car-insuranceWe all know that you can save on your car insurance by only buying cars that insurance companies love – but, there are ways that you can save on your premiums no matter what car you’re driving.

The vast majority of people don’t pick a car based on how much the insurance will be, which is why keeping an eye on the cost of your insurance can help you save money every year.

Now, there are several factors that determine what your car insurance premium will be:

  • The Make
  • The Model
  • Safety aspects
  • Mileage
  • What it’s used for
  • Where it’s stored
  • Your personal characteristics

 

It’s these factors that are used to figure out how likely you are to make a claim, and the more likely you are, the more you’ll be charged.

It goes without saying (but I’ll say it anyway) that expensive sporty cars, that cost a lot to repair and are magnets for car thieves carry with them a higher premium, but let’s look at some perhaps surprising ways to can keep your premium down.

Increase your deductible.

This is sensible in some circumstances. Raising deductibles on collision and comprehensive coverage can save you up to 20 percent on policy premiums.

With newer cars, a $500 collision deductible is best, but for fire and theft, depending on the make and model of your car, the difference between a $200 and a $500 deductible is only $10 or $11 every six months. Laying out an extra $300 to save $25 a year isn’t too sensible. So stick with the lower deductible for comprehensive.

Drop coverage on older cars.

If one of your family cars is, say, 5 or more years old and you’re still carrying collision on it, you may be paying for coverage you don’t need. Consider dropping collision and even comprehensive coverage on vehicles worth only a few thousand dollars. If the car is in an accident or stolen, your insurance company won’t pay more than the book value, anyway, no matter how much you might think it’s worth. Check one of the used-car price guides for an idea of what your car is worth. If your insurance agent doesn’t have such a guide, you can find many online.

Take driver's courses.

Defensive driving courses are not just for people with bad driving records. Even if you’re a good driver with a great record, your insurance company will usually give you a 10 percent discount on your liability and collision coverage for taking an approved course. Taking it just once can give you three years of premium discounts.

Don't file for fender benders.

If you’re involved in a minor accident, you might just want to pay for the repairs yourself and not file a claim. The cost of repairing the damage may exceed your deductible, but you’ll save in the long run. Depending on your insurance company, you could be hit with a pretty substantial premium increase–10, 20, or even 30 percent–for what amounts to little more than a dented fender. But if the accident involved another car, be careful: Make sure there’s no chance that anybody will claim to have been injured.

Shop for discounts.

Many companies offer premium savings if you’re retired and 55 or over. Some also carry a senior adult discount–an additional saving if you’re over 65.

You’ll get a break for buying a car equipped with:

  • Air bags
  • Anti-lock brakes
  • Anti-theft devices
  • On self-activated alarm systems, you generally get a 10 percent discount, and on others, 5 percent.

 

If you let your insurance company write your homeowner policy along with your car insurance, you can get an additional discount, often 5 percent on each policy.

Perhaps most important, insurers offer an “accident-free” or “careful driver” discount if you’ve had a clean driving record for a certain number of years–usually three to five, depending on the company. You’ll save roughly 5 percent.

Sure, style, features, and price play a big role in your choice of a new car. But you’ll also want to compare safety features and the effect on your insurance premiums as well. If you don’t, you could be paying a lot more than you’d planned long after you’ve handed over the purchase price.

How the car you buy affects the premiums you pay

Most insurance companies have a make-and-model rating program that’s based on the company’s assessment of what different types of cars cost to repair and which are likely to attract thieves. If the car you choose devours money when it comes to repairs and asks to be stolen, expect to pay higher insurance premiums.

If you have any tips of your own please share them in the comments.

Thanks to Evolving Personal Finance for featuring this article.