5 Ways to Save Money on Your Car Insurance

Car and health insurance premiums are often seen as fixed costs -- the bills that must be paid regardless of their ever-increasing price and your tight budget. But if you haven't looked in a while, it can be beneficial to review your recurring expenses. Here are five tips that could save you money on your car insurance.

Change your profession
Insurers like to use every statistic they can find to weigh a driver's accident risk and the likelihood they will file a claim. There's one thing that can carry significant weight: your occupation. A report by the Consumer Federation of America discovered that three of the five largest U.S. car insurers base premiums on more than driving records. The study used two hypothetical 30-year-old women living on identical streets in middle-income ZIP codes in 12 different cities. One woman was a single receptionist with a high school diploma and an accident-free driving record. The other was a married executive with a master's degree and an at-fault accident in the past three years. In two-thirds of cases, the woman with the accident received a lower quote, according to the report. Insurers use occupation titles and education level as substitutes for specific income information, and like it or not, income is used to project your potential cost to the insurer. With that in mind, it may help your bank account to leave modesty aside when choosing what to call yourself on your application, since a fancier title may fetch a lower rate.

Buy insurance in December
It varies by state, but depending on the month you buy insurance, you might be paying more than you need to -- sometimes significantly more. Nationally, December is the cheapest month to grab your policy, according to a recent yearlong study by InsuranceQuotes.com. March is typically the most expensive month to buy. Depending on the state, it's possible to see a nearly 50% variation in premium price from the cheapest month to the most expensive. Being savvy about when you buy insurance could save you big time.

Bundle your car insurance
Bundling your car insurance with other insurance policies can not only save you some green, but it also may have the added benefit of making your life a little easier. Beyond having to take care of only one payment, you'll also be dealing with just one agent. Bundling also closes coverage gaps that can cause disputes between your insurance companies over who will pay, which costs you money as the claim is sorted out. If you have separate insurers, ask each of them to see if you can take advantage of bundling discounts. But be careful: Bundling isn't guaranteed to save you money. To remain competitive, auto-only insurers might offer cheaper rates. Compare bundling with using separate companies. If you do bundle, check around at least once a year to make sure you're still saving money.

Get usage-based rates
This trick is a bit more complicated, but depending on the individual, it might be worth a look. With usage-based insurance, your monthly premium is determined by information from your odometer or an electronic device installed in your car. Some policy rates are based on how many miles you drive in a month. In other cases, an electronic device records your driving data, such as speed, acceleration, braking, and handling. The data is compiled and analyzed to determine your rate. Obviously, this kind of policy depends on the individual. If you have a need for speed and take corners like you're in the Grand Prix, this isn't going to help you. If you're young and cautious and don't spend too much time commuting, usage-based insurance could be a money-saving option.

Shop around
You'd be surprised how many people don't shop for a less expensive policy. According to a NerdWallet survey, Americans pay an average of $368 more a year on car insurance than they should. But 88% of drivers said shopping around for the best rate is a frustrating experience. To avoid paying more than you should, there are a few things to keep in mind when shopping. Look at the big insurers, but also at smaller companies. Consider their reputations. Also, make sure when you are getting quotes that you're comparing the same kind of policies. Shop for the coverage you need and can afford. There's not much point in paying less if your coverage isn't enough and you're stuck with an accident you can't afford. Drivers could, on average, save 32% by shopping around, the survey found.

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