Money-Saving Car Insurance Hacks You Need To Know

Car insurance is in place to protect you from a hefty financial loss in the event of an at-fault accident. Looking at your monthly premium rate, it doesn’t always feel like insurance is there to save us money.

Having car insured is required by law, but you do have control in how much you pay for your coverage.

Car insurance rates are continually changing. You may think you have a good car insurance rate, but it is very important to check premium rates every six months to ensure you’re getting the best bang for your buck.

Reasons to Shop for Car Insurance Every Six Months

Premium rates can alternate month to month, or even day to day.

For example, if you live in a state like Florida your premium rates will most likely be higher if you’re shopping for coverage between August and September because it’s peak hurricane season.

Therefore, most property is at risk for damage within that short period of time. A predicted increase in claims means companies must bump their rates up to cover those payouts.

Companies like Allstate and Progressive use their claims payout data from past years to forecast risks for the upcoming year. An increase or decrease in risk due to criminal activity, or weather predictions, may cause certain providers to adjust their costs accordingly.

Changes in quotes from day to day won’t be compelling enough to turn heads, but those that fluctuate over a longer period of time (six months and up), can save you hundreds a year.

1. States change insurance laws and requirements

Legal requirements for liability, personal injury protection, and other coverage options are all set by your state’s insurance department. New Jersey drivers are required to maintain minimum insurance requirements. Unlike other states, New Jersey insurance department provides the option for very basic insurance. It also allows options for a standard policy that provides more protections and gives you additional legal rights.

Minimum New Jersey Car Insurance Requirements
Basic Policy
Property Damage Liability $5,000 Limit
Personal Injury Protection $15,000 Limit
Standard Policy
Bodily Injury Liability $15,000/$30,000 Limit
Property Damage Liability $5,000 Limit
Uninsured/Under-insured Bodily Injury $15,000/$30,000 Limit
Personal Injury Protection $15,000 Limit

No matter which state you call home, requirements of insurance can change with new legislation. Meaning, you may need more or less coverage in order to comply with the law.

2. Changes in your credit history

It is legal in most states for companies to use your credit score to determine your premium rates. California, Hawaii, and Massachusetts are the only states that do not take your credit score into account.

A study engineered by the Bureau of Business Research at UT’s McCombs School of Business, showed that there is a correlation between your credit and how likely you are to file a claim or be at fault in a car accident.

Insurance companies will use research like this to mark drivers with poor credit scores as financially irresponsible. With that being said, you are subjected to a higher premium cost due to your poor credit.

It is estimated that a driver with poor credit will pay an average of $214 more a year.

3. Tickets, traffic violations, and accidents fall off your record

Your driving record has a big impact on your insurance cost. Blemishes on your record, such as traffic violations and at-fault accidents live on your driving record forever.

However, it will not affect your premium rates forever. Auto insurance providers cannot legally factor in violations or accidents after a certain time span. The average time a violation will affect your insurance rate is 3-5 years.

4. Changes in lifestyle

Lifestyle changes could also save you money on your rate.

Birthdays

The older you get, the less you’ll have to pay for car insurance.It is important for younger drivers to shop around quite often because premiums drop once you reach age 20 and continually drop every year after until age 60

New Driver:

Adding a new driver to your policy is always a good time to shop around for a new policy. There is a chance for your rate to decrease, due to a multi-driver discount that most insurance companies offer.

New Home Address:

Your home address brings a lot of risk factors that affect the cost of your insurance. Insurance providers consider crime and traffic stats for your area and take into account how that could impact your risk as an insurance holder. An area with high crime and traffic collisions are deemed more risky and therefore, come with higher insurance premiums. Also, If you just bought your first home, companies often give a generous discount to homeowners, so be on the lookout!

Marriage:

A study conducted by The National Institute of Health found that drivers who have never been married were twice as likely to be in an accident than married drivers. You may be able to unlock some serious savings if you merge into one policy with your spouse or domestic partner.

Graduation:

As with most things in life, your education background has an effect on your auto insurance premiums. The more education you have, the less you will pay for coverage. Car manufacturers also give incentives in the form of rebates on cars to college grads awarding them for all their hard work.
Insurance companies have found correlations between drivers without degrees and a higher number of at-fault accidents and consider it a verifiable cause to increase rates.

5. You’ve maintained coverage for the past 6 months to a year

Generally speaking, car insurance is most expensive for the first time buyers or drivers who may have had a lapse in coverage for an extend period of time.

Drivers without a history of previous coverage are considered by providers to be high-risk. Insurance providers have no record of the number of claims these drivers have or their payment history, so they must prepare for the worst.

Once you have had active coverage for 6 month or longer, you are considered a lower-risk and you are eligible for continuous coverage and loyalty discounts.

6. Depreciation driving down your car’s value

Depreciation is the loss in value of a new car the second it’s driven off the lot, whether new or used.
Reassessing your policy every 6 months will refresh your discounts and coverage options, like collision and comprehensive, that will match your cars decreasing value.
You shouldn’t be paying the same rate every year for a car that had less value than when you originally insured it.
Research has proven that 5-year-old car models spend 20% less on insurance than more current models.

7. Your neighborhood’s weather, population, and crime levels

Unfortunately, external factors outside of your control can impact the cost of your insurance.

You may have a clean driving record and great credit history, but once again, if you live in a highly populated area with severe weather or high levels of theft, you will be paying more for protection.

