It’s doubtful you can get through a TV show or your evening commute without hearing car insurance ads with big promises of saving you money. But how do you know which policy is best for your situation? How do you know if you’re spending too much? The following tips will help you identify opportunities to save:

Collect insurance quotes before you buy a car 

If you have your eye on a fancy sports car or luxury SUV, you may think twice when you consider the insurance costs. In most cases, it’s significantly cheaper to insure an inexpensive car than a premium vehicle. After all, it will cost your insurance company a lot of money to replace or repair a high-end Euro model.

Beyond sticker price, insurance companies consider other factors when setting rates. Higher insurance premiums apply to vehicles that are frequently stolen or involved in accidents. To be on the safe side, get price quotes before you purchase a car.

Keep a clean driving record

When providing a quote, insurance companies will take into account any accidents and moving violations from the past three-to-five years. Drivers with previous violations are considered higher risk and will be charged a higher premium. Likewise, good drivers are eligible for discounts, which can add up to hundreds of dollars in savings every year.
If your driving record is less-than-perfect, call your insurance representative and ask if he/she will reduce your premium if you complete a defensive driving course. It may cost you time and money upfront to attend the school, but it will help reduce auto insurance premiums over the long haul.

Keep a good credit rating

Your credit rating has a significant bearing on your interest rate for mortgages and other loans. Yet did you know auto insurers also consider your credit rating when setting your premium? Maintaining good credit will provide vast financial benefits in a variety of areas.

Increase your deductible

A deductible is the amount of money you’re responsible to pay for a claim before your insurance kicks in. By raising your deductible, you also lower your annual premium. Just remember, if your vehicle is damaged, it’s your responsibility to come up with the funds to cover your deductible. Set money aside for these types of emergencies or unexpected expenses so your deductible won’t create a major financial challenge for you and your family (read more about building your Emergency Fund).

Shop around for policies

Do your due diligence: check rates of several insurance companies to ensure you’re securing an appropriate and affordable policy. Call around to multiple insurance companies, or take advantage of websites like carinsurancerates.com to help you collect and compare quotes from many insurers.

Bundle insurance policies

Many insurers offer discounts when you insure multiple vehicles or take out a renters or homeowners policy.

Purchase the minimum coverage required by your state and supplement with a personal umbrella policy

This sort of policy is issued in conjunction with homeowners insurance and is significantly less expensive than auto/liability coverage. A personal umbrella policy will protect you in the case of an accident where you’re at fault and your liability for damages and/or medical expenses exceeds your insurance coverage.

Take advantage of all available discounts:

• Ask your agent about discounts for antitheft systems and safety features.
• Special discounts are also available for professional groups including teachers, doctors, engineers, scientists and military.
• If you’re footing the bill for insurance for a young driver, ask about “good student” discounts, typically offered to unmarried, full-time students under the age of 25 with a B average or better.