The federal government’s Car Allowance Rebate System (CARS) program may be over but experts say that the tax credit hundreds of thousands of new car owners may have gotten can soon disappear because of costly auto insurance. According to analysts, although many Americans who traded in their old cars for new ones may have gotten as much as $4,500 in tax credits, their savings can go directly to insurance expenses. They explain than newer vehicles are naturally more expensive to insure. Some vehicle types and car models are also inherently more costly to insure because they are often the favorite targets of car thieves and they may not fare as well in safety studies.
This predicament is exactly the kind of problem that new car owners have to deal with once they have purchased their vehicles. With the average insurance in the U.S. standing at $1,871, the money saved by trading in clunkers can disappear in just two and a half years. To maximize the money saved by motorists, experts suggest practicing several money-saving methods in the insurance business.
First, policyholders can ask their insurers for higher deductibles. By accepting a higher amount of liability for minor damages or repairs, motorists can get substantial discounts. Raising deductibles to $500 can mean insurance savings of up to30 percent. Further raising deductibles to $1,000 can save policyholders up to 40 percent in insurance costs. Specialists caution car owners though, saying that new vehicle owners need to be aware of the need for substantial amounts of money reserved for repairs. They should also be prepared for any liability issues that other parties can raise.
Americans can also bundle their auto insurance policies with other policies like homeowner’s, renter’s, health and life coverage. Purchasing different insurance policies and products from the same provider can earn car owners great discounts.
In some states, insurers are allowed by law to determine premiums by assessing their credit standing. A good credit rating can mean lower rates because insurers consider policyholders with good scores as more responsible when it comes to paying for their insurance. Studies have also suggested a strong link between credit scores and insurance claims filings. Higher scores can suggest more substantial income and a lower chance of filing for insurance claims.
Finally, experts suggest asking for affinity discounts. Most insurers give out special discounts to motorists who are part of the armed services, credit unions, and the like. While the discounts rarely go beyond five percent, these discounts can help reduce insurance costs in the long run.
