It’s common to complain about the cost of car insurance, but few people know how to actually go about lowering their insurance rates. Getting older and being a woman helps, as does driving safely, but beyond that, anything else is still a mystery. As it turns out, lowering your car insurance rate may be as simple as just asking.
According to a new Princeton Survey Research Associates International study commissioned by InsuranceQuotes, only 16% of Americans have asked for common insurance discounts, a mistake that has cost millions of dollars in potential savings. Some of the most common discounts like purchasing multiple policies from the same insurance company are usually given automatically, but just because a discount isn’t automatic doesn’t mean it doesn’t exist.
Commonly missed discounts include ones for getting married, getting good grades, and completing a defensive driving course. Others include having a short commute, commuting on public transportation, working from home, paying your renewal bill early, and having advanced degrees. Working a job that’s considered a service to the public like a teacher or police officer can also lead to a discount.
The most commonly missed discount, however, is one for something incredibly basic – not driving your car very often.
A previous study commissioned by InsuranceQuotes found that a car that’s only driven 5,000 miles per year costs 8.4% less to insure than a car that’s driven 15,000 miles a year. Driving one car 15,000 in a year may sound like a lot, but over the course of the year, it’s only a few more miles per day than the 13,476 miles a typical American drives in a year.
Depending on the state, though, the difference can be even more significant. In California, a driver who cuts her yearly driving from 15,000 miles down to 5,000 miles can expect to save 25.1%. Other states offer less extreme discounts, such as Alaska’s driver savings of 11.1% and Massachusetts’ driver savings of 9.9%.
Then again, some states don’t offer much of a discount to low-mileage drivers at all. Drivers in Utah only receive a 1.2% discount, and North Carolina insurance companies won’t offer low-mileage drivers a discount at all.
“It’s all about risk,” said Loretta Worters, vice president of the Insurance Information Institute. “The more miles driven, the greater the chances of being involved in an accident.”
It’s also about the other cars on the road. In California, there are so many drivers, the chances of getting into a wreck goes up significantly. Robert Passmore, assistant vice president, personal lines policy for the Property Casualty Insurers Association of America, puts it best, saying, “The more marbles in the jar, the more likely they will bang into each other.”
The number of drivers on the road isn’t the only way insurance companies determine rates, though, and many of those differences come down to individual state regulations. For an idea of how much of a discount you can get by driving fewer miles, InsuranceQuotes has created a handy chart.
It isn’t possible for all drivers to significantly cut the number of miles they drive, but luckily, there are several other ways for those drivers to receive discounts. Raising your deductible is one of the most effective ways to do so. Sure, it will cost you more if you get into a wreck, but over the span of a few years, the savings could defray the cost of having a higher deductible.
Additionally, taking the time to get quotes from multiple insurance companies helps save a significant amount of money. Not only is cross-shopping more rare than it should be, it’s also important to cross-shop every few years. You never know if the rate you already have is still the best rate you could get. Changing insurance companies could save hundreds of dollars, but you never know until you check.
It’s also important to note that while it may be tempting to simply lie about your yearly mileage to receive a lower rate, companies usually require their customers to report odometer readings. A car insured for 5,000 miles a year that gets into a wreck with 9,000 miles driven that year will probably not be covered, and the policy will probably be revoked. There’s also the possibility of legal trouble since insurance fraud is a crime.
Instead of lying to try and save a few dollars, just be honest, drive responsibly, and ask your insurance company what discounts you may be eligible for. You may not get any, but it can’t hurt to ask.