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More ways to cut car insurance costs

Everyone knows the standard advice about reducing premiums. Here are some less obvious suggestions.

By Karen Datko Sep 14, 2010 3:44PM

This post comes from Jim Wang at partner blog Bargaineering.


When it comes to saving money in this economy, it appears that many people are reducing their auto insurance coverage. It's a bit of a gamble, but adjusting your insurance, whether it's homeowners or auto or anything else, can be a way to save a few more dollars if things are looking tight.

The subject of how to lower auto insurance costs has been covered a nearly infinite number of times, and everyone knows the basics -- shop for alternatives, increase deductibles, drop comprehensive and collision on older vehicles, package together policies for a discount, etc.


I would like to think that you all know that you should shop around for insurance, just as you would shop around for anything else. I would also hope that you understand the relationship between your premiums and your deductible. Hitting those points again just smashes the same tired old ideas back into your brain and, honestly, wastes your time.


So, this post will be about the more novel ways to lower your car insurance costs. Chances are you may not use any of these ideas but it may spur you to think of some clever ideas of your own (that you can share). Post continues after video.

Recreational classification. One of the benefits of working from home is that I don't drive my car to commute anywhere. On a whim, I decided to call up my car insurance agent to ask if my premiums could be lowered because I work from home.


As it turns out, I could have my car classified as a "recreational vehicle" and pay much lower premiums. The general rule is that you don't drive that car to work or school, which I don't, and that you drive fewer than 7,500 miles in a single year. They confirm this by asking for odometer readings.


The reclassification saved me only a few hundred dollars since I only had liability insurance, but I imagine someone with liability, collision and comprehensive could save much more.


Drive less (carpool). Your insurance premium is supposed to reflect your risk as a driver. One of the reasons a recreational classification lowers your premiums is because you are on the road less. Used-car buyers often cite 12,000 to 15,000 as the "average" number of miles driven in a car in a year. (By the way, if you see a used car with a higher average, you should consider passing on the vehicle or decreasing what you'd pay for it.) Well, if you want to decrease the total cost of insurance, one way is to drive fewer miles.


This could be subtle because driving less may not directly decrease your premiums unless you're able to get under the 7,500 annual mileage or whatever your insurance company's threshold is. Driving less does, however, decrease the likelihood you get into an accident and have to pay higher premiums because of an accident. 

Improve creditworthiness. It's not clear why your credit score should affect how risky you are as a driver, but insurance companies do use your score in their assessment of your risk. While I've never heard of someone seeing their premiums increase because their score fell, mainstream media has jumped all over this idea and received confirmation from the Property Casualty Insurers Association of America that your credit history is being used to determine rates. Whether you like it or not, data suggest that credit risk and car accident risk are related.

If you can improve your credit score, you might see a decrease in your rates. Not every insurer uses your credit history to determine rates, so give your agent a call to find out more. Also, it's important to review your reports regularly even if it won't do anything for your insurance premiums.


Do you have any less obvious ways to help lower your car insurance premiums?


More from Bargaineering and MSN Money:



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