Auto insurance makes up a hefty part of your budget -- ranging from a couple of hundred dollars a quarter to several thousand -- depending on a number of factors. To save on insurance expenses, you could sell your brand-new sports car that carries a hefty insurance premium and buy a subcompact car that costs much less to insure, or you could take advantage of different ways to decrease the amount you pay.
Improve Your Credit Rating
Whether you like it or not, your insurance premiums are based in part on your credit scores. The insurance companies look at those scores as a measure of responsibility and whether you're likely to make a claim. Pay down credit card debt so you have a better ratio of used to available credit, and make all payments on time, every time. If you haven't had a need for credit, establish a credit history by opening one or two credit card accounts and making the payments on time.
Improve Your Driving Record
Claims and accidents increase your auto insurance premium. The insurance company thinks that having one accident boosts the odds that you'll be in an accident again. Improving your driving record will eventually decrease your insurance premiums.
Cover Just What You Need
Insurers base premiums on the level of coverage. Many states legally require some level of liability insurance to cover others in an accident that's your fault. In addition to that liability coverage, your policy may include bodily injury liability, collision, property damage liability, medical payments, comprehensive, collision and uninsured motorist coverage, with what you pay based on the dollar amounts of coverage for each level. Decreasing the coverage amount decreases the cost, but if you cause an accident with $75,000 in property damage but only have $40,000 in coverage, you're legally responsible to pay the difference out of your own pocket.
The deductible -- the amount of money you pay to cover part of the damages to your own car or someone else's property when you have an accident -- ranges from several hundred dollars to several thousand. If you increase the deductible so you pay more of the damages, your insurance premiums will decrease. Just keep your fingers crossed that you don't have any accidents.
The more miles you drive, the higher the probability you'll get in an accident, which doesn't jibe with the fact most accidents take place within 10 miles of home, but that's the way insurance companies think. Drive less and your insurance cost will decrease, next year, but you actually have to demonstrate that you've decreased the mileage.
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