Nobody wants to overpay for the necessities of life like gas, rent and cellphone service. The same holds true for car insurance. And just as you can search for deals on other purchases, you can hunt for ways to lower your car insurance costs.
Given that the average good driver in the U.S. pays $1,556 a year for car insurance, reducing your insurance bill by just 5% to 10% can put more money in your pocket. In some cases, you could slash your car insurance costs by 30% or more. Here are 10 tips to help you drive down your car insurance premium.
Featured Car Insurance Partners
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Geico
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USAA
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State Farm
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1. Shop Around
Many of us shop around for bargains on electronics, clothes and other everyday purchases. You can apply the same strategy to car insurance.
Whether you are getting insurance for the first time, renewing coverage or switching to a different insurer, don’t overlook the savings you can score by comparing rates from several auto insurance companies.
Car insurance rates for the same coverage can vary significantly among insurance companies, so if you don’t shop around, you won’t know how much you can potentially save. The industry-backed Insurance Information Institute suggests obtaining quotes from at least three insurers in order to compare car insurance costs and coverage.
Be sure to compare identical policy coverage and limits, so it’s an apples-to-apples price comparison
Related: Cheapest Car Insurance Companies
2. Review Your Deductibles
Rebekah Nelson, a spokesperson for USAA, recommends reviewing the deductibles attached to your current coverage to see whether you can raise them.
“If you’ve not done this in a while, you may find a higher deductible is more appropriate and will lower your rate,” Nelson says.
A car insurance deductible is an amount taken out of your insurance check when you file a comprehensive or collision insurance claim. You choose your deductible amount when you purchase a policy, and you can adjust your deductible later if you change your mind. A higher deductible means you pay a lower premium. That’s because you’re taking on more of the costs if you file a claim, and you’re less likely to make claims for minor damage because the repair costs won’t exceed your deductible amount by much.
The Insurance Information Institute says raising your deductible from $200 to $500 could reduce the cost of your collision and comprehensive coverage by 15% to 30%. Boosting the deductible even higher, to $1,000, could result in savings of 40% or more.
The institute also points out that if you bump up your deductible, you should set aside enough money in case you wind up filing a car insurance claim. For example, let’s say your claim payout for a crash is $5,000 and your deductible is $1,000. Your insurance company will pay $4,000, so you’re responsible for $1,000 in out-of-pocket expenses to repair your vehicle damage.
3. Bundle Insurance Policies
You’ll often see TV commercials promoting the ability to bundle auto and home insurance. Most insurance companies offer discounts to policyholders who carry both auto and home policies, and bundling can apply to other coverage such as motorcycle and boat insurance
Generally, a bundling discount (also known as a multi-policy discount) can reap savings of 5% to 25%.
Not only can you earn a discount from bundling, but also purchasing more than two policies from a single company “also simplifies your insurance, as you have it with one carrier,” Nelson points out.
4. Explore Car Insurance Discounts
Auto insurance companies offer a trunkful of discounts aside from bundling discounts. Some of the most common discounts include:
- Multi-car discount. Insuring more than one vehicle with the same insurer might yield savings of 8% to 25%.
- Vehicle safety discount. If your car is equipped with the latest safety features, such as anti-lock brakes and air bags, you might qualify for a discount.
- New car discount. Are you driving a car that’s less than three years old? If so, you could pick up a discount of 10% to 15%.
- Good driver discount. If you go a certain amount of time without an accident or a traffic violation, your car insurer might reward you with a discount of anywhere from 10% to 40%.
- Good student discount. Good grades can pay off. Some insurers extend discounts ranging from 8% to 25% to a full-time high school or college student who’s age 16 to 25 and earns at least a B average.
5. Let Your Insurer Track Your Driving
A number of car insurers enable you to potentially trim your bill by signing up for usage-based car insurance. These programs use an app or device that plugs into your car to track your driving behavior. Factors tracked can include how many miles you drive, speeding and how often you slam on the brakes.
If the data shows you’re a good driver, you can qualify for a discount. For example, if a customer joins USAA’s SafePilot program they can land a discount of up to 30%. Other examples of usage-based car insurance include Snapshot from Progressive, State Farm’s Drive Safe & Save and Allstate’s Drivewise.
Be aware that in some cases usage-based insurance could increase your rates, according to a 2022 “Insurance Trends and Outlook” report by TransUnion. Usage-based car insurance is best for low-mileage drivers who don’t drive at night and have very safe driving habits.
6. Take a Defensive Driving Course
Successfully completing a defensive driving course that’s approved by your insurer can result in savings on your car insurance. For example, a driver in Texas who graduates from one online defensive driving course approved by Geico can nail down a discount of up to 10% discount for three years. In New York, you can trim 10% of your rate for three years by successfully completing an approved driving-safety course.
7. Park in the Garage
Some insurers will lower your car insurance if you park your car in your home garage rather than in your driveway or on a street. Data shows that cars parked in garages are less prone to being stolen or having crash damage.
8. Drive a Safe Car with Low Repair Costs
When you’re visiting car dealerships in person or online, take into account the type of car you’ll be buying. Some cars are cheaper to insure than others.
In addition to your age, driving record and other variables, car insurance companies consider the type of vehicle you drive when pricing your coverage. They look at how likely it is that a certain car will be stolen, how much it typically costs to repair that kind of car, how safe it is and the amount of claims made for similar models.
The Insurance Institute for Highway Safety has safety ratings for thousands of vehicle models and also shows the percentage above or below the average number of claims filed for particular classes of vehicles. The National Insurance Crime Bureau lists the most stolen cars annually.
Related: See Forbes Advisor’s ranking of the most and least expensive cars to insure.
9. Boost Your Credit if Possible
Most states let insurers credit-based insurance scores to help determine your car insurance rates. This score predicts the probability that you’ll file a car insurance claim. The lower your credit-based score is, the higher the odds are of filing a pricey claim. If you can raise your traditional credit score, this might also lift your credit-based insurance score, paving the way for better car insurance rates.
A Forbes Advisor analysis of rates showed that drivers with poor credit pay an average of 76% more than those with good credit.
10. Pay Your Premium in Full if Possible
Instead of spreading out premium payments by paying monthly, consider paying your premium in one lump sum. Many car insurers will give you a small discount for doing so. Progressive, Allstate, American Family and Farmers are among the major insurance companies offering this discount.
