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5 Ways to Lower Your Car Insurance Premiums

Car insurance rates shouldn’t be a mystery. Carriers always look at the same binary metrics when quoting a rate. They can’t ask certain personal questions — like your medical history or financial holdings — but they can home in on other data points that traditionally give them a strong idea of your risk profile.

By knowing exactly what the insurance carriers are looking for, you can position yourself beforehand in order to save money on your policy.

Clean up your credit. Credit scores are a big part of your risk profile. Remember, FICO scores, while helpful to consumers, were originally designed as a tool created by banks to assess your likelihood of defaulting on a loan. The score can also be used more broadly (and subjectively) to determine whether or not you’re a high-risk driver, and therefore more pricey to indemnify.

Look into a group policy.The most common is a collective policy with your spouse and/or your children. Covering three people under one policy is much less expensive than it would be to take out three individual policies. The carriers know that the more customers the merrier, and are happy to give a rate cut to accommodate your group. Group policies can also cover you and your same-sex partner, your roommates, friends, etc. For somewhat old-school industry members, car insurance carriers are pretty open-minded about what constitutes a group for a policy.

Pick the right car. If your car has poor safety ratings and is susceptible to theft insurers are going to charge you more for coverage; Mercedes Benz and Jaguar vehicles often fall into this category. If you’re serious about saving on car insurance seek out safe cars that thieves will have no interest in stealing. The Honda Accord is usually a safe bet.

Shop around. While all insurance carriers look at the same metrics to arive at a quote, most weigh certain factors differently. Some might be extremely keen on your credit score, while others will focus on the type of car you drive. If you don’t like the rate someone quotes you, feel more than free to look around to get a sense of the market. Don’t accept the first offer you get; chances are someone can beat it.

Be female.This one is in jest of course. Nevertheless, women do pay less for car insurance because they traditionally make fewer and smaller claims to carriers. Men also tend to drive more aggressively and there less safely.

The process of arriving at an auto insurance quote is a science, not an art for the carriers. They know exactly which metrics cause a spike or decrease in the rates they will quote. Different carriers quote different prices only because they weigh factors differently. Nevertheless, these are the sacrosanct metrics by which you are judged and if you’re looking to spend up to $25 less each month on car insurance it’s best to focus on them now.

Larry Kuhns is a staff writer at CoverHound, where smart shoppers find insurance.

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March 30, 2012 um 9:52 am
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