Maintaining ample car insurance coverage is about more than just protecting you from disaster—it’s legally required in most cases. So if your premiums are on the rise, you’ve got to figure out how to lower car insurance costs without getting rid of the coverage you need.
Comparing quotes from multiple insurers is one of the best ways to see if you are paying too much for coverage. It helps you to understand how purchasing a policy from a different carrier can potentially reduce your premiums. Other cost-saving measures may include raising your deductibles, buying multiple insurance products from the same insurance company, and refraining from filing claims for minor collisions.
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12 ways to lower car insurance
In the upcoming sections, you’ll learn about several ways to lower car insurance payments without compromising on the level of coverage you need.
1. Compare quotes
Comparison shopping may be the most straightforward way to lower your car insurance payments, since it may not require you to change anything other than the company you buy insurance from. Each insurance provider has its own methods for calculating premiums, and a given insurer may weigh some factors more heavily than others.
Because of this, you may be able to find a cheaper quote on the exact level of coverage you currently have simply by shopping around. For example, if your premiums go up significantly after you get into a couple of car accidents, you may be able to save money by switching from your standard insurance company to an insurer that specializes in covering high-risk drivers.
2. Check for car insurance discounts you qualify for
Car insurance companies generally offer a wide range of discounts, so it’s important to ask about different cost-saving opportunities you may be eligible for. Here are some examples of possible discounts you may already qualify for:
- Multicar: Just like buying certain products in bulk may lead to lower per-item costs, it’s often cheaper to add multiple vehicles to the same insurance policy than to buy a separate policy for each car.
- Homeowner: Individuals who own a home rather than renting are often viewed as more fiscally responsible and less risky to insure—meaning they may be charged less for auto insurance.
- Preferred shopper: Some insurance companies may offer discounts based on how you shop for coverage, like if you buy a new policy before your current one expires or if you request a quote online.
- Student: Though full coverage car insurance can be expensive for young people, many insurers offer discounts to help mitigate these high costs for students. For example, you may secure lower rates if you maintain at least a B average or attend a university at least 100 miles from your parents’ home without a vehicle.
- Eco-friendly: Your insurance company may offer you lower auto insurance premiums if you own or lease an electric vehicle (EV) or a hybrid car.
- New car: Since newer vehicles tend to come with more advanced safety systems, you may earn a discount if you buy a new car that’s less than three years old.
- Preferred payment: Discounts often apply if you pay your car insurance premium using your insurer’s preferred payment method—whether that’s by consistently making payments on time, paying your full premium at the beginning of the coverage period, or paying through an electronic autopay system.
- Safety features: Installing airbags, anti-lock brakes, anti-theft devices, and other safety or security features may lower your odds of filing claims and result in cheaper auto insurance prices.
- Affiliation: Depending on your insurance carrier, you may be able to get a discount based on your occupation or your membership in a certain organization, such as a professional association. Examples of professions that commonly qualify for discounts include teachers, first responders, and military personnel.
- Loyalty: While comparison shopping and switching to a different insurer can be a great way to lower your insurance premiums, it’s also important to evaluate whether sticking around may be a more cost-effective option, since many insurers offer a loyalty discount to policyholders who stay with them for several years.
3. Consider raising your deductible
You can usually lower your car insurance premium by opting for a higher deductible, which is the amount you must chip in toward your own costs whenever you file certain types of claims. Conversely, you can expect higher monthly premiums if you choose a lower deductible, since your insurance company has to shoulder more of the financial risk.
Keep in mind that some types of car insurance—including liability insurance and medical payments coverage (MedPay)—may not require you to pay a deductible. Nevertheless, you likely will have to pay a deductible if you file a claim on your personal injury protection (PIP) or physical damage insurance, so you may be able to save on these policies if you can afford a larger upfront payment in the event of a claim.
4. Bundle your insurance policies
If your car insurance company also offers other types of insurance—such as homeowners, renters, or life insurance—you may be able to secure a discount by purchasing multiple lines of insurance from the same carrier. In addition to the fact that bundling policies may be cheaper than buying them separately, it may also be more convenient, since all your claims and premium payments will be handled by a single insurance provider.
