Buying the Right Kind of Car Insurance to Get a Bang for Your Buck

The United States has some of the highest rates of road fatalities in the world. According to a Statista report on road accidents, an estimated 36,680 people died on U.S. roads in 2020. In severe automobile crashes, 94% of identified causes point to human error. Even if you’re the best driver on the road, there’s no guarantee that accidents won’t happen, and even when these accidents aren’t fatal, the damage to your car could break your bank. This is where auto insurance comes into play.

On average, 25-year-old drivers in the U.S. pay $3,348 per year for car insurance. Most drivers and new car owners may not look into the fine print of their auto insurance and doing so could be costing them more than necessary. In this post, we’ll go over some tips on making sure you get the right kind of affordable car insurance:

Differentiating collision and comprehensive auto insurance

Most new car owners may not know the specific insurances they need, or what coverage best applies to them. Insurance terminology can be tricky to navigate, especially when you get insurance salesmen talking you into investing in the best, premium-priced ones most of the time. Taking the time to know what kind of coverage best matches your needs and situation can help you save some money from insurance. For instance, there is usually some confusion between collision and comprehensive auto insurance plans. A write-up on what is comprehensive auto insurance by Sound Dollar discusses how this type of insurance covers the cost of damages to your vehicle from events not part of a collision. Sometimes, this is referred to as “other than collision” coverage — which is reserved for vandalism, theft, natural disasters, and more. Whether or not you get comprehensive auto insurance depends on various factors, such as the cash value of your car, or if the area you live in is prone to natural disasters.

Inquiring about “Good Driver” discounts

Depending on your car manufacturer and insurance company, you may be able to get the “Good Driver” discount. Essentially, this is an insurance discount that incentivizes good and safe driving. The longer you go without making car insurance claims for damages from accidents, for example, the higher your discount could be. This not only saves you money in the long run but can also act as motivation for you to be the best driver you can be, for the safety of both you and others around you. While the amount varies by the insurance company, practicing safe driving can net you insurance discounts anywhere between 10% to 40%.

Maintaining good credit history

This probably goes without saying, but having a bad credit score is, well, bad. In the case of auto insurance, like many other insurance types, you may need or already own, having a bad credit score could land you higher insurance rates, costing you more down the road. Insurance companies are not one to embrace negative credit scores, because it tells them that you’re likely to miss those insurance payments, as highlighted in this’s post on bad credit scores. When asking around for auto insurance, it’s important to keep in mind that insurance premiums are based on credit-based insurance scores, depending on the insurance company. However, regardless of what the credit score is called, it’s more beneficial for you if you take the necessary precautions to maintain a positive one.

Reducing insurance on your older car

If you own an older car model, you may be in luck. Generally, if your older car is worth less than 10 times the insurance premium, you may want to opt out of a collision or comprehensive coverage. Of course, the same wouldn’t apply if what you own is a flashy, classic muscle car. If you’re not sure, our previous post on the ‘Greatest American Muscle Cars’ can help give you an idea. The fancier the car, the more you will want it insured, in case of things like road accidents or theft. Knowing the value of your car is surprisingly easier than it sounds and can help you better calculate whether or not you should invest in pricier auto insurance than needed. At the end of the day, you need to make cost-effective decisions on whether or not a car is worth all the coverage you could be paying for.