Car insurance ^[2] companies calculate your premiums based on several risk factors. The biggest factor is the likelihood you’ll file a claim. Some examples of other risk factors with auto insurance include the mileage on the car, how often you use the car, your driving record, previous accidents, your zip code, whether your car is highly desired by thieves, and  the car model’s history of accidents (Corvettes cost more than Chevettes). There are a few ways to reduce your risk factor and, in turn, the amount of your car insurance ^[2] premium, saving your bank account ^[3] from a state of shock!

^[4] 1. Shop around!

Take a few moments and shop with online sites like NetQuote or Insureme ^[5]. These two sites do the shopping for you, taking your information and getting online insurance quotes from multiple, highly reputable companies. The savings can be substantial and it pays to shop your car insurance ^[2] every 12 – 24 months. Insurers can be guilty of “premium creep” – where they inch up your premiums every few months or so, citing nothing more than the increased cost of providing the service as their reason.

Another aspect of shopping around is to ask for discounts. Sometimes simply asking can score you some big-time savings! Ask about discounts for :

• Your occupation
• Multiple vehicles insured with the same company
• Multiple insurance lines with the same company
• New vehicle safety features
• Senior citizens
• New parents
• Those who have been accident free for multiple years
• Alternative fuel vehicles
• Anti-theft devices installed on the vehicle (including On-Star)
• Taking defensive driving courses
• Low annual mileage driven
• Not driving after midnight
• Having no traffic citations
• Good students
• Driver training courses

2. Choose a policy with a high deductible ($1,500 and up).

I’ve seen a statistic that the average car accident is minor and costs less than $1,200. Insurers are willing to charge a much smaller premium to avoid the hassle of a $1,000 fender-bender. If you’ve built your emergency fund ^[6] properly, a $1,500 deductible won’t ruin your bank account ^[3]!

^[7]

3. Maintain a clean driving record.

Lay off the lead foot! Use your cruise control when on the highway (set for the speed limit) and pay attention to traffic signs and signals. I tell my 16 year old — “Do what you know is right” and you won’t have to worry with getting pulled over.

4. Lower your coverage on older cars.

Drop collision and/or comprehensive coverage on older cars that are worth less than ten times the premium –  these cars aren’t worth the cost of that type of coverage.

5. Keep your mileage low by using public transportation when you can.

Make sure your insurer knows that you use public transportation on a regular basis. More miles on your vehicle means a great possibility of an accident.

6. Take a defensive driver education course.

Even if it isn’t to relieve your record of a ticket, a defensive driving course can reduce your car insurance ^[2] premium, drastically if you have drivers on your policy that are under the age of 26.

7. Buy a used vehicle with safety features, such as airbags and anti-lock brakes.

Remember that not only is your likelihood of filing a claim an important consideration, but also how large your claim might be. Buying a car with safety features no only protects you and your loved ones in case of an accident, but also protects the insurance company from higher claims.

Photo by Team Dalog ^[13]

About the author

Ron has written 1082 articles on The Wisdom Journal.

The founder and editor of The Wisdom Journal ^[14] in 2007, Ron has worked in banking, distribution, retail, and upper management for companies ranging in size from small startups to multi-billion dollar corporations. He graduated Suma Cum Laude from a top MBA program and currently is a partner in a national building materials company.

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