Your auto insurance premiums can go up for a lot of things. From speeding tickets to at-fault accidents, violations and claims can make insurers upcharge your insurance premiums for the next three to five years. If you’re already struggling to pay your auto insurance as-is, these upcharges can be a major blow to your budget.
The good news is that there are a few ways you can lower your insurance costs to keep your premiums as low as possible.
Improve your credit score
Improving your credit score might seem completely out of left field if you’re trying to lower your insurance costs. But the truth is that your credit score is actually a primary contributor to your auto insurance rates. In fact, according to studies by the Federal Trade Commission (FTC), drivers who have lower credit scores typically have higher insurance rates. Those who have credit scores between 300 and 579 often pay $910 more for a six-month auto insurance policy compared to drivers with credit scores between 800 and 850.
The reason for this is because of risk. Underwriters, 42% of which work with direct insurance carriers, use data such as your driving history, vehicle type, domestic situation, education level, and credit score to determine the risk the car insurance company poses in covering your vehicle. A lower credit score means you pose a higher risk, and your auto insurance company is looking to make up for that risk by hiking up your premiums. That said, if you’re looking to lower your auto insurance costs, it might be worth considering working strategically on boosting your credit score.
File a personal injury claim for accidents that aren’t your fault
Car accident claims are one of the biggest reasons why auto insurance companies hike up their costs. If you know for sure that you weren’t at fault for an accident you were involved in, it may be worth filing a personal injury claim against the other driver. You don’t have to worry about the other driver’s inability to pay for the costs of the accident, either, since the money won from the case would come from the driver’s insurance company and not the driver themselves.
Just be sure to keep an eye on legal deadlines. For instance, the state of Texas imposes a two-year statute of limitations to file a personal injury lawsuit. Be sure to file a police report of the accident at one of the 17,985 U.S. police agencies across the country to document that it took place if the other driver comes back and claims you’ve hit their vehicle rather than the other way around.
Switch your car insurance company
Car insurance premiums tend to be higher in certain states like Michigan, Texas, and California. However, you can’t make a statewide move just to lower the cost of your car insurance. What you can do, though, is switch your car insurance company. Make sure before you buy a vehicle that you shop around and check out each car insurance company’s premiums and their reviews. But don’t necessarily trust online reviews, either. Make sure to ask friends and family which car insurance companies they use and whether they’d recommend them to you. Some companies are more expensive than others whether you improve your credit score or you’re never involved in an accident.