If you have a car and live anywhere in the U.S. except Virginia or New Hampshire, you need car insurance. Unfortunately, it may seem overwhelming when you factor this cost into your budget.
How can you make sure you get the best car insurance for your needs without breaking the bank? Here’s what you should know to save money while staying safe on the road.
What To Look for When Shopping for Car Insurance
Whether you are shopping for your first car insurance policy or are looking to switch providers, there are some key things to look for when you compare providers.
Price
The price is the first thing most people consider when shopping for insurance. Obviously, this is a significant factor, and you should compare several companies to find the best price.
We know about companies like GEICO, Aflac, Allstate, State Farm, Esurance, and a handful of others from commercials. Some claim to save you “15% or more” with one call. Others will compare your rate with other companies.
There is no right or wrong way to review rates. You can call in and get a quote or do it yourself online. Either method has advantages and disadvantages regarding time, speed, and discounts.
It's important to note that, depending on where you live, a factor that could impact your rate is your credit score. Some companies use a soft inquiry to get your score, which does not impact your credit report. Others do a hard inquiry, which impacts your report and can lower your score.
If you get multiple quotes, ask how they pull your credit first. This way, you can safeguard your credit.
Coverage Quality
All insurance companies are not equal. If you read customer satisfaction surveys and check company reviews, you will find that some of the older, high-service companies like Liberty Mutual and Allstate score higher than the low-price sites.
Make sure that your plan gives you extensive coverage. I have only researched quotes for plans with low deductibles (about $250) and high coverage that offer uninsured motorist, medical, and comprehensive vehicle coverage.
Some companies can offer a lower rate because they offer less extensive coverage. You have to decide for yourself which is more important, but I prefer to err on the side of having better coverage.
Customer Service
If you ever had to file a claim, it can be a miserable process based on the insurer you choose. Dealing with approved shops, quotes, rental cars, repair schedules, surveys, deductibles, and customer service representatives can be a nightmare.
When you read online customer satisfaction reports, certain trends emerge. You will easily find which companies have good service and coverage and which will leave you angry, upset, or frustrated.
How Does Being a High-Mileage Driver Impact Rates?
Driving can cost a lot of money. Between car payments, maintenance, fuel costs, and insurance, using your vehicle can be pricey. It pays to look for ways to save on transportation costs whenever possible.
This is especially true if you drive a lot since your insurance rates can see an impact if you qualify as a high-mileage driver.
What Qualifies as High Mileage Driving?
Simply put, mileage influences car insurance premiums because more time on the road means a higher risk of accidents or damages. On the flip side, if your car spends most of the time in the garage, it’s not very likely to be the source of an insurance claim.
If you’re making a long commute daily, your accident risks are objectively higher, resulting in higher premiums.
According to statistics, the average American motorist drives around 13,000 miles annually. If you fall in the range of 10,000 to 15,000 miles yearly, your premiums are unlikely to see a hike. If you drive over 15,000 miles in a year, you may qualify as a high-mileage driver.
How Much More Do High-Mileage Drivers Pay?
How much more will you pay if it turns out you are a high-mileage driver? Let’s look at some average statistics from The Zebra:
Average six-month premiums by mileage include:
- 0 – 7,500: $1,710
- 7,501 – 10,000: $1,760
- 10,001 – 15,000 miles: $1,795
- 15,000+ miles: $1,826
While this is a fairly marginal change in premiums, you should also be aware that premiums can vary by state. For example, in California, rate hikes for high-mileage drivers could go up to 30% (as compared to 1% to 3% for high-mileage drivers in other states).
How Can High-Mileage Drivers Lower Their Insurance Rates?
There are a few things high-mileage drivers can do to lower their insurance rates. These include:
- Finding a cheaper insurer: It pays to shop around for a better deal. Online tools have made it easy to compare insurance rates between companies and find a better rate than you have now.
- Maintaining a clean driving record: A driving record free of accidents and traffic violations is one of the most dependable ways to keep your rates low (or at least prevent them from getting higher). Do your best to drive defensively.
- Take advantage of discounts: Insurers commonly offer discounts and other perks for things like being a good student, driving safely, bundling your insurance policies, or prepaying. Get in touch with your insurance company and find out what they offer.
- Change your coverage: If your car is fully paid off and worth less than $4,000, consider dumping your collision and comprehensive coverage. Your liability insurance should be sufficient for your needs.
- Buy a cheaper used vehicle: Older cars tend to attract lower rates as their value depreciates. Now might be a good time to trade down by purchasing a used vehicle.
- Take a defensive driving course: Some insurance companies will lower your insurance if you can prove you completed a defensive driving course, reducing your risk of an accident on the road regardless of how much you drive.
- Drive less and lower your mileage: While this might seem like a no-brainer, it could be worth looking into how you could drive less often. If public transportation or biking is an option, consider giving that a try.
Should I Install a Telematics System?
One major way car insurance companies offer their customers lower rates is telematics. A driving tracker installed in your car will collect usage data telling the insurer how much you drive, what time of day you drive most, and what your driving behavior is like.
If the data collected shows you drive safely, you can use that data to negotiate a lower rate. Plus, many insurers will give you a discount simply for letting them collect that data in the first place.
For some, this might be a privacy concern. However, it might be the solution if you are looking for another way to save money.
Are There Insurance Options for Low-Mileage Drivers?
Yes! In fact, your car insurance could go down by half if you are a low mileage driver and switch to Metromile.
Pay-per-mile insurers like MetroMile realize that you probably will not get into a car accident when your car is sitting still, so you shouldn’t have to pay as much if your vehicle is parked.
With pay-per-mile, you pay a lower fixed monthly rate plus a few cents for every mile you drive. If you drive more, you pay more. If you drive less, you pay less.
Anyone who drives less than 10,000 per year could save money with pay-per-mile.
What About AAA Membership?
While an AAA membership won’t cover you in terms of insurance, many people have heard about it and wonder if it’s worth the cost. I’ve found that it can be a helpful investment that provides extra peace of mind on the road and additional financial perks.
Here are the benefits of using the service.
Hotel Discounts
While I originally got AAA so I could tow my car, I use the hotel discounts much more often than anything else I get from AAA. I find that I save around $10 per night when using a AAA discount. If I spend at least six nights in a hotel annually, I cover the cost of the lowest membership level.
When looking for hotels, remember that AAA is not always the cheapest, but it usually is. I was at a wedding once and found that the AAA rate was lower than the wedding rate by about $20 per night. I have also seen deals where AAA is more than other offers.
Just do your homework to ensure you make the right choice.
Emergency Services
Getting your car towed is expensive. My AAA plan gets me towing services, tire changes, jump starts, lockout service, and gas if I accidentally run out.
I have actually only used AAA roadside assistance once, for the tow the day I signed up. In this regard, I am really just paying for peace of mind. You never expect your car to break down, but it can happen.
Travel Services
AAA's free maps, travel guides, and travel info are beneficial. I have planned weekend getaways, road trips, and other short vacations using information products provided to AAA members for no extra fee.
I once planned a weekend getaway to Disney World and used AAA for a discounted travel package. It doesn't come up all that often, but it is useful enough when I need it that I get some value from the travel services.
The Bottom Line
If you do your homework and consider your driving habits, you can save money on your car insurance. Evaluate what kind of coverage you need based on your vehicle and how far you drive each day, and then choose the best insurance policy for your needs.
