IS IT WORTH TRIMMING YOUR AUTO INSURANCE PREMIUM TODAY?

Auto insurance bills are one of the largest expenses of American citizens, especially for a teenage driver.

For the first time ever in over 10 years, ValuePenguin reports that auto insurance rates have decreased in value as the premium changes are finally approved and taking effect across the U.S in 2021, InsuranceBusinessMag confirms.

“According to the report, auto insurance rates across America decreased by 1.7% for 2021; the average cost of auto insurance in the U.S for 2021 is $1,636. However, it also found that premiums are still 106% more expensive when compared to prices in 2011”, InsuranceBusinessMag adds.

The report shows there has been a decrease in the number of auto insurance rates by an average of 2.3% in all 45 states in America. States like Arkansas, Michigan, and Ohio have seen the largest annual decrease in auto insurance premiums, notably within the range of 4.3 to 4.8% respectively.

The other five states have only witnessed an average of 1.2% increase in their auto insurance premiums this year, including Indiana and New York.

However, it also shows that a traffic violation, especially those with a DUI violation could lead to a premium increase by an average of 157%.

This is quite good news because it gives Americans more room to save money from their auto insurance bills.

Research analyst Sterling Price added that drivers can save a lot of money on auto insurance by comparing quotes carefully and then choosing the perfect car insurance company strategically.

Of course, certain factors affect the cost of car insurance and knowing these factors can help you make helpful decisions about your insurance coverage choices and vehicle purchases.

These factors are in the range of driver factors, vehicle factors and insurance company factors. Insurance companies will collect information on your vehicle like your vehicle identification number (VIN). They will also look at your personal information and compare them to statistical data to decide on your premiums.

Here are the several factors they consider which might impact your auto insurance costs:

a. Driving record: To gauge how risky it is to insure you, auto insurance companies will review your driving record. Your insurance premium will be higher if you are found to have traffic violations or have been involved in car accidents.

b. Anti-theft devices: Most insurance companies will offer you discounts if you have a car alarm or other anti-theft devices installed in your car.

c. State laws: Insurance companies give their rates based on the laws of the state which they reside in and operate. We can verify this by a report provided earlier this year by Insurance Business Magazine when Arkansas has witnessed a decrease in auto insurance rates by 4.8% and New York with a 1.2% increase.

d. Type and Model: This also affects the cost of car insurance because a supercar like a Lamborghini Veneno will surely cost more to insure than an ordinary sedan or minivan. And why? Because sports cars are engineered to achieve high speeds, making the drivers more exposed to accidents.

e. Credit score: Basically, a higher credit score equals a lower auto insurance premium. So unless you live in a state where this is no longer a requirement, your credit score will be used to justify your car insurance premium.

f. The company’s payment plans: Auto insurance companies provide different payment plans to best suit their customers. They might offer discounts to customers who choose an annual plan as well as setting automatic payments.

The price of an auto insurance policy also depends on the type of insurance coverage you go for, depending on where you live.

You can ask your insurer for a list of available discounts and know if you qualify for them to trim your auto insurance premiums. Some insurance companies offer 10% to 15% discounts to those that work in very specific industries, such as accountants, medical doctors, teachers, lawyers etc.

Ways to Trim Your Payments

We shall explore some popular ways to help you trim your premiums by hundreds or even thousands of dollars each year.

1. Set Up Automatic Payments

You may receive a discount from your auto insurance company if you set up automatic monthly payments from your bank account or credit card. If you sign up to receive your auto insurance bills online, you could very much save from 3% to 5% on your monthly rates.

2. Bundle Your Payments

You can get a discount of 5% to 25% by purchasing your auto insurance from the same company that provides your home insurance.

3. Do a Comparison Shopping

Car insurance companies compete on many platforms. It’s important to shop around for several car insurance companies every now and then or when you are going through big changes in your life, for example, if you moved to a new city or got married. There might be insurers who serve a unique market that fits perfectly to your own needs and situations.

Whenever you shop around for premium cuts, make sure you ask your insurer for available discounts on the following requirements:

a. You have a good credit record.

b. You took a defensive driving course.

c. Have higher deductibles.

d. You haven’t been involved in an accident in 3 years or more.

e. You have been a long-time customer.

f. You own more than a single car.

g. You’re a student driver with excellent grades.

h. Have zero records in moving violation in 3 years or more.

4. Ask a Premium Cut From Your Auto Insurer

Your insurer may offer a reduction or discount on your premium just to keep you as a customer if they sense you’re about to switch. So if you find a better rate from a new company and plan to switch over, let your insurer know.

5. Buy a Reliable Car

Before you purchase any vehicle, make sure you do your research on how much it costs to insure that exact type of car you plan on buying. Kimberly Lankford, contributing editor at Kiplinger Personal Finance Magazine elaborates on how to do just that. “You can check out a vehicle’s safety rating using Insurance Institute for Highway Safety or find out a car’s insurance cost using State Farm’s vehicle rating tool”.

6. Make Use of Low Mileage Discounts

A wise choice is to seek low mileage discounts if you’re the type that barely goes on a long-distance drive. Because some companies offer premium cuts or discounts to drivers who drive below than the average number of miles per year.

A freelance writer who loves to share knowledge on personal finance and works with start-ups in the finance industry.