7 Ways To Lower Your Auto Insurance Premium

It costs $8,698 to own and operate the average automobile, according to 2015 data from AAA.

Given that automobile expenses are such a high - and often overlooked - expense, it's well worth the time and effort to try to reduce them as much as possible. Although you may not be able to shorten your commute or trade for a more fuel-efficient vehicle overnight, there's one automotive expense on which you can - as incessant ads like to remind you - cut by hundreds of dollars a year in a matter of minutes.

Yes, we're talking about car insurance. And yes, you can almost always reduce your auto insurance bill if you know where to look.

Here's how to do it.

Drive safely (and slowly)

Auto insurance is expensive enough in the normal course. But if you have accidents or moving violations, it can be ridiculously expensive. Avoiding accidents and drive more carefully are among the best ways to keep your auto insurance at a minimum.

If you already have moving violations, avoid adding more to your record going forward.

Even if you have one or more moving violations in the recent past, time can be your friend here. In most states, moving violations are dropped from your driving record after three years.

Buy an "insurance-friendly" car

The car you drive makes a big difference in your auto insurance premiums. There's not much you can do about that right now, but there's plenty that you can do when the time comes to buy a new car. When you do, make sure that car is auto insurance-friendly.

So avoid excessively expensive or sporty cars.

At a minimum, the cost of your collision coverage will rise with the value of the vehicle. But beyond costs, it's also important to understand that certain vehicles carry higher insurance charges. For example, any vehicle that could be a least loosely interpreted as a sports car will cost more for insurance.

Next, choose cars with plenty of safety features

In addition to the type of car, and the amount you pay for it, you should also make sure it has certain safety features. Those features can result in lower insurance premiums.

The best way to go about this is to get a list of safety equipment that will result in a lower premium from your insurance company. Once you do, be sure that any car you buy incorporates as many as possible. Some examples include: a security system, passenger and rear seat airbags, and anti-lock brakes.

Take a defensive driving course

If your driving record is below average, this can be a relatively quick way to lower your insurance premium. Some insurance companies will offer a discount if you complete a defensive driving course. The one that you took in high school won't do. It must be a course that you have completed recently.

There is one caveat here, however - make sure that the cost of the driving course doesn't wipe out any savings that you'll get from the reduced premium. It may still be worth taking the course if it only eats up the savings for the first year. After that, you'll get the benefit of the discount for each year thereafter.

Yes, it can pay to shop around

Many people stay with the same auto insurance carrier for years, but that's not always the best course of action. Despite loyalty incentives, must insurance carriers slowly raise your rates over many years because they count on customers being too lazy to shop around.

You should compare auto insurance rates from competing companies at least every two years.

This is important because every year different companies choose to cut their prices in order to attract new business. They may offer discounts that are very attractive when compared to the company that has been handling your auto insurance for the past five years. Auto insurance is actually a more competitive market than most of us know, so that does require some investigation from time to time.

Move closer to work

When you apply for auto insurance, one of the first questions you'll be asked is how many miles your daily round-trip commute is. Not surprisingly, the shorter your commute, the lower your auto insurance premium will be. This makes sense because it means you'll be on the road less and reduces the possibility of being involved in an accident.

Conveniently, most people look for a job that's closer to home when changing jobs. The fact that auto insurance will be less expensive as a result should be an added incentive. The biggest discount will happen if you have a work-at-home arrangement. This will mean that you will have virtually no commute, ensuring you will get the biggest discount on commuting.

Improve your credit

Although you probably won't be able to call up your insurance company and ask for a premium reduction just because your credit score went up a few points, a better credit score is likely to result in at least a slight improvement in your premiums the next time you shop for car insurance.

But let's be clear - the biggest savings are likely to come if you go from being a poor credit risk (ie, a 580 credit score), to a good one (700 or better). There are always numerous advantages to improving your credit and the prospect of lower auto insurance is yet another.

Increase your deductible

I saved this one for last because it appears on virtually any list of ways to lower your auto insurance premium. But even though it's a cliche', it's still a very valid point.

In the event of a claim, your deductible is the amount of money you agree to pay out-of-pocket before insurance kicks in. For example, if you have a $500 deductible and you have an accident requiring $2,000 in repair work, the insurance company will only cut you a check for $1,500 ($2,000 - your $500 deductible).

If you have a good driving records, with no claims in the last few years, you can probably save up to $500 a year by increasing your deductible from $500 to $1,000. If you're worried about having to pay that much in the event of an accident just put an extra $500 into your emergency fund to cover it (you should easily have it as a result of your lower premium). You'll save money for every year in which you don't have a claim.

One caveat here - if you have a history of accidents in which you have filed claims, do not raise your deductible. Since your need to file claims is fairly predictable, increasing your deductible will simply  increase your exposure, potentially costing you more money than you save.