6 secrets that could help you lower your auto insurance bill

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6 secrets that could help you lower your auto insurance bill
Image Credit: Andrew Steinmetz/Flickr
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As families everywhere look to lower expenses, reduce debt and become more financially stable, there are certain areas where we often don’t think we have any control over our costs, such as insurance rates. The truth however is that by knowing the secrets behind the insurance laws, we can work to make sure we’re not being charged any more than we need to be by auto insurance companies.

Read more: 2 insurers that offer low prices and great service!

Here are 6 little-known secrets that may result in more expensive insurance rates, and what you can do to keep your insurance costs low.

  1. The type of car you drive affects your insurance premium. There are several factors that determine how much a car costs to insure. Sportier and high-performance cars such as Mustangs and Chargers can cost more to insure because it’s assumed by insurance companies that they’ll be driven more aggressively. Higher-priced car models such as Mercedes can also cost more to insure as repair costs will more expensive in the case of an accident. Conversely, minivans, crossover models and SUVs tend to have lower numbers of accidents and are therefore often less expensive to insure.

What you can do: Call your insurer and ask about the cost to insure car models you’re looking at before you buy. Avoid high-risk vehicle types and models in order to keep insurance costs down.

  1. Letting people borrow your car can end up costing you money. If you lend your car to a friend and your friend gets into an at-fault accident, you’ll end up footing the bill for the increased premium rates that can result.

What you can do: Think twice about borrowing your car out. Instead, offer to give a needy friend a ride if you can.

  1. A lower credit score can mean increased rates. A huge ding on your credit score, whether it is because of missed payments, quickly rising credit balances or a recent bankruptcy can affect your insurance premiums. A drastically dropping credit score can put you into a “high risk” category with some insurers, thereby inducing them to raise your annual premiums.

What you can do: Work hard to maintain good credit and low credit card balances if at all possible. Also, set up a bill-paying system such as automatic bill pay that ensures your bills will be paid on time.

  1. Paying your bill monthly can increase your insurance bill. Most companies will charge you a surcharge if you choose to pay your insurance bill monthly instead of annually or semi-annually. This “convenience charge” can increase what you pay for auto insurance each year.

What you can do: Save up or use windfalls such as tax returns or bonuses to pay your auto insurance bill annually instead of monthly. By doing so you can avoid insurance surcharges that can raise your bill.

  1. You must cancel your old insurance policy when you purchase a new one. If you don’t, you are legally liable to pay on both policies. If you don’t cancel your policy and simply don’t pay the insurance bill for the old policy when it comes, you may be subject to a black mark on your credit report.

What you can do: Be sure to cancel your old insurance policy as soon as your new policy goes into effect, and be sure also to inform your former insurance company of the date that your new policy went into effect. In some cases, they can backdate cancelations by a short period of time, as in less than two weeks.

  1. Teen drivers don’t necessarily have to cost you more money for auto insurance. In many states, insurance companies can’t charge you for having a teen driver in the house unless that teen becomes officially licensed. A learner’s permit doesn’t necessarily mean the teen driver has to be insured.

What you can do: Check your state’s laws on the eligibility requirements regarding teen drivers and insurance. Then check with your insurance company to make sure they aren’t charging you illegally.

In a specific case we heard about, the insurance company didn’t charge for the permitted teen driver, but they did raise the rates when they found out an insured’s daughter was about to become a permitted teen. Don’t put up with these sneaky tactics from your insurance company.

By understanding your state’s specific insurance laws and by doing what you can to combat happenings that can raise your insurance rates, you can work to get and keep your auto insurance rates low and save yourself hundreds of dollars a year.

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Read more:When not to contact your insurance company

Want more money-saving advice for your ride? See our Cars section.

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