How to Keep Auto Insurance Costs Down

Like many things in recent years, the cost of automobile insurance has continued to rise. With the need to stretch money out as much as possible, cutting costs is always an important consideration. Although the insurance companies set their rates, there are ways of keeping the automobile insurance rates down.

The key to keeping insurance rates down is to identify what the insurance companies look at when they determine the rates to charge their customers. In other words, what causes the rates to go up, and what can be done to prevent an increase in your rates?

• Clean driving record. The single best consideration at keeping your insurance rates down is to keep your driving record as ticket-free as you can. Most auto insurers have special discounts for "safe drivers". The definition of a safe driver varies from company to company. Some discount after three years, and some discount after seven years. However, the longer you can go without tickets, which represent points on your license and points on your insurance, the better.


• Stay accident free. An accident will certainly raise your insurance rates. Sometimes these cannot be avoided, but if you have an at-fault accident, your insurance company will add a point to your insurance, and this will result in an increase, often a significant one, to your insurance rates. Some states are no-fault states, where your insurance company pays an accident, regardless of who is at fault. The only drawback is that if the insurance company sees you as a risk for accidents, whether they are your fault or not, they will increase your premiums.


• Paying off your vehicle. With auto loans, the loan company requires you to carry additional auto coverage, collision and comprehensive insurance, which pays for the repair of your vehicle, regardless of who is at fault. As long as you are financing your vehicle, you will have to carry this additional insurance, which can more than double your premium. Getting your vehicle paid off early, or buying a used car that doesn't require financing, will save you money. Just make sure to cancel the collision and comprehensive insurance when the car is paid for.


• Good credit. In the past several years, insurance companies have increasingly inspected their insured's credit rating. Although it has no effect on the likelihood of the insured getting into an accident, the insurers will rate someone a higher risk, and therefore increase their premium, if their credit score is low. Keeping good credit will allow you to pay less for your insurance.