Car insurance is a necessary evil that virtually anyone who owns or drives a vehicle must pay. Even though it does protect you financially if and when you get into an accident, it’s a frustrating expense for most of us throughout the year because it can feel like we’re spending money unnecessarily. While you can’t eliminate the expense altogether, you can find ways to save on car insurance.
There is no silver bullet when it comes to shopping for auto insurance—each company calculates their rates differently based on their risk calculations and profit margins—but many providers have special offers and rewards that help you qualify for discounts based on different criteria. Which insurer ultimately offers you the best policy price will depend on a variety of factors, so it pays off to shop around and compare quotes.
You may even find that the insurer who offered you the best rate a few months ago is beat out by a competitor thanks to changes in your situation or hitting a major milestone. The key takeaway is that you should never settle for your insurance rate if you feel like you’re paying too much. With a little effort on your part, you can reduce your car insurance premium and save your hard-earned money.
In this guide, we’ll cover 13 tips to save on car insurance. Use the links below to navigate to the solutions that best apply to your situation:
- Tip #1: Review Coverage on Older Vehicles
- Tip #2: Use the Same Provider for All Insurance Policies
- Tip #3: Raise Your Deductible
- Tip #4: Practice Safe Driving
- Tip #5: Pay in Full
- Tip #6: Switch to a Mileage-Based Program
- Tip #7: Buy a Safe Car
- Tip #8: Protect Your Car from Theft
- Tip #9: Skip Roadside & Car Rental Coverage
- Tip #10: Improve Your Credit Score
- Tip #11: Ask About Discounts for Teens & Seniors
- Tip #12: Capitalize on Milestones & Organizational Affiliations
- Tip #13: Shop Around
(Note that these are not universal situations that lead to a premium discount with every insurer. That’s why it pays to shop around.)
How to Lower Your Car Insurance Tip #1: Review Coverage on Older Vehicles
Too often people set and forget their insurance policies, meaning that once they purchase their original insurance policy, they don’t actively search for savings.
While your insurance company may reduce your monthly premium after a few years of having the policy (especially as the car ages), depending on the value of the car, it may no longer be worthwhile to have a full-coverage insurance policy. Some aspects of car insurance are optional (collision repairs), so if your car’s value is low, it’s probably not worth keeping this on your insurance policy.
To learn more about the different aspects of car insurance coverage, refer to USA.gov’s guide to car repairs and auto insurance.
How to Lower Your Car Insurance Tip #2: Use the Same Provider for All Insurance Policies
As with many other types of services, your provider may award you with a rate discount if you have multiple policies with them. If you have multiple cars, boats, and other vehicles, use the same insurance company to take advantage of this savings opportunity. Additionally, if your insurer covers other industries, such life, health, and home, you can sign on for these other types of insurance policies with them as well to take advantage of available discounts.
Based on the findings of The Zebra’s 2020 State of Auto Insurance Report, you could enjoy an 8% savings.
How to Lower Your Car Insurance Tip #3: Raise Your Deductible
You might be wondering how raising your deductible could save you money? While it might seem counterintuitive to agree to pay more in order to save less, it can actually work out in your favor if you don’t have to file a claim. This is because your insurance premium is a sure thing that you have to pay each month (or annually), whereas your deductible is only paid if and when you get in an accident. For many of us, we can go years without getting into an accident, meaning you enjoy all of that savings on your premium.
How to Lower Your Car Insurance Tip #4: Practice Safe Driving
Did you know that your driving record can impact your insurance rate? Generally speaking, insurance providers typically look at the last three to five years of your driving record. So after that time period, you may be able to negotiate a lower rate on your insurance policy if your provider doesn’t automatically offer a car insurance premium decrease.
The biggest risk insurers take is that you might get into an accident and collect on your policy. However, if you practice safe driving, you are a lower risk, which many insurance providers reward. That’s why many insurance providers reward safe driving. If you can avoid getting into an accident or committing a traffic violation by driving safely, you can typically qualify for a lower rate. Some insurance providers also offer loyalty incentives like accident forgiveness programs that protect you from rate hikes or limit the penalty for involvement in collisions.
In addition to driving slowly and safely, you can also take a defensive driving course. There are also certain apps you can sync to your car and use to track and improve driving safety (there are even ones specifically for teen drivers).
How to Lower Your Car Insurance Tip #5: Pay in Full
As is the case with many services, car insurance policies are often discounted when customers pay in full ahead of time. If you can afford to do so, you can save quite a bit annually—approximately 12% according to The Zebra’s 2020 State of Auto Insurance Report.
How to Lower Your Car Insurance Tip #6: Switch to a Mileage-Based Program
Some insurance policies are based on a mileage scale. So, if you drive less, your rate is lower. This is based on the assumption that the more you are on the road, the higher risk you are. Some insurers are taking this a step further and piloting programs that track your actual mileage using an in-car device or mobile app. You can find pay-per-mile auto insurance programs with a variety of providers including Nationwide and Progressive.
