With an increase in auto accidents, due in part to distracted driving (primarily texting or operating a cell phone while driving), it may be a good time to look at common ways people can maximize their insurance dollars and even save money on costs for auto insurance.
Some stats to consider first: The National Highway Traffic Safety Administration reports that 32,885 people died in motor vehicle crashes in 2010 (the latest year data is available). Excessive speed is a factor in approximately 20% of fatal crashes, while driving under the influence of drugs or alcohol is a factor in 15% and inattention or distracted driving in 9.3% of fatal crashes.
Factors that determine current rates
A person’s driving history is one of the primary factors that go into determining their auto insurance premium, and if they are involved in an auto accident or get a speeding ticket, the violation can stay on their driving record for three years or more – ultimately increasing auto insurance premiums.
Other factors in determining rates include how much a motorist uses their car, where the car is parked or stored, type of car driven, where they live, their age, gender, credit and the type and amount of coverage.
Ways to save money on auto insurance:
1. Become a safer driver– Many insurance companies give discounts to policyholders who take defensive driving classes, driver’s education for new drivers and even specialized training for older drivers.
2. Shop around for the best deal– Auto insurance is a highly competitive business so it is a good idea to compare the coverage available for the price from several different firms and organizations.
3. Ask for higher deductibles on comprehensive and collision coverage– By requesting higher deductibles, a driver can lower their premiums substantially. Raising the deductible from $200 to $500 may reduce optional collision and comprehensive coverage costs by 15 to 30%. Going to a $1,000 deductible could save 40% or more.
4. Reduce coverage on older cars– Consider dropping the optional collision and/or comprehensive coverage on older cars. If the car is worth less than 10 times the premium, purchase of this type of coverage may not be cost effective.
5. Buy homeowners and auto coverage from the same insurance company– Many insurers will give price breaks when purchasing two or more types of insurance from them. A reduction may be available when insuring more than one vehicle with the same company. Ask your insurance broker about this.
6. Maintain good credit– Establishing a solid credit history can cut insurance costs as well. Most insurers use credit information to price auto insurance policies.