Managing high auto insurance premiums effectively


Auto insurance shopping is mandatory for everyone who own automobile in USA, since it is a rule that every driver must have auto insurance. Auto insurance that offers sufficient coverage usually comes with slightly higher monthly premium rates. Monthly premium rates are monthly payments that the insurance policy holder makes to the auto insurance company, to avail the coverage needed. These premium rates depend upon a number of different things, including the amount for which the vehicle has been insured:

  • Premium rates depend upon the area of residence. Some areas are more prone to natural disasters and extreme weather conditions, all of which can cause harm to the vehicle. So insurance companies charge a high premium rate to make up for the sensitive area of residence.
  • Premium rates depend upon the kind of vehicle, since some cars are statistically shown to me more vulnerable to accidents on roads. Sports cars, high speed cars and cars imported from other countries are costlier when it comes to insurance rates. Insurance companies have a list of cars that are statistically proven to be safe on roads, and hence those cars get discounts in premium rates.
  • Premium rates depend upon the number of vehicles insured as well. Family insurance plans and group insurance plans give more business to the companies and hence cost less, premium wise.
  • Insurance rates also depend upon the driving record of individuals. Premium rates are increased two fold, with every traffic offense that the policy holder commits.

Premium rates can be reduced effectively since insurance companies provide a number of discounts in order to attract new customers and retain the old ones. Some of the ways to take advantage of the discounts are given below:

  • Enrolling in group insurance policies work well for families and people with multiple cars. Also, enrolling through employers insurance policies can offer additional discounts, since corporate get special discounts if they enroll through their companies.
  • Insuring multiple cars at once will give additional discounts.
  • Taking defensive driving lessons always have additional discounts when it comes to premium rates. Defensive driving lessons prepare the drivers to avoid other driver’s mistakes while driving, which will reduce the chances of the accident.
  • Upgrading the car to include the latest security devices and safety equipment can be helpful in bringing down the premium rates. Auto lock seatbelts, airbags, accident and emergency recognition systems and so on can help in making the cars safer, thereby reducing the premium rates.
  • Driving within the mileage limit set by the insurance companies always qualifies the policy holder for lower premiums. The lesser the car is driven around, the lower the chances of accidents. So the insurance companies always lower the premium rates for drivers who don’t use their cars very often.

Insurance policy should not just have the minimum required coverage. The policy should be designed such that it offers maximum protection and should be tailor made for every individual driver. Having enough coverage on road gives the peace of mind while driving so it should never be sacrificed for lower premium rates.