What Can Reduce Automobile Insurance Premiums?
- A major component in determining your automobile insurance premiums is your deductible, the amount you are required to pay before insurance kicks in on a claim. For example, if you have a $500 deductible and you get in an accident, you pay the first $500 of the costs, then your insurance pays the rest. So if the accident cost $2,000 for repairs, you would be reimbursed $1,500. Allstate recommends raising your deductible to significantly lower your premiums. Doubling your deductible from $250 to $500 may decrease your auto insurance premiums by up to 30 percent. If you are willing to go up to a $1,000 deductible, your premium may drop by 40 percent. However, as your deductible increases, your portion of the costs will increase. For example, if you jump to a $1,000 deductible and have an accident needing $900 of repairs, your insurance company will not pay any of it.
- Most states require a minimal amount of medical coverage in case of an accident, but many policies carry more than the minimum requirement. If you have a solid health insurance policy, consider dropping excess medical coverage that is above the state minimum. Also consider dropping collision and comprehensive coverage on older vehicles because of the minimal amount you will receive in an accident. For example, if you have a $1,000 deductible and the fair market value of your car is only $2,500, the most you would receive is $1,500 if your car is totaled. If you chose to drop this coverage, set aside money to pay for repairs or replacement of an older automobile in case of a major accident.
- Most auto insurance companies will offer a discount if you have multiple policies with the company, so it may be best to have only one company for all your insurance needs. If you start to carpool or minimize your mileage, you may be eligible for a rate reduction based on your reduced mileage. Many insurance companies will also offer a discount if you have theft-prevention devices installed in your car. In addition, by avoiding tickets and accidents for several years you may become eligible for good-driver discounts. Call your insurance company to ask about their discount options. If they don't offer any that you are eligible for, shop around other companies.