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4 Ways to Save on Auto Insurance

by Susan Perna

Auto insurance can cost an arm and a leg, but there are a number of ways you can reduce those costs. However, your savings vary greatly depending on your driving record, vehicle, and your location. Here are four ways that can help you start saving today:

Clean Up Your Driving Record

Maintaining a clean driving record will save you money on your auto insurance. For example, companies like Allstate and Geico offer a safe driver's discount if you have had no violations or accidents in the past three years. Taking a defensive driving course will help reduce as many as four points on your license. The defensive driving course will teach you how to drive safe, so you can avoid future violations. The discount varies from state to state and you are allowed to take the course every three years. Every state has different rules and qualifications for defensive driving discounts. Taking a point-reduction course can result in a mandated 10% discount on your auto insurance in some states.

Choose the Right Car

You can't change certain things like your location, but you can change what vehicle you drive. Before you buy that next vehicle, you will want to shop around to compare because the year, make, and model of your vehicle can have a profound impact on your auto insurance rates. More horsepower means higher premiums, so it's best to stay away from fast high-end sports cars.

Here is a list of some of the least expensive vehicles to insure for 2016. Annual rankings taken from Insure.com:

Rank / Make & model / Average annual premium

  1. Honda Odessa LX $1113
  2. Honda CR-V LX $1170
  3. Dodge Grand Caravan AVP 2WD $1174
  4. Jeep Patriot Sport 2WD $1180
  5. Jeep Wrangler Sport 4WD $1181
  6. Jeep Compass Sport 2WD $1190
  7. Ford Escape S 2WD $1194
  8. Buick Encore Sport Tour 2WD $1200
  9. Jeep Cherokee Sport Utility 2WD $1203
  10. Nissan Frontier S King Cab Pickup $1204

Here is a comparison of the most expensive cars to insure for 2016:

Rank / Make & model / Average annual premium

  1. Dodge GT Viper - $4,048
  2. Mercedes SL65 AMG - $3,797
  3. Mercedes S600 BI-T - $3,539
  4. Mercedes S63 AMG 4Matic - $3,513
  5. Porsche Panamera S Executive - $3,484
  6. Nissan GT-R Nismo - $3,476
  7. BMW M6 Gran Coupe - $3,309
  8. Land Rover Range Rover SV Autobiography Black LWB - $3,245
  9. Audi RS7 Quattro Prestige - $3,229
  10. Porsche 911 Carrera GT3 RS - $3,212

As you can see, you can save at least $2000 annually on your auto insurance just by choosing the right car to drive.

Go High on Deductibles

Another way to reduce your premiums is to increase your auto insurance deductibles. According to the Insurance Information Institute, increasing your deductible from $500 to $1,000 could save you as much as 15% on your auto insurance. For example, increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage cost by 15% to 30%. Going to a $1,000 deductible can save you 40% or more.

Cheat Sheet: How to Get the Best Auto Insurance Deal

Drive Less, Save More

Driving less can also help to save you a considerable amount of money on your monthly auto insurance payments. While not all auto insurance companies offer low mileage car insurance discounts, many insurers do. For example, State Farm® drivers get a discount of 1% to 2% for every 500 miles less they drive. Discount policies vary depending on what the company offers. Reducing your daily commute by cycling to work or joining a car pool can help you save even more on auto insurance. Cycling to work will not only help you save money and get healthy, but it will also cut your environmental impact. Depending on your location, you could save between $200 and $1000 annually in gas money. Joining a car pool is another option that could help save you up to $800 a year depending on your where you live. Taking the bus to work is another good alternative to driving that can save money. According to the American Public Transportation Authority (APTA), transit riders can save $697 to $1160 per month depending on your location.

When it comes to saving on auto insurance, it's all about knowledge and research. If you're willing to invest in both to determine the many ways to trim, you'll be better off in the end. And in today's uncertain economic times, you can ensure you're at least doing your part.

Reviewed December 2017

Take the Next Step:

  • Use this handy cheat sheet from a 30-year veteran of the auto insurance industry to get the best auto insurance deal that you can.
  • Take a look at these homeowners insurance basics to see if you can cut other insurance costs.
  • Want to pay off your car faster? Consider refinancing into a lower auto rate.
  • Not an auto club member? Compare roadside assistance plans.
  • Get control of your financial life. Subscribe to Financial Independence, a free daily email that provides you with the tools to help you gain that control and achieve financial independence. Subscribers get a copy of Are You Heading for Debt Trouble? A Simple Checklist for FREE!

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