4 Easy Ways to Lower Your Car Insurance Premium

4 Easy Ways to Lower Your Car Insurance Premium

Do you find yourself sometimes wondering why your car insurance premium seems to be so high even though you have never had a speeding ticket or a major accident? You are not alone! Although it is known that your car insurance premium is based on many factors – your age, gender and driving experience – there are actually many ways to lower your car insurance premium quickly if you have a quick moment to spare. Trust me; by taking only a couple of minutes out of your day, you can save a lot of money every month that you could put towards your savings and investing. 


Here are a couple of ways that you can lower your car insurance premium immediately:

1.) Increasing your Car Insurance Deductible

Before delving into the benefit of a higher car insurance deductible, we must first define it. As an example, you are in a car accident where you end up damaging your front bumper. You get towed to the mechanic shop and they tell you it will cost $1000 to repair your car. You currently have a deductible of $200 with your insurance company. So who pays and at what ratio? To answer this, we will use the definition of a deductible. A deductible is the amount of money that you are required to pay (out of your own pocket) when you make a claim to your insurance company. At this point, you will have to pay $200 out of your own pocket as you currently have a $200 deductible and then your insurance company would pay the other $800 (or up to a specific coverage limit described in your car insurance agreement). So the mechanic would receive the full $1000 but you are actually only paying $200 out of pocket rather than the full $1000. A deductible is an easy way to share the risk of an accident and between you (the policyholder) and your insurance company. The reason why you need a deductible is to make sure you have a claim on keeping your vehicle protected from unnecessary damage and danger. Imagine if you did not need to have a deductible, than there would be no incentive (other than your health and safety) to not be a bit more crazy behind the wheel as any accidents would get paid off completely by the insurance company rather than from your own wallet. 

Before I explain why it would be beneficial for you to increase your car insurance deductible, I must add a disclaimer to this trick. It is important to note that for people who have the mischance of being in many accidents, you are better off with a lower deductible as this means that you will pay less each time you file a claim with your insurance company after an accident. Now, if you are less prone to accidents and have a good driving record, it is definitely worth it to get a higher deductible as you will be able to save a lot more money on your monthly car insurance premium. This is because the insurance company takes into account that you are more willing to pay a larger amount of money in the case of an accident and they are more willing to provide a benefit to you in the form of a lower premium since you are taking on more risk with a higher deductible.

If you are able to afford a higher deductible and are not as worried to get into an accident since you are a cautious driver, it is in your best interest to increase your car insurance deductible. As an example, if you were to increase your deductible from $200 to $1000, you could save 25% on your monthly car insurance premium. If you do decide to do this, make sure that you take into account this higher deductible in your budget, as you never know when you might be in an accident and having a small emergency fund to help you out is never a bad thing.

2.) Always Shop Around for Car Insurance

I find that this is a recurring theme throughout my blog. It is always important to shop around for anything, including car insurance, as having a better idea of many different companies pricing methods will benefit you. If you are aware that some car insurance companies are more expensive, you should definitely take a look at why. It is important to never disregard an insurance company just because they are more expensive than others. This is because you might be surprised to hear that they offer additional security for your vehicle that has been built into the price that you would not normally get with other insurance companies. As an example, I pay $8 extra every month with my current car insurer as they have given me a guarantee that if my car is stolen, they will provide me an option of taking another vehicle of equal value or my loss in cash. Since I park my car in the street everyday as I do not currently have a reserved parking spot in the apartment building that I live, I worry a lot less that my vehicle might get burglarized, damaged or stolen since I have this guarantee from my car insurer. Although when I had first started looking for car insurance, my car insurance company price was slightly higher, in the long run, that peace of mind was definitely worth the extra little bit of money it costs me every month.

I also think it is important to note that if you have a clean driving record (a couple of parking tickets do not really affect you that much), than you should definitely pick up the phone or go online to shop around for car insurance. This could save you upwards of a couple of hundred dollars a year simply by taking 30 minutes out of your day to do research. 

3.) Always Drive Safely

I think it is understood that if you are consistently driving safely throughout the year, you will have the ability to lower your car insurance premium. This is because when you finish a year with your insurance company and it comes time for renewal, your insurance company will take a look at your driving record from the last year and will make a decision on if they increase your premium or not. If you drove safely with no issues or accidents, you can make a case for lowering your premium as you have not cost the insurance company any money through filing your claims. This is because your insurance company has a stake in your ability to drive safely and they will want to reward you for good behavior behind the wheel. This is because insurance companies always have some unexpected bad drivers that cost them money through claims so it is in their best interest to reward good drivers who pay a premium to the insurance company without ever being a financial drain on them. Being a good driver by getting your car routinely inspected by a professional, pulling out of parking spots and driveways cautiously and obeying traffic signals will help you lower your car insurance premium over the long-term and keep more money in your pocket!

4.) You Should Install a Car Insurer’s Apps

Many car insurers have begun using apps that help monitor your driving behavior to help them get a better grasp of the type of driving that you are. This allows them to get a sense, using their proprietary algorithm, if you would be likely to claim more or less accidents and claims than the average person. With this information, they are able to estimate the cost to insure you and your vehicle. These apps have the capacity to monitor everything – your speed, how hard you break, any sudden accelerations and when you usually drive. Please note that if you tend to drive long distances everyday without any accidents, this will help improve your app rating as you are considered consistent. So what is the benefit of this app? By downloading and using the app, you are able to actually cut your car insurance premiums by a substantial amount!

In my situation, when I switched insurance companies for my vehicle in February 2020, I decided, for the first time, to enroll in the car insurer’s app as they had explained to me that there were no downsides – my premium could only go lower by using the app. Without any negative outcomes, I told myself I might as well try it and see if I could save some extra money. So I let the app run in the background for 100 days (usually it’s about 3 months from start to end) and was able to cut my premium down by 19%! I was able to cut it down by so much – usually you can cut it down anywhere from 5-25% with the app - by driving prudently and making sure that I never went over the speed limit and followed all of the rules. Honestly, it was not that tough to be a good driver and I tended to lose points (the 6% I missed) because sometimes I would speed or would accelerate too quickly at a red light or a stop sign.

Overall though, it is definitely worth installing a car insurer’s app because there is absolutely no downside and I was able to save about $450 this year alone with a lower premium. Just as an FYI, the app does use Wi-Fi and LTE when you are driving so make sure that you have a plan that is good enough. I estimate that the monthly app internet usage for a regular driver is about 0.4GB so it does not use a lot but if you only have a 1GB plan than maybe think about it before installing the app as you will probably save less money a month than you would be charged by your phone company.

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Do you know of any other ways to lower your car insurance premium? Would you like me to add anything else to this post? Let me know down in the comments below!

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