Car Insurance Tips To Lessen Your Financial Load

Anyone who drives needs to pay for car insurance. Driving without insurance is illegal, to say nothing of the potentially huge cost of being in an accident without it. Nevertheless, no one wants to pay more than necessary for insurance. Here are NUMBER ways to significantly lower your car insurance premiums.

Raise Your Deductible. A deductible is the amount of money you are responsible for in the event of a claim. The higher your deductible, the lower your monthly premiums. Opting for an increased deductible can save you hundreds every year, but be careful. Put some of that money away each month to pay the higher deductible, just in case.

Reduce Coverage. If you drive an older vehicle with limited value, it may not be financially worthwhile to pay for full collision and comprehensive coverage. The most your insurance company will pay out in the event of a claim is the book value of the car. If that value isn’t high enough to justify spending hundreds of dollars for full coverage, cut back to the minimum.

Consider Storage Insurance. Do you own a car that you only use for part of the year, or a spare vehicle that just sits in your garage? Why pay full price for insurance when you aren’t actually driving the vehicle? Consider getting a storage insurance policy, which will not allow you to drive the car but covers any damage the vehicle might sustain during storage. Since the risk of an accident is so much lower, insurance companies charge much less for this type of insurance.

Get a Safer Car. Many factors go into calculating insurance premiums. One is your model’s loss history, which is based on the number of filed claims involving your type of car. Many insurers also offer discounts for optional safety features, such as anti-lock brakes and car alarms. If you are in the market for a new vehicle, consider the cost of insurance before you buy. It may be worthwhile to buy a more expensive car and save money on premiums.

Look for Discounts. Different insurance companies offer different ranges of discounts. You may be able to qualify for safe driver discounts, long-term customer discounts or good student discounts. If your insurer offers a discount for low mileage, look into creative ways to reduce your mileage to qualify, and save on fuel costs to boot. Other insurance companies offer discounts for optional driver safety courses; see if those are available and save.

Live in a Safer Area. Are you planning to move soon? Insurers take the accident rate in your area into consideration when computing your premiums. Obviously, insurance costs are just one of many factors to consider when planning a move, but be sure to include them in your overall assessment.

Pay in Full. If, like most drivers, you pay your premiums every month, you are actually paying more than you owe. Ask your insurance agent about paying your whole premium every six months or every year. Arranging your budget to accommodate these large up-front costs instead of smaller monthly payments can be tricky, but the savings are often worth the effort.

Shop Around. Find out who’s offering the best auto insurance quotes. Armed with all this knowledge, look at all of your insurance options to find the best deal. Opting for the company that offers the lowest base premium is not always the best choice. Find out where you can qualify for discounts and compute your premiums based on your whole situation. Choose the insurance company that offers you the best bottom line, and your finances will improve accordingly.

Credit Scores and Car Insurance

While credit scores and credit reports are most commonly associated with loan approvals, there’s more than just getting approved for a credit card, auto loan or mortgage that the little three-digit FICO score is used to calculate.

For instance, credit scores are also factored into things like auto insurance premiums. Yes, credit scores count for insurance too, which makes credit repair all the more important and quite the lesser known credit tip.

So just how is a credit score factored into an insurance premium? An insurance provider will typically base premium rates on an insurance score. And this insurance score takes into account your credit history in order to predict your likelihood of being involved in an accident or filing an insurance claim. Studies detail how credit history can be linked to risk and accident potential. However, Federal law requires car insurance companies that offer less favorable terms for consumers with no credit, or poor credit score, to inform consumers of their score and of the name, address and phone number of the reporting company that provided them with the score.

Here’s a closer look at a credit-based insurance score and why it’s important that you repair credit for more than just good interest rates on loans:

The higher your credit score – and thereby your credit-based insurance score – the greater the likelihood that you’ll qualify for low auto insurance premiums. Keep in mind that this premium also takes into consideration driving history and the amount of claims on your record.

If you have a low credit score, you’re more likely to pay more for your auto insurance premium, as you’ll likely have a lower overall credit-based insurance score. In many cases, drivers around the country have found themselves paying up to 80, even 126% more for the same coverage, than drivers with excellent credit score. Top 10 States with the largest percentage difference premiums nclude: District of Columbia, Wyoming, Indiana, Maine, Michigan, South Carolina, Ohio, Louisiana, Minnesota, Kentucky.

If you have less than stellar credit, what can you do to improve it for auto insurance purposes? The same thing you would do to improve it for any other purpose:

Make sure payments are on time. Open new credit lines in good standing. Have a favorable credit history (i.e., no collections, missed payments, etc.) Good debt management – try not to accrue more than 30 percent of your total credit line at once.

Yes, good credit is about more than just low interest rates on loans – it can also net you lower auto insurance premiums. So if your credit is lacking, take measures to get your finances in order today.

Budgeting For Car Insurance

Avoid Making Late Payments

Late payments can not only throw your budget off balance, but can also cause your insurance premium to go up. If you’re very late, many car insurance providers will put a temporary hold or cancellation on your policy, meaning you might not have coverage during that time period. The policy will have to be re-instated once your payment has been made, and there may be late fees as well. If you are continuously late on your bill, the provider might refuse coverage in the future. This could hinder your opportunities later down the road to get affordable car insurance. It pays to pay on time!

Figuring a Budget

Just as with any other bill, figure how much your car insurance payments are on a monthly or quarterly basis, unless you normally pay a lump sum each year. If paying a quarterly bill, you’ll still want to plan for it monthly and maybe even weekly depending on how you are paid by your employer.

Budgeting monthly means you’ll put back so much per month in order to accumulate enough money to pay the quarterly bill. Let’s look at a real number example to see how this works. If your yearly car insurance bill is $1,800, divide this by four to get your quarterly amount. This equals $450 per quarter. Take the figure $450 and divide it by three to get a monthly amount. This equals $150 for a monthly payment. If you make quarterly payments, you’ll need to set back $150 per month in a checking or savings account until your quarterly bill arrives.

You might also want to put back an amount weekly to save the trouble of coming up with a larger monthly amount. In the example above, you would take the annual amount of $1,800 and divide it by 52 weeks. This equals $34.62 per week that you would need to save out of your payroll check.

Direct Draft Payments

Consider direct draft payments if you’d rather pay your car insurance premium automatically. Some providers will do this on a weekly or monthly draft, while others might do the draft quarterly. Either way, you’ll need to be sure enough money is available in your bank account for your payment on the date that it’s set up to be drafted. This option works well if you’re good at keeping a budget and have a steady income flowing in each week or month. Otherwise, automatic bank drafts can cause headaches if you’re already living on the edge with your finances.

The important thing to remember is that car insurance premiums are a very real part of your budget. These bills shouldn’t be ignored until the last minute. It’s required by law that you keep insurance on your vehicle. So, paying your premiums on time should be a priority in your finances.

Ask your auto insurance company about various payment options. Some offer more than one way to pay your bill. If you’re signing on for car insurance for the first time, this gives you an opportunity to start afresh with budgeting. You’ll have peace of mind by setting up a payment plan and budget that works for you!