My car insurance bill had come in the mail and all I see are $169.13, bold and staring at me! I was furious! This was the second increase in almost as many months! In fact, 2 years ago, I had two cars and my motorcycle insured, with full coverage, for $130/month with the same company. And before I knew it, the price was $169/month and that was for only 1 car and my motorcycle.

easily lower your car insurance rate

At this point, I knew I had to act!

But first I wanted to learn a little more about insurance.

The Basics

The first question that popped into my head was a question that I never really knew the answer to. And it’s the most basic question of all: Do we even need insurance? I mean (knock on wood) I have never caused a car accident. I’m basically giving my insurance company money for free! Right?

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Well, unfortunately, I found out that auto insurance is basically the law (that’s why police officers ask you for license, registration, and proof of insurance when you get pulled over). You have to have it… well except in New Hampshire (but even then you have to prove you are able to pay for damages in accidents).

Plus, insurance covers your butt if you do have an accident.

Alright, so we must have insurance. But what exactly do car insurance companies look for when they give my insurance policy?

What Insurance Companies Look At

Insurance companies look at four things:

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  • Your age
  • Gender
  • Credit history
  • Driving history

That seems pretty straight forward. But what the hell does my credit history have to do with my car insurance? I mean, this isn’t a credit card or a loan. Well, they look at credit score for one reason…to see how dependable you are at paying your insurance payment on time. So, just like applying for a credit card, the higher the score the better rate you will get.

Another thing that I found was that insurance companies look back 5-years on your driving record. So thankfully that big speeding ticket I had at 20 won’t count towards my insurance rate…whew!

Oh and one other thing…

How you use your car and how often you drive matters! Like a lot!

Usually, we use our cars for work, which means we are driving 10,000 to 12,000 miles a year. And, as you can guess, that increases your premium (I’ll cover what this means in just a second). Typically, a car used for pleasure will be a little bit cheaper, because it is assumed you’re not going to be driving it as much.

The Jargon

Now the question is…what exactly is a premium and a deductible and what do they even do with my money?

Well, it’s pretty simple. Your premium is the amount that you pay every month or every three months (whatever agreement you set with your insurance company). And how do they know how much to charge you?

Well, that isn’t as simple. Insurance companies basically take a look at your age, your gender (unfortunately, guys under 25 pay more cause we crazy), the car you have and all the other things I mentioned above and then they’ll plug it into a machine and spit out a number. This number is how risky (or not risky) the insurance company thinks you are too them.

Your deductible is how much you pay out of pocket if an accident happens or a tree falls on your car. You can lower your monthly payments if you choose a higher deductible (but then that means you have to pay more out of pocket). :/

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And with all of this money that you fork over every year your insurance company does one thing with it…it invests it and spends some on paying out for accidents and damages.

So we’ve covered the basics and the not so basics, but I still haven’t found out why my damn insurance price went up! I scoured the interwebs a little longer and finally found it…

Why have our rates increased?

Because people are driving more! So for prices to decrease people are going to have to stop driving! That is the only solution. Back to the horse and buggy.

Seriously though, people are getting into more accidents because they are driving more. And since this is causing more accidents, insurance companies have to pay more to cover these costs (source).

Increasing car insurance rates

Now What?

We’ve done most of our homework, but now we have to act!

So here are the 5 steps you can follow to lower your car insurance payment:

  1. First, you have to understand what kind of coverage you are looking for. And there are lots of options! (You also have to meet what’s called your state minimum amount of liability coverage)
  2. I then went to theZebra (but you can also go to everquote or nerdwallet) and put in all my information.      Word of caution: just because you are quoted a price doesn’t mean its guaranteed. easily lower your car insurance rate
  3. I then choose the best deal! The best deal is one that reduces your monthly payment, but gives you the best coverage. Don’t choose a deal that makes your coverage worse…or it can bite you in the bite the butt down the road.
  4. I then went to the insurance company and told them how I awesome I was and took advantage of my discounts and knocked that price down even more! And there are tons of the discounts. If you’re a student, you have a hybrid vehicle or even if you have daytime running lights, you can reduce the costs of your insurance.
  5. Finally, I sent my previous auto insurance a letter saying that I wanted to cancel my insurance with them because they were too damn high!

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And that’s it!

I now pay $138.73 a month for my insurance! Changing my car insurance from my old insurance company to my new one saved me a little more than $30 a month, which comes out to $360 a year! Vacation here I come!