely (by hundreds of dollars) between different insurers, even in states that regulate automobile insurance rates.

2. Increase your deductible.
For many people, raising the deductible on their automobile insurance is a good way to cut the cost of the policy. Sometimes you can reduce your annual premium by 10 percent or more if you increase your deductible from $250 to $500. If you do this, however, make sure you have the financial resources to handle the larger deductible when the time comes.

3. Keep an eye on your credit report.
Your credit history is an important factor for most automobile insurance companies. Many studies have shown a correlation between your credit history and the risk to an insurance company. Paying your bills on time and maintaining a good credit history will allow you to enjoy lower automobile insurance rates.

4. Drive less.
If you drive less than a certain number of miles in a year (e.g., 7,500), you may qualify for a low-mileage discount on your automobile insurance. If your insurer offers this discount, try to limit your driving as much as possible. If you commute to work, use public transportation instead of driving. When you go away on vacation, fly or take the train.

5. Don't use your car for business purposes.
Since work-related driving generally subjects you to higher automobile insurance premiums than pleasure driving, it may be in your best interest to stop using your car for business purposes.

6. Drive more safely.
You may be eligible for a price break on your insurance policy if you maintain a clean driving record for a specified period (usually three years). A clean driving record generally means no accidents, moving violations, drunk driving convictions, etc., during that period. The best way to qualify for the applicable automobile insurance discount is to drive carefully and defensively at all times.

7. Buy a low-profile car.
Cars are rated on a risk scale for automobile insurance purposes. In general, sports cars and other high-performance, flashy vehicles are classified as higher insurance risks because they are common targets for thieves and vandals, and because statistically, the people who own them tend to drive more recklessly. If you own such a vehicle, you will likely pay a higher insurance premium than if you owned a station wagon, sedan, or other low-risk vehicle.

8. Move.
If you live in a rural community with little crime and traffic congestion, your premium will generally be lower than if you live in an urban area where your car is more likely to be stolen, vandalized, or involved in an accident. Granted, you shouldn't move just to cut your automobile insurance costs. However, this may be one of many factors in your decision if you're thinking about relocating from the country to the city.

9. Keep your car in a garage.
Cars parked in garages are less likely to be stolen, vandalized, or struck by other vehicles. Using a garage to store your car may entitle you to a slight premium reduction on your automobile insurance.

10. Have safety and anti-theft devices installed in your car.
You may receive discounts on your automobile insurance if your car is equipped with one or more of the following options: anti-lock brakes, automatic seat belts, and airbags. Similarly, anti-theft devices such as car alarms and tracking systems (e.g., Lojack) may also get you an automobile insurance discount because they reduce the chances of your car being stolen or vandalized.

11. Inquire about multifamily/multipolicy discounts.
You may receive a discount from your insurance company if you buy more than one type of insurance through that same company (e.g., auto and homeowners). A discount may also apply to your automobile insurance if you insure multiple cars under the same policy or with the same company.

12. Other discounts
Other discounts may be available if you meet certain criteria. Examples may include discounts for taking a defensive driving course, being a AAA member or staying with the same automobile insurance company for a number of years. These discounts vary by company.

Automobile insurance companies are competing for your business. Compare multiple rates and find the policy that’s right for you.