5. Maintain a clean driving record
Drivers without an extensive history of car accidents, traffic tickets, or other driving violations are typically viewed as a lower risk to insure, so they can generally expect to pay less for car insurance. For example, GEICO offers a discount of up to 22% on most car insurance coverage types to policyholders who have gone at least one year without getting into an accident.
6. Improve your credit (where insurance scoring is permitted)
Most states allow auto insurance companies to consider a credit-based insurance score when setting your rates, meaning you could save on car insurance by raising your credit score. Some of the steps you could take to improve your credit include staying on schedule with your mortgage payments and paying off your credit card in full every month.
7. Reduce how much you drive
Car insurance companies try to evaluate the chances that you’ll file a claim when establishing your rates, so one of the factors they frequently consider is how much time you spend on the road. As a result, you may be able to save money on auto insurance by taking steps to lower your mileage, such as carpooling, using public transportation, or riding a bicycle more often.
8. Look into usage-based insurance
Depending on your driving behaviors, you may be able to lock in lower auto insurance costs by signing up for a usage-based car insurance program. With this type of policy, your insurer will use a mobile app or a telematics device to track your driving data—including how often you drive and whether you exhibit risky driving behaviors, such as speeding or sudden braking. Then, it will calculate your premium or apply a discount based on this information.
One type of usage-based insurance is called pay-per-mile car insurance, which includes a starting premium and a variable rate that changes based on how many miles you drive during the coverage period. Just note that, although telematics insurance can lead to lower rates for safe, low-mileage drivers, it can instead lead to higher rates for risky, high-mileage drivers.
9. Review your coverage
It can be helpful to review your car insurance at least once per year to see how your coverage needs have changed and where there may be opportunities to cut costs. For example, if you’re close to or have already finished paying off your auto loan, it may make sense to cancel your gap insurance, which covers the difference between your outstanding loan balance and your car’s actual cash value after a total loss.
10. Reconsider comprehensive and collision coverage for older vehicles
While you don’t want to sacrifice necessary coverages, there may be situations where you can save money by getting rid of coverages you don’t need anymore. For example, if you own an older car and its value has dropped below 10 times the cost of comprehensive coverage and collision coverage, it’s generally a good idea to remove those coverage types from your policy.
11. Choose your next vehicle with insurance costs in mind
The type of car you drive factors heavily into the cost of your insurance policy—so if you’re in the market for a new car, you may want to consider how the vehicle you select could shape your insurance prices. For example, if you buy a brand-new model with many built-in safety features, you may qualify for discounts that didn’t apply to your previous vehicle.
However, new cars may also have advanced technology that costs more to repair or higher overall replacement costs in the event of a total loss, potentially leading to higher insurance premiums. In comparison, older used cars can be cheaper to insure because your insurance company won’t have to pay out as much if your vehicle is totaled or stolen.
12. Evaluate your policy after major life changes
Major life events or changes in your household can alter your coverage needs and the cost of your auto insurance policy. For example, adding a 16-year-old driver to your policy may cause your rates to skyrocket, since teens have a high exposure to car accidents and tend to pay much more for auto coverage. Conversely, if an older child moves out of your house, you can remove them from your policy, resulting in lower premiums.
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What factors affect your car insurance rates?
Several factors influence how much you have to pay for auto insurance, including the following:
- Driving record: Individuals with clean driving records are viewed as less risky to cover, so you’ll generally pay less for auto insurance if you’ve gone many years without any accidents or traffic violations. Conversely, newer drivers without an extensive insurance or driving history may have to pay more for coverage due to a lack of information that can be used to underwrite their policies.
- Mileage: Someone with high annual mileage generally has a higher exposure to car accidents than someone with low annual mileage, so a person who has a long commute or simply drives often for pleasure can expect higher car insurance rates than a person who rarely drives.
- Location: Where you live significantly impacts your car insurance premiums, as insurers will consider factors like local weather patterns, crime rates, population density, and accident frequency when setting rates. For example, if you live in a state with a high percentage of uninsured drivers, you’ll likely encounter more expensive quotes for uninsured motorist coverage.
