The reports list a lot of different expenditure categories and average amount, yet they remain valid indicators of how expensive auto insurance can be. It gets worse when driver falls under high-risk category. A high-risk driver is one who has tendency to file claims more often than an average person due to history of recurrent involvement in accidents, lack of experience behind the wheel, vision impairment, and bad credit score. Auto insurance companies see high-risk drivers as undesirable customers. More claims translate to more payout, and this is bad for businesses. However, there are many different ways to reduce car insurance premium whether a driver is high-risk or low-risk.
Understand Auto Coverage Necessity
Auto insurance provides financial protections through coverage. There is specific type of coverage for a different set of perils for examples Bodily Injury and Property Damage, Collision, Comprehensive, Personal Injury Protection, and Roadside Assistance. Some of them are mandatory by law, while others are optional. Mandatory coverage is unavoidable because all drivers must be able to produce valid proof of insurance when a police officer asks for it. Failure to produce the proof is punishable by fines, driver license suspension, and jail time.
Optional coverage is omissible from auto insurance policy. It is best to understand what each coverage type does to help make the right decision. For example, an old inexpensive car that would not cost too much to replace does not need comprehensive insurance. After some thorough calculations, the premium and deductible for the coverage can cost more than the value of the car. In contrast, a new car that is worth more than ten times of the premium can always use both Comprehensive and Collision.
Regardless of the car model, please make sure that all coverage types in the policy are necessary because omission of useless coverage can save a lot of money. A discussion with an independent agent can help anyone determines the right insurance for their needs.
Cut the Premium but Not the Coverage
Not all drivers can afford the most complete insurance policy or need the same types of coverage. An insurance policy that consists of only the state’s minimum coverage requirement costs less than those with some optional protections indeed, but it does not mean that everyone should cut the coverage to save money. One of the easiest ways to reduce premium without omission of coverage is to take advantage of insurance discounts. Auto insurance premium can look expensive, but reduction from several discounts cut good amount of the cost. There are three basic types of insurance discounts: Vehicle Discounts, Driver Discounts, and Policy Discounts.
1. Vehicle Discounts
Premium reduction is available for those whose vehicles meet and exceed the requirement for safety standards. Vehicles with anti-theft and passive restraint system are the bare minimum requirements for eligibility. Some new vehicles come with these safety features as standard options, so there is no need to purchase and install aftermarket parts. Other safety features include VIN, anti-lock brakes, and stability control. All those additions prevent injuries and accidents on the road; auto insurance companies appreciate and reward drivers’ efforts to stay safe. In case the provider does not offer the discounts, consumers should ask for this.
2. Driver Discounts
Eligibility fort driver discounts depend on the drivers’ profiles. It has nothing to do with vehicle safety features. Some requirements for driver discounts are as follows:
· Completion of Defensive Driving Course: the course teaches drivers to drive safe and avoid involvement in accidents all the time regardless of the road conditions.
· Safe Driver: after a period of ticket-free or accident-free, some insurance providers reward the drivers with discounts. The period can be different from provider to provider.
· Low Mileage: in case the consumer allows, an insurance carrier can install mileage detector on the vehicle. Drivers with low mileage means they spend less time on the road, hence low risk of accidents.
· Loyal Customer: a policyholder who stays with the same carrier for several periods can be eligible for this discount.
· Good Student: teenage driver who achieves good grades at school or college is eligible for premium reduction as well.
When life circumstances change, a driver who previously was ineligible for discounts can ask for reductions as long as he/she can show valid proof of eligibility.
3. Policy Discounts
Unlike driver and vehicle discounts, the eligibility for policy discounts depends on how a customer purchases the insurance. Common eligibility requirements include:
· Full Payment: some companies offer multiple payment options. A customer who pays the entire cost upfront deserves a price reduction.
· Multi-Car: a customer who has two or more cars in the same policy is eligible for lower price, too.