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If you are like many other people, you have experienced an increase in your car insurance premiums since last year.
Doesn’t it feel like every time you have to pay, your rates are higher than last time?
The good news is there are some simple steps you can take to help you lower the cost of auto insurance.
With a little effort, you can save hundreds and, in some cases, thousands of dollars on your premiums.
Here are the best ways to save money on your car insurance premium.
Table of Contents
15 Ways To Lower Car Insurance Premiums
Fastest Way To Lower Car Insurance Premium
If you want to save quickly on your car insurance policy, shopping around and comparing rates at different insurance companies is best.
While most people think that staying with the same company means they are paying the lowest rates, this is rarely the case.
With auto insurance, the best rates are offered to new customers to get them to sign up for coverage.
Then over time, your rate slowly increases.
The only way to win this game is to shop coverage.
In the past, this meant researching to find auto insurers, then calling them up and getting quotes.
Not only was this time-consuming, but it was also hard to know you were comparing the same amount of coverage.
Thanks to technology, these problems are no longer present.
With Insurify, you get quotes from multiple insurers in a matter of seconds, all with the same coverage you currently have.
If you want to switch, Insurify will help you do this too.
The average user saves nearly $500 a year using this free service.
With Insurify, you get multiple insurance quotes, fast and easy. The average savings is close to $500 a year. Click the link below to see how much money you will save with Insurify!
#1. Review Your Auto Insurance Policy
While I recommend you use Insurify to lower your rates, there are other steps you can take to save money.
First is to review your auto insurance policy.
A lot may have changed since you first purchased insurance coverage.
You might drive less now than previously as you now work from home.
Or you might have had minimum coverage, and now since you have more money, you need a higher level of coverage.
It makes sense to review your policy annually or every other year to ensure you have the coverage you need and aren’t paying for things you don’t need.
For example, do you really need towing coverage?
Many new cars come with roadside assistance for a couple of years, meaning you can cancel it and lower your car insurance costs.
#2. Raise Your Deductible
Raising your deductible is another simple thing that will help to lower your premium costs.
If you have a low deductible, your annual premium will be higher because the car insurance company is taking on more risk.
In other words, if you get into an accident and have a $250 deductible, you only have to pay that amount, and the insurance company pays the rest.
If you had a higher deductible, your annual premium would be lower because you are taking on more risk.
If your deductible is $1,000, you pay this for repairs, and the car insurance company pays the rest.
How much can you save by increasing your deductible?
I called a few different auto insurers to get some quotes.
Here is what I found:
|Deductible Amount||Annual Premium||Savings|
If you go from a $250 deductible to $500, you can lower your premium by around 30%.
The same is true if you increase from $500 to $1,000.
However, when going from $1,000 up to $2,000, the savings is 10%.
For example, if you pay $1,800 a year for car insurance with a $250 deductible, you can reduce this to around $1,260 by increasing your deductible to $500.
And if you really want to reduce your costs, raise your deductible from $250 to $1,000.
In this case, your $1,800 premium will drop to around $900.
#3. Bundle Insurance Policies
Another simple way to save on car insurance costs is to bundle insurance policies.
This means having your car and home insurance with the same company.
Most insurers offer a discount when you have multiple policies with them.
If you don’t own a home but rent, consider taking out a renter’s policy.
This policy covers your belongings in case of a fire or theft and is very reasonable in cost.
When I took out a $50,000 policy, my annual cost was $25.
Anthony Perretta, an agent with Allstate, says, “always look to bundle your auto policy with your home or renter’s policies. Often the savings on your auto policy will be more than the actual cost of a renter’s policy.”
Another option is to take out an umbrella policy if you have significant assets.
Since most insurance policies only cover up to a certain amount of loss, an umbrella policy is a way to get additional coverage.
#4. Lower Coverage For Older Cars
One of the ways to save money that most people overlook is lowering or dropping coverage on older vehicles.
Since care lose value as they age, it only makes sense to pay less in coverage.
For example, why pay $1,000 a year to cover a car that, if totaled, is only worth $1,500?
Once the value of your vehicle is less than collision coverage, you can drop this from your policy.
The same logic applies to comprehensive coverage as well.
If you pay more in premiums than your car is worth, you are overpaying for insurance.
A better option is to take less coverage and use the money you save toward buying your next vehicle.
#5. Drive Less
The fewer miles you drive, the less your premium will be because you are less likely to get into an accident.
Most insurers offer low mileage discounts, though the maximum number of miles you need to stay below varies.
It is best to call your insurance agent and ask to see if you qualify as a low-mileage driver.
What are some ways you can drive less?
Try to combine trips so that you aren’t going to the same areas multiple times a week.
If possible, walk, ride, or take mass transit.
If you have a co-worker who lives nearby, try to carpool once in a while as well.