- Personal details: Depending on your state, insurers may consider personal characteristics like your age, gender, and credit-based insurance score when setting rates. That said, some states restrict or prohibit the use of certain personal characteristics for insurance rating.
- Vehicle details: The make and model of your car matter for insurance underwriting purposes, with carriers considering information like the car’s value, size, safety record, and exposure to theft.
- Policy details: Naturally, the specific level of coverage provided by your policy will impact how much you have to pay for it. Relevant factors include your chosen coverage types, deductibles, and coverage limits.
How to lower car insurance rates at a glance
- Overview: Car insurance is necessary to obey your state’s laws and avoid catastrophic out-of-pocket costs in case of an accident, so if you’re struggling with high premiums, you need to evaluate how to get lower car insurance rates without dropping your coverage types or limits so much that you’re underinsured.
- Comparison shopping: Shopping around is one of the most important ways you can save money on car insurance because it may allow you to secure lower rates on the exact type of car insurance policy you need simply by switching to a new insurance carrier.
- Discounts: Auto insurance companies typically offer a variety of discounts. For example, you may be able to save by adding multiple cars to the same policy, bundling multiple insurance products together, paying your premium in full up front, or driving safely.
- Deductibles: You may be able to reduce car insurance costs by picking a higher deductible—just make sure you have enough money saved up to cover the deductible in case you need to file a claim.
- Usage-based insurance: If you consistently practice safe driving habits and/or drive infrequently, you may qualify for lower rates through a usage-based insurance program that measures your driving behaviors and uses this data to set your rates. However, usage-based car insurance can backfire and lead to higher rates if you drive more often than expected or exhibit risky behaviors behind the wheel.
- Cutting coverage: While you won’t want to lower your coverage limits for certain types of coverage, such as liability insurance, you may be able to reduce or completely cut other coverages over time, including comprehensive, collision, and gap insurance.
- Cost factors: To calculate your insurance premiums, your insurer may consider numerous factors, like your location, driving record, mileage, policy details, and personal information.
How to compare car insurance quotes
Take the following steps to compare auto insurance quotes and find the best possible deal on the right coverage for your circumstances:
- Familiarize yourself with the factors that will impact your insurance premiums, such as your vehicle, location, and personal details.
- Determine your coverage needs by looking up your state’s car insurance requirements and deciding which optional coverages may be beneficial for you.
- Gather the information you’ll need to request quotes, such as your vehicle identification number (VIN), driver’s license number, and driving history from the past five years.
- Collect three to five quotes for policies with the same coverage types, limits, and deductibles so you can make accurate comparisons across multiple insurance carriers.
- Research insurers’ financial strength and customer satisfaction ratings to help inform your decision.
- Inquire about discounts that could make coverage more affordable before submitting an application and paying for your policy.
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The takeaway
There are many simple tactics to potentially lower your monthly car insurance premium. From bundling with homeowners or renters insurance to raising your deductible to simply rate shopping every year or so, you may be surprised at how affordable it can be—especially for those with a relatively clean driving record.
Just remember that car insurance is required by law in most cases, so driving without it can result in more than just crippling bills after an accident. You may be looking at a suspended license and other legal penalties if you’re caught driving uninsured.
Frequently asked questions
What is the best way to lower car insurance?
Comparing quotes from multiple insurers is one of the easiest ways to lower car insurance costs without reducing your coverage. You may also save by choosing a higher deductible, bundling policies, and asking your insurer about available discounts.
Can you negotiate your car insurance rate?
No, you typically can’t negotiate your car insurance rate. But you still may be able to secure lower premiums by comparison shopping or enrolling in discount programs.
Does raising your deductible lower car insurance?
Yes, raising your deductible generally results in lower car insurance premiums. However, you’ll pay more out of pocket if you file a covered claim.
Does your credit score affect car insurance?
Your credit score doesn’t directly affect the price of your car insurance. But depending on where you live, the provider may use a credit-based insurance score to determine your eligibility for coverage or the cost of your policy. The use of credit-based insurance scores is limited or banned in California, Hawaii, Maryland, Massachusetts, Michigan, Oregon, and Utah.
How often should you shop for car insurance?
It’s typically a good idea to shop around for car insurance at least once per year—and potentially more often if you experience major life changes.