Getting auto insurance coverage is about finding the balance between cost and benefit. If anything, insurance companies have mastered the art of selling you things you don’t really need. They start out with a simple requirement, and the offer add-ons that, well, make a lot of sense. Until they don’t.
It’s your job to figure out what you need and don’t need – and one of the things you don’t need is to pay for an insurance plan that drains your resources.
In the United States, auto insurance usually costs more to purchase in the early to mid year (think during March and April), and it is at its cheapest in December. This isn’t true in every state, and the reasoning isn’t conclusive due to a lack of research, but there are some theories.
Speculation is bad for business, but it can help people rationalize some of the stranger things in life – and when it comes to car insurance, the guesswork makes sense. As the New Year approaches, a new fiscal year begins – and at that point, insurance companies are likely to adjust their rates based on new risk forecasts for the year. This, combined with the fact that rate implementations don’t kick in until January, makes December the cheapest month, according to CNN Money.
However, it’s important to realize that the national average doesn’t represent all states. In fact, in some states, December is the most expensive month of the year for car insurance deals. Wherever rate regulations are strict, insurers will try to push for rate changes in the New Year, prompting the most expensive months to be March and April. On the flipside, wherever rate regulations are weak, insurers have the power to change rates at will.
Just because your state’s auto insurance policies aren’t cheapest during the month of December, that doesn’t mean it doesn’t have its own cheap month.
Here’s What You Can Do to Cut Costs
The road to a better deal is always out there. There are a couple measures you can take to make sure you’re getting the best deal, and it starts at the car dealership.
- The type of car matters. Cars of different price levels and risk levels mean different premiums. Aggressively-driven cars, like chargers and sports cars, cost more because the risk of them getting totaled is higher. Alternatively, the premiums on a family-safe and tested hybrid SUV are going much, much lower.
- Your credit score. This is pretty much a given whenever you’re asking an institution to give you money of any kind, whether to help you buy a home or pay your medical bill in the event of a crash – if your credit score is down because of something like a recent divorce, missed bills, or other offenses, you’ll have a harder time getting a good deal.
- Don’t let a lapse happen. Speaking of credit scores, another punishable offense in scoring your deal month after month and year after year is a lapse. A car insurance lapse not only puts close to 20 percent onto your bill over years according to Family Handyman, but it could cost you your entire relationship with your insurer.
- Get the discounts rolling. Car insurers can offer you a bunch of discounts, if you know what to ask for. You can drastically reduce the cost of your car insurance by asking for a prompt pay discount for paying your bills early and always on time, and a discount for having filed no-claims. Both discounts are for pre-existing plans, but you could also get a discount right off-the-bat if you are part of a volunteer crew or a recognizable service, like the local Fire Department. If you’re curious to see what discounts can net you, check out sites like CoverHound to get a sense of the average car insurance per month payment you’d make based on your details.
Could You Be Looking for a Short-Term Plan?
Finally, if you’re looking for a cheaper alternative on a car you don’t use often to begin with, your best bet may be to go with a short-term plan. That way, you can also regularly shop around for another insurer, and up your chances of finding a great deal. Just make sure to be diligent with your cancelations and payments – being late on a bill without cancelling it warrants a negative mark on you credit score, and unless you cancel an insurance plan before getting into a new one, you are by law required to pay both insurance companies.