When Does Car Insurance Get Cheaper?
Car Insurance Get Cheaper
I’ve been trying to teach my dog a new trick—he’s supposed to roll over, but he just stares at me like I’m crazy. Speaking of patience, waiting for car insurance to get cheaper can feel the same. Let’s break it down.
As a young driver, you might also ask yourself, “At what age does car insurance go down?” People often say car insurance rates decrease once you turn 25, but age isn’t the only factor determining your monthly car insurance bill.
While you may see your insurance premium decrease after you reach a certain age, several reasons exist. Your insurance rate is based on your assigned risk based on your demographics and where you fall statistically, to be clear.
Insurance companies try to reduce their financial risk by charging higher rates to drivers who are in certain high-risk groups. But just because you may fall into one of these risk categories, it does not mean there are no opportunities for savings.
Insurance rates are at their highest for new drivers who are just getting their licenses, but the costs can decrease over time, for several factors, including the fact that you are simply getting older. Understanding the age which insurance rates begin to decrease, can help you plan for your future and where to allocate savings until you reach your right age for insurance.
How Much Does Car Insurance Cost?
How much someone pays for car insurance depends if they are a driver where they live, the choices of insurance companies available to them, and the kind of coverage they have. The average driver paid $1,176 for their car insurance in 2020, based on the latest data from the National Association of Insurance Commissioners (NAIC). According to NAIC data, premiums in fact dropped 2.4% from 2019 to 2020.
AAA also placed the average cost for car insurance on new cars a little higher at $1,202 in 2023 compared to 2020. The numbers are pretty close to one another, indicating that you likely need to budget about $100 a month for auto insurance in addition to the new car price you calculate for yourself.
How To Save On Car Insurance?
There are various strategies that you can employ to lower your premium costs.
Take Advantage Of Multi-Car Discounts
If you are insuring a single vehicle, you could end up having to pay more per vehicle overall than if you were to go ahead and insure many cars, with the same company. Insurance companies typically provide what amounts to a bulk rate, as they want your business.
Most multiple drivers must reside at the same address, and be blood or marriage-related. Two unrelated individuals might also qualify for a discount, although they generally must co-own the vehicle.
If one of your drivers is a teen, you can expect to pay more to insure them, but you may get a good student discount if they have a B average or better, or are among the top 20% of their class. Such discounts typically apply until your child turns 25. They vary from as low as 1% to as high as 39%, so if your teen is a good student, be sure to provide proof to your insurance agent.
Some insurers might also offer an auto insurance discount if you have other policies with the same company, such as homeowners insurance. You can save up to 25% by bundling your homeowners and auto insurance with Allstate.
Pay Attention On The Road
Be a safe driver. The more you pay attention, the fewer accidents or moving violations you’ll be able to avoid and those are the incidents cause your insurance rates to go up. For example, traveler’s insurance offers safe driver discounts that can range based on your driving record.
Take A Defensive Driving Course
The time and money you must spend on the course result in enough insurance savings, so be sure to ask your agent/insurance company about this discount before committing to the class. It’s also desirable that you take an accredited course. Each state has its own accreditation rules. GEICO lets you see what they are by state on its website.
Shop Around For Better Car Insurance Rates
If your policy is up for renewal and the annual premium has climbed significantly, consider shopping around and checking the quotes from other companies. Even so, getting quotes from different companies every year or two makes sense, just in case a lower rate exists.
But cheap is not always good. Also, keep in mind the insurer’s creditworthiness. What good is a policy if the company lacks the financial strength to pay its insurance claims? Look up a site that rates the economic stability of insurance companies.
Your company’s financial stability is significant, but it is also essential to understand what your contract includes. Insure. Com’s website rates insurance companies based on data compiled by Standard and Poor’s.
Use Mass Transit
When you buy auto insurance, a company typically has you fill out a questionnaire. One of the questions you can expect to be asked is how many miles you drive the insured automobile in a year.
You’ll generally pay higher premiums if you drive your vehicle three hours to work daily than if you drive one mile a day, so consider mass transit to rack up fewer miles. But remember that it’s likely that you’ll have to reduce your mileage significantly before getting a discount. Check with your insurance company to ensure that when you’re trying to lower your mileage, the truth isn’t your insurance efforts are wasted.
Downsize Your Vehicle
A big SUV may be a fun vehicle to drive, but insuring a 5,000-pound, high-end frame is more expensive than putting the same coverage on a little but safe low-cost commuter car. Some insurers will discount if you buy a hybrid or alt-fuel vehicle. Farmers Insurance provides a 5% discount on these kinds of vehicles.
Increase Your Deductibles
When you choose car insurance, you are usually given a choice of the deductible you want to pay. This is the amount of money that you’ll have to pay out of pocket before insurance front the bill for the rest in the event of an accident or other type of claim. Deductibles are most often between $250 and $1,000, depending on the policy. The trade-off is that the higher the deductible, the higher the annual premium usually is. The older and higher the deductible, the lower the premium.
Talk to your agent to see how lowering your premium would impact your deductible. It may trim your annual premium slightly better by a few percentage points or the savings could be little.
Raising the deductible may be a sensible move if you’re hesitant to file small claims out of fear of increasing your premium.
Improve Your Credit Rating
Your driving record is one of the most significant factors in determining auto insurance costs because someone who was in a ton of accidents could end up costing an insurance company a lot of money. Some insurers also check credit ratings when they’re setting insurance premiums.
FAQ
Your age is just one car insurance rating factor affecting your premium. Although carriers all prioritize factors differently, most consider the car, driving record, annual mileage and where you live. But in general, note that your rates are affected both by factors that determine the likelihood that you’ll make a claim.
The first step to finding the best car insurance for your circumstances is determining what factors matter most. For example, do you need specialty coverage for customizations, or are you looking for a bare-bones policy? Do you want access to a brick-and-mortar agent or prefer a carrier with robust digital tools? Getting quotes from several companies may help you compare coverage offerings, discounts, policy features and third-party ratings to find the best option.
You may be stuck with young driver premiums, but you can lower the cost of your premium. In addition to keeping a clean driving record, you should also look for carriers with additional discounts geared towards young drivers, including good student discounts and driver training discounts. Your parents may also be entitled to a student away credit credit if you cannot take your car with you to college. If you’re in the market to buy a car, opt for an older used car where you could get by with liability-only coverage and save money.
