One of the documents that you will need to have before you can take the car you just purchased home from the dealership is proof of insurance. Unfortunately, auto insurance premiums can be costly. The good thing is that there are ways to reduce your auto insurance payment to make it more manageable.
What Your Rate is Based On
Your insurance rate can be based on any number of criteria, depending on the carrier. These criteria typically include:
- Your credit history
- Age of the car
- Previous moving violations
- Previous accidents
- Your age
This list is not all-inclusive. Although you might not have control over how old you are or how old your car is, there are some steps you can take to minimize the damage to your insurance rate.
What You Can Do
In order to reduce your insurance premium, you can:
- Pay up-front. Usually, insurance carriers will offer a discount to someone who pays their 6-month or 12-month premium up-front. Or if a lump sum payment is not an option, you might be able to secure a discount by having the payment automatically withdrawn from your checking account or charged to a credit card each month.
- Clean up your driving habits. Moving violations, accidents and other tickets are a surefire way to hike up your premium. Slow down, stop at the stop signs and drive defensively to reduce your violations and accidents. Depending on what you were ticketed for, and provided you improve your driving record, you can expect to see improvements in your rate within 1-3 years.
- Improve your credit score. A lot of companies base potential risk off of credit score. By improving your credit score, you might be telling the insurance company that you are less of a risk, thereby receiving a reduced rate. By improving your credit score (perhaps by paying down debt), you can expect to see a change in your rate.
- Increase your deductible. By increasing your deductible, you will be responsible for a larger portion of the repair costs if you should ever be in an accident. But increasing your deductible can reduce the amount you pay every month for your policy.
Your auto insurance company might also offer discounts because you are of a certain profession (like a police officer) , are a student or because you installed an anti-theft device. It never hurts to ask your insurance provider what types of discounts they offer and for information on how to qualify.