Typically, mileage-based insurance programs are best for individuals who drive infrequently or who mostly drive around town. So if you’re retired, a student, or remote worker, this may be a good way for you to reduce your car insurance premium.
How to Lower Your Car Insurance Tip #7: Buy a Safe Car
One of the main factors determining your auto insurance premium is the vehicle itself—specifically its risk and safety ratings. If you are considering buying a new car, research safety ratings first and shop around for insurance quotes based on that vehicle type. State Farm publishes vehicle safety ratings and the corresponding vehicle safety discounts (VSD’s). The Insurance Institute for Highway Safety (IIHS) has risk and safety ratings as well. Take them into consideration if you want to keep your insurance costs low.
How to Lower Your Car Insurance Tip #8: Protect Your Car from Theft
Vehicles with a theft deterrent device often get car insurance discounts, which in some cases, could be up to 20% savings. so if you add an anti-theft device, it pays to ask. Some examples of theft-deterrent devices include visible wheel locks, an alarm system, VIN chemical etching, wheel locks, and electronic keys.
How to Lower Your Car Insurance Tip #9: Skip Roadside & Car Rental Coverage
Roadside and rental car coverage are add-ons that can provide you greater peace of mind, should something happen to your car. However, they may be an unnecessary luxury if you’re trying to save. Today, many people opt for third-party roadside assistance like AAA. If you have roadside assistance through a third party, then it doesn’t make sense to pay for it through your insurance. You can also be added to a family members’ policy, if it offers a savings.
As for car rentals, many of us can get by without a car for a few days. Plus, you may be able to save quite a bit in the long run if you cut this cost from your policy. In a pinch, there are a lot of options for getting around, from carpooling with coworkers to taking advantage of rideshare options and public transit.
How to Lower Your Car Insurance Tip #10: Improve Your Credit Score
Believe it or not, many insurers now look at your credit score when determining your rates. Part of the reason this has become common practice is because individuals with lower credit scores are perceived as higher risk—just like your credit score can impact the cost of your security deposit when renting. Additionally, studies have found that credit scores are a good risk-indicating factor to predict provider losses. That said, some states place restrictions on how insurance companies can use credit data to determine rates.
According to The Zebra’s 2020 State of Auto Insurance Report, you can save 17% on car insurance by raising your credit score by one tier.
How to Lower Your Car Insurance Tip #11: Ask About Discounts for Teens & Seniors
Many types of services offer discounts for seniors including car insurance providers. These discounts typically apply to those over 50, but once you hit 70, you may be in for a rate increase, so make sure you take advantage of this savings as soon as possible. Ask your insurer whether they offer special rates for seniors.
On the other hand, adding a teen driver to your insurance policy can hike up your insurance costs quite a bit because they’re perceived as high-risk drivers due to their inexperience. However, if they have good grades it could cost you a little less. Many insurance providers offer good student discounts, which are about a 7% savings on average.
How to Lower Your Car Insurance Tip #12: Capitalize on Milestones & Organizational Affiliations
In some cases, life milestones and car insurance go hand-in-hand. It’s worth looking into, as you may be able to save simply by achieving one of these common milestones:
- Birthday: Certain birthdays may qualify for a discount. For example, many insurers offer discounts when policyholders turn 25.
- Marriage: Those who are married are viewed by some insurers as less risky, and worthy of a discount, which could amount to a 6% annual savings.
- Graduating: Having a degree may be a factor that is considered when calculating your insurance premium, resulting in a reduced rate. These savings may also be scaled by education level (bachelors, masters, and doctorates). You’ll find that some insurers even offer discounts to alumni of certain universities—if you check with your university’s alumni association, you should be able to find a list of these companies.
- Moving: Location is a major factor in insurance policy cost. So, if you move to a city with lower risk of theft, vandalism, and accidents, your rate will typically be lower.
- New job: Certain positions or industries put you at a higher risk, which your job may impact the cost of your car insurance. So, if your new job is lower risk, you may actually be able to save on your insurance policy.
If you are affiliated with a certain organization such as the military or educational establishment, you may also be able to qualify for a reduced car insurance premium.
How to Lower Your Car Insurance Tip #13: Shop Around
One of the easiest answers for how to lower car insurance is finding a cheaper insurance provider. If none of the above savings opportunities are available with your current insurance provider, you may want to consider shopping around to see if you can find a better deal. If you’re wondering how to negotiate car insurance for a lower premium, this is the way to go. Come back to your current provider with these lower quotes to see if they’ll compromise.
But beware when shopping around for savings, not all policies are the same. When comparing costs, make sure it is at the same coverage level to help prevent you from ending up with less coverage than you need due to an oversight.
Even if you don’t think your current rate is unreasonable, it’s still a good idea to periodically check rates elsewhere to see if you’re overspending. After all, who doesn’t want to save on car insurance? That money could be used on essentials or added to your 401(k) even.
Start Saving on Your Insurance
If any of the above savings options might apply to you, start shopping around to see if you can get a better deal on your insurance premium. Choose three to five different insurers, let them know exactly what you are looking for so that you can compare apples to apples, and get your quotes. May the most competitive insurer win!