Better yet, try to get permission to work from home more often.
#6. Be A Safer Driver
While driving an older or safer vehicle can lower your car insurance rates, so does having a good driving record.
The safer of a driver you are, the less risk you have of getting into an accident and filing a claim.
And the less likely you file a claim, the less your car insurance costs will increase.
So make it a point to pay attention when you drive.
Where should you pay the most attention?
Parking lots are notorious for minor accidents.
Stop signs also pose a danger, either by someone missing their stop or miscommunication regarding whose turn is next.
But the most likely place to get into an accident is a rural, two-lane road with a low posted speed limit.
When you think about this, it makes sense.
As you drive this road, your mind may start to wander, leading to running off the road or into oncoming traffic.
Also, when on these back roads, people assume they are safe, so they check their phones or text their friends.
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But with their eyes not on the road, disaster sometimes follows.
Because accidents can happen anywhere, ensure you always pay attention to the road.
#7. Research Safe Driving Discounts
Most insurance companies offer discounts for safe driving.
This means you can take a defensive driving course and save.
You can also save by not having any moving violations, like not getting a speeding ticket.
If you have a younger driver, encourage them to take a safe driving course, as this can also help reduce your costs.
#8. Let Your Insurer Track Your Driving
Another option is to use technology to help you reduce your insurance rates, often called usage-based insurance.
These insurance trackers plug into the OBD-II port beneath your steering wheel and collect data as you drive.
The data collected includes how often you drive and how much, any hard braking or hard acceleration, your speed, if you drive at night, if you use your phone while driving, and if there are any fast turns you make.
All this information is analyzed to determine your driving behavior and your car insurance rate.
Many popular insurers offer this service, including:
- Allstate: Drivewise
- State Farm: Drive Safe and Save
- Farmers: Signal
- Nationwide: SmartRide
- Geico: DriveEasy
- Progressive: Snapshot
- American Family: KnowYourDrive
- USAA: SafePilot
- Travelers: IntelliDrive
#9. Get An Insurance Quote Before Buying A New Car
If you are in the market for a new car, make sure you call to get a quote from your auto insurance company before you buy the car.
Most people make the mistake of not doing this and then are shocked when they discover their new premium.
It is best to provide the VIN of the vehicle, as this will tell your insurer all they need to know.
If you don’t have this, provide the year, make, and model.
Additionally, you want to inform your agent of the car’s safety features, as these can offer significant discounts.
This includes an anti-theft device, anti-lock brakes, blind spot monitoring, lane assist, etc.
You will also want to mention if you are paying cash or financing the car, as this, too, will impact your insurance rate.
Ideally, you want to make a sizeable down payment, as you will generally pay less for coverage the less you finance.
Finally, if you do finance, call your insurance company when you pay off the loan, as they might be able to lower your rate now that you own the car completely.
#10. Pay Your Premium Semi-Annually Or Annually
If you pay your premium monthly, you are paying fees you otherwise can avoid.
Most insurance companies offer you the ability to pay monthly, but they charge a convenience fee for this option.
While it usually isn’t a lot, you pay the fee every month.
So if the fee is $5 per month, over a year, you paid an extra $60.
Again, it’s not a lot, but it adds up over time.
A smarter option is to pay semi-annually or annually.
To make this work and not get your bill in the mail and have no way of paying it, I use this simple trick.
I take my annual premium and divide it by 12.
This gets me the amount I need to save every month.
I take this amount and transfer it to a savings account that is strictly for car insurance.
When the bill comes due, I have the money to pay it.
Here is how this looks.
If my premium is $1,800, I divide this by 12 to get $150.
I then save $150 each month.
The bonus here is by putting my money into a savings account, I earn interest, meaning I am making money.
The bank I use for this trick is CIT Bank.
They make opening and having an account simple and pay a great interest rate.
With one of the highest paying interest rates in the U.S. CIT Bank stands out as the best high yield savings account. Add in ease of use and great customer service, and you have a clear winner.
Make sure you contact your insurance company first and ask them about paying once or twice a year.
Some car insurance companies offer a discount on one or the other option.
This is a drastic option and a way to lower your insurance costs.
Moving to a rural area, or even particularly low-cost-of-living areas throughout the country, can profoundly impact your car insurance cost.
New Hampshire, Maine, Ohio, Virginia, Pennsylvania, and North Carolina are some of the cheapest places to insure your vehicles.
On the flip side, Delaware, New York, New Jersey, Florida, Louisiana, and Georgia are some of the most expensive states to insure your vehicles.
#12. Pay Your Bills On Time
Paying your bills on time has an impact on your car insurance rates.
And I’m not only talking about paying your premium on time.
I mean all your bills, including rent or mortgage, utility bills, etc.
Most insurers review your credit reports to help assess your rates.
They found that those with higher credit scores are safer drivers.
