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Cheaper Car Insurance in 8 Easy Steps

by Penny M. Hagerman


How often do you compare car insurance rates? Every two or three years? Only at renewal time? When you buy a new car and need different coverage?


According to the National Association of Insurance Commissioners (NAIC), only 20 to 35 percent of us compare rates annually. That means we may be spending a lot more than necessary for the auto policies we have—and sacrificing significant savings that could put money back in our pockets.

To maximize savings, take these 8 easy steps to lower car rates. They'll make shopping for the right insurance easier, and help stretch household budgets further.

  1. Inform the insurance company about recent changes that could add up to savings. Installing anti-theft devices in the car, trading a newer car in for an older one, and working a job closer to home all make additional car discounts and cheaper car insurance rates possible.
  2. Avoid loaning insured cars to friends and family. If they cause an accident, you'll need to file a claim on the policy—which could result in higher rates and deductibles owed.
  3. Pay annual premiums up front. Paying in monthly or quarterly installments, though convenient, usually racks up additional fees, costing more over the life of the policy.
  4. Wait until they're fully licensed to add teen drivers to your car policy. Most insurers extend coverage to teens with permits without listing them as drivers on the policy.
  5. Ask about usage-based or good driver car insurance. Based on measureable data such as speed, acceleration and braking, this type of policy requires the placement of a small tracking device in the car to monitor driving habits—and rewards good drivers with lower rates.
  6. Consider "pay-as-you-drive," or by-the-mile insurance. Offered by a few insurers in an increasing number of states, programs like these reduce premiums for those who drive fewer miles, thereby reducing traffic, pollution and oil consumption in the process—and the risk of car accidents. According to a recent study, almost two-thirds of households would pay less for auto insurance under this type of plan, resulting in an average savings of $270 per car per year.
  7. Hang up the cell phone and drive. Cell phones distract drivers and cause thousands of car accidents a year. For those 73 percent of drivers who take and place calls while driving their cars, accident and insurance rates run much higher. Avoiding this risky behavior can lower insurance rates significantly.
  8. Install daytime running lights—or drive with headlights on 24/7—to increase the car's visibility for other drivers. Doing so gives them time to react when necessary, and might help avoid an otherwise unavoidable car collision.

By taking these 8 steps to cheaper car insurance, premiums can be slashed appreciably, and coverage purchased at the lowest possible price.

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