How to Shop for Auto Insurance and Reduce Your Premiums

Understanding the Auto Insurance Landscape

Shopping for auto insurance can be overwhelming due to the sheer number of options available. With so many companies offering various policies, it's crucial to know where to start and how to ensure you're making the right choice. According to the Insurance Information Institute, the average annual cost of auto insurance in the U.S. was $1,070.47 in 2019 (source).

Check Your CLUE Report

A valuable tip for keeping your car insurance affordable is to review your Comprehensive Loss Underwriting Exchange (CLUE) report. This report details your insurance claims history. Incorrect claims on this report can increase your premiums. You can access your CLUE report for free once a year under the Fair Credit Reporting Act (source).

Avoid Unnecessary Add-Ons

When purchasing car insurance, steer clear of unnecessary add-ons like Motor Club, Travel Club, and Accidental Death Insurance. These extras are rarely used and can significantly increase your annual costs. Instead, focus on essential coverages such as:

• Collision Coverage
• Liability Coverage
• Property Damage Coverage
• Bodily Injury Protection

Understand Different Coverage Types

It's essential to understand the various types of coverage available and what your state requires. Common types of coverage include:

• Bodily Injury Liability: Covers legal fees, death, and injury claims if you cause an accident.
• Property Damage Liability: Covers damage to another person's property.
• Uninsured Motorist Protection: Covers your expenses if an uninsured driver hits you.
• Medical Payments Coverage: Covers medical expenses for you and your passengers.
• Collision and Comprehensive Coverage: Covers damage to your vehicle from accidents and other incidents like theft or natural disasters.

Assign a Specific Vehicle to Young Drivers

If you have a young driver in your household, you can save money by assigning a specific vehicle for them to drive. This prevents the higher premiums associated with insuring all family vehicles for a young driver. According to the National Association of Insurance Commissioners, adding a teen driver can increase premiums by an average of 130% (source).

Consider Relocating

Living in a city can significantly increase your auto insurance premiums. If feasible, consider moving to the suburbs, where insurance rates are generally lower. Urban areas often have higher rates due to increased traffic and higher accident rates.

Educate Yourself

Taking the time to educate yourself about auto insurance and the various options available can make the shopping process less stressful. Understanding your needs and the coverage types can help you make an informed decision.

Take a Safe Driving Course

Many insurance companies offer discounts for completing a safe driving course. These courses are relatively inexpensive and typically take only a week or two to complete. Check with your insurance provider to see if they offer such discounts.

Drive Safely

Adhering to speed limits and avoiding traffic violations can help keep your insurance premiums low. Speeding tickets and other violations can lead to higher insurance costs and potential license suspension. Safe driving not only reduces your insurance costs but also minimizes the risk of accidents and repairs.

Conclusion

Shopping for auto insurance doesn't have to be a daunting experience. By understanding the different types of coverage, avoiding unnecessary add-ons, and taking advantage of discounts, you can find the best policy for your needs and save money. Remember to review your CLUE report annually and consider taking a safe driving course to further reduce your premiums.

For more information on auto insurance and tips on how to save, visit the Insurance Information Institute and the National Association of Insurance Commissioners.