If you have bad credit, make it a point to improve it.
However, if you have a low credit score but live in California, Hawaii, Maryland, Michigan, or Massachusetts, you don’t have to worry as much as these states either ban or limit the use of credit reports in helping to determine car insurance rates.
#13. Talk To Your Insurance Agent
At the very least, you should schedule an appointment or a call with your current insurer once a year.
Review your current coverage and see if you qualify for any potential discounts.
Doing this ensures you get the best deal without switching.
With that said, I still recommend getting other quotes to ensure you pay as little as possible for coverage.
#14. Check Your Benefits
Here is an often-overlooked way to lower your auto insurance costs.
Many larger companies offer additional benefits to their employees.
This could be a discount on cell phone service, dry cleaning, auto cleanings, and more.
Many also offer discounted car insurance.
It makes sense to ask your employer if this exists and to get a free quote.
The discount is usually around 15%.
#15. Review Organizations You Belong
You can also save depending if you belong to a national association.
Some organizations partner with insurance companies to offer discounts.
This even extends to alums from some colleges and universities.
Again, the discount is usually around 15%.
So make a list of the organizations you belong to and your college and see if they partner with any insurance companies.
Frequently Asked Questions
There are many things you can do to save on your premiums.
Because of this, it can be complex.
Here are the common questions and their answers to help you save easily.
How can drivers under 25 save money on car insurance?
Younger drivers tend to pay the highest rates on average.
To keep rates low, experts recommend keeping your grades high, as many insurers offer discounts for good grades.
Taking a class at a traffic school can also help to lower costs.
Being a good driver and having a clean driving record is also critical.
Driving less is good too, so encourage walking or even taking mass transit if possible.
Finally, consider driving an older car.
Since it is less valuable, it will cost less to insure.
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Is it legal for car insurance companies to check your credit report?
It is only illegal or limited for an insurance company to check your credit in five states: California, Hawaii, Maryland, Michigan, and Massachusetts.
If you live in any other state, make it a priority to have good credit.
What are some ways to lower premiums for kids away at college?
If your child is attending college over 100 miles away, you can either take them off your policy or see if your insurer offers a student-away option.
Both of these will help lower your costs.
These options are only possible if your child is at school over 100 miles away.
Instead, you can change them from primary to occasional drivers.
No matter what, encourage good grades, as this will help to keep premiums low too.
To ensure you get the most significant discount, call your agent and see what options are available based on your specific plan.
Can you negotiate car insurance premiums?
You cannot negotiate premiums between insurance companies.
Each company uses its own data to determine your premium and sets it at that rate, regardless of what other insurers do.
This is why it is critical to compare rates between companies.
How can I lower my auto insurance after an accident?
The first step is to improve your driving record by being a safer driver.
From there, you can take a driving class to help lower your premium.
Since different options are available depending on who you have coverage with, it is best to call your agent and ask about your options.
For example, if you have been with an insurer for a long time, they might offer accident forgiveness if this is your first accident.
Do insurance companies price match car insurance rates?
The insurance companies actuaries set the rates, and they will not price-match other insurers.
How much does your auto insurance go up after a ticket?
There are two types of tickets, moving and non-moving violations.
Non-moving violations like illegal parking will not impact your rate.
But a ticket for a moving violation, like a speeding ticket, running a red light, or a DUI, will impact your rates.
How much depends on the severity of the violation.
If you get caught driving 5mph over the limit, there will be little impact.
But if you get caught speeding through a school zone, you will have higher rates coming your way.
On average, a speeding ticket will increase your rates by 20-25%.
A DUI or reckless driving could spike your premium up to 75% higher.
Will using a device that monitors my driving cause my rates to increase?
Using a device to monitor your driving habits is an excellent option for saving money.
No insurance company has said using a device will increase your rates.
However, if you read the fine print, most state that “the use of the device will not directly cause your rates to go up.”
I bolded the word directly because this gives the insurance company an out when they raise your rates.
They won’t say that they monitored your driving history and saw that you often drive at 80mph, which is why your rates are increasing.
Chances are your rates will increase more than others, but the insurance company won’t specify why.
There are the best ways to save money on car insurance.
There are many options, so chances are good you can reduce your premiums.
But to save the most, I highly encourage you to take a few minutes and get multiple quotes from Insurify.
There is no cost or obligation, and it will show you instantly if you are overpaying for coverage.
If you are overpaying, you can switch right then and there.
If you are not, take the next step and call your agent and see if there are any additional discounts you may qualify for.
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I have over 15 years experience in the financial services industry and 20 years investing in the stock market. I have both my undergrad and graduate degrees in Finance, and am FINRA Series 65 licensed and have a Certificate in Financial Planning.
Visit my About Me page to learn more about me and why I am your trusted personal finance expert.