Four More Things You and Your Teen Can do to Keep Your Auto Insurance Rate Low
New drivers have higher auto insurance rates than experienced drivers, which stings, but there's a good reason for it: they haven't had a chance to prove to insurance companies that they're safe drivers. Proving you're a safe driver takes time.
However, there are a few things completely within new drivers' control that can help tremendously to keep their insurance rates down.
Here are four fundamental tactics to ensure your auto insurance premium doesn't come at a premium price.
Give Your Credit Score a Boost
Although the degree of its importance can vary by state and insurance company, your credit score usually has a big impact on your monthly auto insurance premium. The difference between a mediocre and good credit score and a good and great credit score could mean a substantial difference in your monthly auto insurance premium.
According to ConsumerReports, single drivers with merely "good" scores (that is, 650 to 720) paid $68 to $526 more per year on average than drivers with scores considered "excellent" (720 or better), depending on the state they lived in.
If you have already have a good credit score—and by "good" we mean 650 or higher—then congratulations, your premium is probably not being negatively impacted much by your credit. But if you have a bad or fair credit score, you're going to want to find a way to improve it.
If you're a teenager, it can be hard to build good credit because you're just starting out. But there are a lot of ways to improve your credit score, including co-signing for debit cards with your parents, choosing just a few cards with low credit limits, and keeping track of your payments and expenses to keep your debt low. Building good credit doesn't take that long, and once you achieve that high credit score you can bet the insurance company will take notice.
If you're a parent and the car's insurance premiums are going to be calculated according to your credit, then consider the various best practices for improving your credit score. Remember: applying just a few of these can have a big impact in a relatively short amount of time.
Drive a Safe Car
Many insurance companies now look at how safe your car is, or its "safety rating," in calculating your insurance premium. These ratings take two main variables into account: how well the vehicle is able to avoid accidents and how well the vehicle performs in accidents. The Insurance Institute for Highway Safety is the primary organization behind these ratings. To see where your or your teenager's car ranks, go to their web site and plug in the make, model, and year.
If your car has a low safety rating, consider swapping it out for a car with a better rating. Even a used car with a better rating can improve your auto insurance premium.
One of the first questions auto insurance companies ask when you apply for insurance is how many miles you drive each day and how long your daily round-trip commute is. The shorter your commute, the lower your auto insurance premium will be, because it means you'll have less chance of being involved in an accident. If your job is far from where you live, consider getting a job that's closer. If your school is far, consider moving closer to it, or even better (and easier) use public transit instead. In either case you'll be saving not only on insurance money, but also time.
Increase Your Deductible
If you get into an accident, your "deductible" is the amount of money pay out of your own pocket before the insurance kicks in. For example, if you have a $1,000 deductible and you get into an accident that requires $3,000 in repairs on your car, the insurance company pays for only $2,000 of it ($3,000 minus your $1,000 deductible).
As long as you're a safe driver with a good driving record, increasing your deductible could save you a lot of money on your insurance premium because the higher the deductible, the lower the risk for the insurance company and thus the lower the premium.
If you want a really low auto insurance premium, the best thing of course is to combine all of the above: not only to keep your insurance premium low but also to keep you safer.