How can I save money on my car insurance?

How can I save money on my car insurance? I don't drive fancy cars and my kids are out of the house but my car insurance premiums just keep going up!

Congratulations! You asked the #1 question that every car insurance shopper wants to know.

How can you save money on car insurance? It's pretty simple to drive down the cost of your auto insurance if you follow the guidelines below.

Compare. Compare. Compare!

This isn't the tip that your insurance agent will like, but it's the single best way to make sure you're paying the lowest car insurance rates possible. Insurance companies raise (and occassionally lower) their rates all the time. The employ actuaries who have the fun job of analyzing claims data and try to pinpoint areas that are either above or below their average loss ratio.

When they find an area, it could be a metro area, a few counties or even an entire state, that is experiencing either too many claims or fewer claims than anticipated, those areas may be the targe of car insurance rate increases or decreases.

Car insurance companies will then file their rates with the states and upon approval, their new rates are available to consumers. One company may sustain substantially more claims than another, either in frequency or severity, and their rates may adjust upward in comparison with other companies. If you are currently insured with this company, then you will probably see your car insurance rates adjust upward, to your dismay of course.

This is the time to jump ship and find another company that has lower rates in your area. Some consumers are fiercely loyal to their insurance company and will ride out the storm until their rates fall back in line. This may take several years, however, so unless you really, REALLY like the company you're with, it's time to shop, shop, SHOP around!

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Do you really need $250 deductibles?

This is the second best way to lower your car insurance rates. It's not without sacrifice however. By raising your comprehensive and collision deductibles, you can really lower your car insurance rates. The trade-off is in the event of a claim, you will have to fork up more money out of your pocket to get your car fixed.

Look at your past claim history. Do you tend to have a claim every once in awhile? Or have you been claim-free for 10 years? If you are the type of person who would rather just insure for "the big one", then take your deducibles higher and save the difference. If you tend to have frequent smaller claims, then you might be better off leaving your deducibles where they are. But we'll warn you now: frequent claims may result in either a non-renewal from the company or company-mandated higher deductibles.

Package discounts can save. But then again, maybe not!

You probably heard that packaging your home and auto can save you money. It's true. Most companies will give you a discount if they insure both. The problem is, you might be able to save even MORE if you insure your home and auto with DIFFERENT companies!

That's right. You heard it here first. Packaging your home and auto does not always result in the lowest insurance premiums. It may with that particular insurer, but maybe not when you consider all the other insurers out there waiting to write your business.

If you currently have your insurance coverage with the same company, it will make one thing easier: buying a personal umbrella policy. But you might be spending more for the convenience of dealing with one company or agent than you could be paying with separate companies.

True agent story: This story comes from an independent insurance agent (me) who had the luxury of almost 20 contracts with different personal lines insurance companies. My home was with one company and my car was with another for YEARS! Every year at my homeowner's renewal I would quote my own coverage with many different companies to see who had the best rates (and no, agents don't get discounts on their own insurance). It wasn't until I filed a wind and hail claim on my homeowner's policy that my rates increased enough to be able to get the best package rate with one company. So don't be lulled into believing that you're getting the best rates possible by packaging your coverage! I didn't do it for years, and I am my own agent!

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Your credit rating is HUGE!

Consumers underestimate the power of their credit score. I don't like it, but insurance companies use your credit score to help them predict the chances of you filing a claim in the future. Their thinking is that a consumer with good credit is less likely to 1) be in a situation that requires a claim, and 2) less likely to file a claim even if the situation arises.

Whether right or wrong, credit scoring has a big impact on your car insurance premium. I've seen car insurance discounts as much as 54% based on excellent credit scores, and I've also seen what a bankruptcy can do to your auto insurance rates. So take the time to clean up your credit and try to keep it above the 720 mark. This is generally regarded as the "good credit" level and your car insurance rates will thank you.

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