I’m sure you have seen the commercials for car insurance companies showing you how to save money. You can switch and save 15%. You can switch faster and save more than that. The good thing about competition is it typically lowers prices for consumers. I said typically!  I switched insurance companies when we moved and it saved me quite a bit. My old insurance company, Nationwide, would not provide me any discounts on what I already had. They were well priced, but they didn’t beat the competition. I asked them to reconsider, as I had been with them for nearly 15 years, but they didn’t. Oh well, their loss is another companies gain. So, in the spirit of helping you lower you costs, I wanted to share some simple tips to save money on your car insurance. I’m also providing these tips in a nice infographic, provided by CJ Pony Parts.

Tip # 1 – Combine Coverages

Now, this might seem like common sense, but I know many people who don’t actually combine coverage policies. For me, it’s not only a matter of convenience, but also one of savings. When I combine my coverage for my home and auto policies, I get a discount. While that discount will vary wildly from one company to the next, you still get a discount. I have seen anywhere from 5% to 20% discount. Every little bit counts. Most insurance companies want you to combine coverage so they can keep you on as a customer. It’s a little more of a pain to switch all policies, but I didn’t have a problem doing it. If you have life insurance with another company, you can also think about bringing that over. It’s just adding onto the savings train!

Tip # 2 – Always Shop Around

You should always shop around when looking at car insurance or any insurance for that matter. You don’t know what kind of deal you’re getting unless you shop it around. Trust me, I would know. I used to shop around every time my policies were up for renewal. I wanted to make sure they were still well priced. There were until I came across my current company by a recommendation. You never know what you’re missing.

People used to hate to run comparisons every time they needed to renew their policies, but it’s so much easier these days. The internet is a powerful place and there are tons of sites which will help you compare insurance prices and easily get a car insurance quote. Don’t be lazy and shop around. You won’t be sorry.

Tip #3 – Keep Good Credit Score

No matter what people tell you, a good credit score is really important. It’s not just for loans anymore. Companies use it to see if you’re a good customer. Those three little numbers have a lot of weight behind them. Trust me, I have seen get rejected for an apartment because their credit score was bad. I have been people pay large amount of interest due to their credit score. I have also seen some insurance companies provide outlandish rates due to poor credit scores. It’s very important to have a good credit score. If you don’t know what your score is, then I recommend signing up for Credit Sesame. It provides a free score. While they are free, they aren’t the scores used by most lenders. For that, you need your FICO score. If you don’t have a credit card which provides the score, then you will need to pay at MyFICO.com. It does cost money, but if you have never seen it or have no idea what it is, you need to know.

Related: How to increase your credit score quickly

Tip #4 – Increase Your Deductible

This is often times controversial, but I like to provide it anyway. Increasing your deductible means you lower your insurance rate, by on average 9% if you go from $500 to $1,000. The reason for this is you have to pay more upfront when something happens. Say you have a $500 deductible. If you get into an accident, you will have to pay $500 before the insurance will kick in and pay for the rest. If you raise said deductible to $1,000, then you will have to pay that before insurance will kick in. The reason this method is a little controversial is you need to have the ability to pay the extra money if/when something happens.

I keep my deductible in my emergency fund at all times. I know it’s there and I can handle something if/when it arises. That’s why I have an emergency fund. If you can’t save enough to cover the larger deductible, then don’t do it. I beg you. It will only put you in a deeper hole if you do. Saving money with a higher deductible is not always the best solution. It depends on your finances and how well you save in general.

Tip #5 – Own Your Car

I know this one first hand. I have leased two cars in my life (mistakes) and I pay much more than I would if I actually bought my cars. Now, the true way to save on car insurance is to actually own your car outright. That means no loans or liens on the vehicle. If you own your car, then your insurance rate can be lower. This coincides with the age of your vehicle as well. The older your car, the cheaper it is to insure. If you are in need of a vehicle, then think about buying an older one. You can save a lot of money and many older cars still work in tip-top shape. You just need to find one that has been taken care of. If you lease like I have, then you will pay the most for your insurance.

Tip #6 – Pay with Auto Draft

Insurance companies love when you are on auto-draft. The reason? They know their payment is going to be there on the same day every time a payment is due. Now, I typically hate auto-draft payments. The reason for my hatred is when Gold’s Gym sued me because they screwed up the auto payment. I’ve had a sour taste in my mouth since then. That all changed when I started working with my new insurance company. They offered me around 8% off if I was on auto-draft. With three cars, that adds up quickly. Since I have multiple bank accounts, I just set them up on one that has very little money in it. Just enough for the auto-draft. If something happens, they can’t deplete my money!

Simple ways to save on car insurance

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  1. Pretty awesome infographic, and some really good information on it. I plan on taking a defensive driving course to take advantage of that 10% discount as well as talking to my current insurer and shopping around this summer before renewing my insurance again. It’s a huge expense for me and I’d really like to cut it down. If I end up moving closer to work I should get an even bigger discount for being a low mileage driver!

  2. Helpful post and I second the previous comment — the infographic is a great addition. Tip # 2 – “always shop around” is one of the easiest ways to save! It’s true, though unfortunate, that loyalty doesn’t pay when it comes to things like insurance since carriers increase their rates slowly but surely for longtime customers.