If you buy through an insurance carrier that insures a large portion of your community, you are going to have even more expensive rates. The company is taking on more risk by serving that area and thus will need to hike up the rates to ensure they can cover claim payouts.

8. “New” customers

In order to get you in the door with a specific insurance company, they will offer cheaper rates or “new” customer rates.

“New” customer doesn’t mean you’ve never had insurance before, it simply means that you are new to a different provider. Requesting quotes from different companies every six months makes you an appealing customer, therefore opening up avenues for lower rates.

Car Insurance Cost-Cutters

It is both smart and prudent to have adequate coverage for your vehicle, but it shouldn’t break the bank. Premiums can vary by hundreds of dollars depending on many different factors, but there are various ways to cut down the costs.

Keep a Clean Driving Record

It should go without saying that the more violations or accidents you have, the higher you will pay for coverage. Keep a spotless driving record and watch your rates drop.

Take a Defensive Driving Course

Most companies will provide a discount for drivers who complete an approved defensive driving course. If you have points on your record, taking this course may also help reduce this number.

Take Mass Transit

If your daily commute to the office requires you to drive a whole bunch on miles, chances are your insurance rates will be higher than someone who lives right around the corner from where they work. If possible, try to take mass transit to decrease your mileage significantly, therefore saving money on your coverage.

Consider Raising Your Deductibles

When deciding upon your vehicles insurance, typically you choose a deductible, or the amount of money you would have to pay before insurance picks up the tab in the event of an accident. Deductibles range from $250-$1,000 depending on the policy. The catch is, the lower the deductible, the higher the annual premium.

Improve Your Credit Rating

Credit scores play a huge factor in determining insurance rates. In most cases, the higher your credit score, the less you’ll pay with insurance.

Install Anti-Theft Devices on Your Car

You have the potential to lower your annual premium if you install anti-theft devices. Each policy should be able to tell you exactly what devices to install to cut back on your cost. Car alarms and LoJacks are two types of devices you might want to inquire about. Although most cars today come equipped with these devices, this is a perfect way for a college student who still has a hand-me-down down car to cut back some monthly expenses.

Discounts

Deductions off your auto insurance can come through various discounts. Students can receive discounts through good grades, low mileage programs, family plans, and even savings through an employer. There are hundreds of discounts available, it’s just a matter of asking for discounts you may qualify for.

Select Your Vehicle Carefully

The biggest savings can come through the type of car you choose to drive. Every factor of a car like its size, make and model, can have a huge impact on your insurance rates.

Car Brand Comparison


Another big factor which determines your monthly insurance rates are the make and model of your vehicle.

For example, let’s take a look at two popular crossovers. The Toyota Rav4 and the Ford Escape are both very similar cars, but each has substantial differences when it comes to insurance.

The average monthly lease for a new Toyota Rav4 is around $276 a month. If you are a female between the ages of 25-34 and you have a good driving record, you are looking at about $86 a month for insurance coverage in the state of New Jersey.  Adding the two costs together, your vehicle cost and insurance coverage is $362 a month.

With a poor driving record, your monthly insurance more than doubles. You are now paying $175 a month, turning your monthly total to $451 per month.

Now, we took a similar crossover, the Ford Escape, and ran the same variables. An estimated $280 a month lease on an Escape combined with a monthly insurance rate with a clean driving record of $69, totals for $349. With poor driving record insurance would be $145 which brings that total to $425. In both of these scenarios the Ford is $4 more per month on the lease, however the insurance is substantially lower, making it more affordable.

25-34 Year Old Female in New Jersey
Type: Crossovers Premium Sedans
Car: Honda CR-V Toyota Rav4 Ford Escape Nissan Maxima Infiniti Q50 BMW 320xi
MSRP: $26,525 $27,588 $24,845 $34,405 $41,855 $39,390
Avg. Monthly Lease $276 $276 $280 $322 $358 $326
AVERAGE INSURANCE RATES
Good Record $85 $86 $69 $119 $130 $97
Poor Record $164 $175 $145 $270 $263 $212
Comparison is done on $0 down lease deals on sedans, crossovers and SUV’s in the same monthly price range. Due at signing may differ based on taxes and fees.

 

25-34 Year Old Male in New Jersey
Type: Crossovers Premium Sedans
Car: Honda CR-V Toyota Rav4 Ford Escape Nissan Maxima Infiniti Q50 BMW 320xi
MSRP: $26,525 $27,588 $24,845 $34,405 $41,855 $39,390
Avg. Monthly Lease $276 $276 $280 $322 $358 $326
AVERAGE INSURANCE RATES
Good Record $90 $89 $87 $133 $130 $108
Poor Record $180 $181 $177 $290 $285 $229
Comparison is done on $0 down lease deals on sedans, crossovers and SUV’s in the same monthly price range. Due at signing may differ based on taxes and fees.

Conclusion

Auto insurance should not be eating away at your wallet. There are many factors that decide your insurance rates, such as age, state, credit, driving history, and may more.

Be on the lookout for discounts and lifestyle changes you are eligible for savings across the board with auto insurance. To keep up with those saving offers, remember to reassess your policy every six months. Also, keep in mind choosing certain cars can hike up the cost of your insurance policy, so shop wisely by asking one of our leasing agents which vehicles they recommend to better manage your vehicle expenses.

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