Driving Down Costs: 5 Effective Ideas for Cutting Your Car Insurance Expenses

How Much Does Car Insurance Cost?

The cost of auto insurance is different for every driver, depending on the state of the insurance company they choose and the type of coverage they have. But when trying to save money on car insurance, it can be helpful to know what the typical driver pays.

The average person spent an average of $1,190 on auto insurance in 2018, according to the most recent data available from the National Association of Insurance Commissioners (NAIC). According to NAIC data, car insurance premiums rose even though the number of vehicles insured rose only 30% between 2014 and 2018 up 7%.

The average auto insurance cost for a new vehicle in 2020 is slightly higher at $1,202 per year, according to AAA. These numbers are close enough to suggest that you're probably looking to spend around $100 a month in auto insurance as part of your new car budget.

How to Save on Car Insurance Costs

There are several strategies you can use to save money on auto insurance. Once you know how much car insurance costs, you can put some or all of these strategies to work.

1. Take Advantage of Multi-Car Discounts

If you get a quote from an auto insurance company to insure a single vehicle, you may end up with a higher price per vehicle than if you ask the company to insure multiple drivers or vehicles. Insurance companies will offer the equivalent of bulk rates because they want your Business. In some cases, they're willing to give you a deal if it means you'll bring in more.

Check with your insurance agent to see if you qualify. Generally, multiple drivers must live in the same residence and be related by blood or marriage. It is also possible for two unrelated people to receive the discount; however, they must generally own the vehicle jointly.

If one of your drivers is a teenager, you may have to pay more to insure them. However, if your child has a B average or above, or if they are in the top 20% of their class, you may be able to get a good discount on student insurance, which typically lasts until your child turns 25. These Discounts can range from as low as 1% to as high as 39%, so be sure to show your insurance agent proof that your child is a good student.

By the way, some companies may also offer auto insurance discounts if you maintain other policies with the company, such as homeowners insurance. For example, Allstate offers 10% off auto insurance and 25% off home insurance when you bundle them together, check out Discounts are available and apply.

2. Pay Attention on the Road

In other words, be a safe driver. This should go without saying, but in today's age of increasing in-car distractions, it's worth mentioning as often as possible. The more you pay attention, the more accidents or moving violations you can avoid - events that improve your coverage rate. Travelers offers safety drivers a 10% to 23% discount, depending on your driving history.

For those unaware points, drivers are usually assessed for violations, and more points can lead to higher insurance premiums (other things being equal).

3. Take a Defensive Driving Course

Sometimes insurance companies offer discounts to people who complete an approved defensive driving course. Drivers can also reduce the points on their license by taking defensive driving accident prevention or other courses.

Be sure to ask your agent/insurer about this discount before you sign up for a course. After all, it is important that the effort and cost of the course translates into a sufficiently large insurance savings. Driver registration is also very important Certification courses. Each state has its own rules regarding accredited defensive driving courses, and GEICO allows you to view state-by-state rules on its website.

4. Shop around for better auto insurance rates

If your policy is about to be renewed and your annual premiums are going up significantly, consider shopping around and getting quotes from competing companies. Also, it might make sense to get quotes from other companies every year or two, just in case there are lower rates out there.

Remember, cheap doesn't always mean good, and choosing a less expensive company isn't always the smartest decision. This is because the creditworthiness of the insurance company should also be considered. After all, what good is a policy if the company doesn't have the funds to pay it? Insurance claim?

For a check on a specific insurance company, consider looking at websites that rate insurance companies' financial strength. The financial strength of your insurance company is important, but so is what your contract covers, so make sure you understand it. Insure.com's Website Basics Its insurers are rated based on data collected by Standard & Poor's.

Generally speaking, the fewer miles you drive your car each year, the lower your insurance rate is likely to be, so be sure to ask the company about its mileage threshold.

5. Use Mass Transit

When you sign up for insurance, companies usually start with a questionnaire. It may ask questions such as how many miles you drive your insured car each year.

If you drive three hours a day to and from get off work, you'll typically pay more for insurance than someone who drives just one mile a day. If possible, try to reduce your miles by using public transport, but keep in mind that you will often have to reduce your miles significantly before discounts are incurred. Ask your insurance company about the company's different mileage thresholds so your efforts are not in vain.

Also check with your provider to find out how many miles they currently drive for you, as most can give you a better insurance quote.