How To Save Money on Car Insurance - 12 Easy Ways
Car insurance is essential for financial security. It's important to be insured in case of an accident, which can otherwise end up costing thousands of dollars in out-of-pocket expenses and possibly even jail time. Having too little insurance may also end up being very costly. While it's important to have adequate car insurance, you don't want to spend more than you have to on a car insurance policy. Knowing how to shop for car insurance can help you buy coverage at a price that fits your budget. Raising your deductible can lower premiums. Being a safe driver or taking a course can help too. Bundling policies, maintaining good credit, choosing the right car and driving less are other ways to save.
Here are the 12 top ways to find the cheapest car insurance.
1. Shop Around for Cheaper Car Insurance Coverage
When shopping for coverage, most drivers get a car insurance quote from one car insurer, instead of getting quotes from several companies. Insurance experts recommend that car insurance customers comparison shop several carriers to save money.
Car insurance companies charge different prices for the same coverage levels. On average, rates from the lowest cost policy are usually half those of the costliest one.
For example, drivers with good credit and a spotless driving record can save almost $115 a month by shopping for cheaper rates. Drivers with less-than-perfect credit scores and poor driving records can get an even better deal. Some have saved almost $220 by selecting a different carrier, often one that specializes in high-risk drivers.
Shop around and compare prices for coverage every year to determine whether you're getting the best rates. If not, switch car insurance companies to find a better plan.
Buying cheap car insurance coverage doesn't always mean that you're buying a less valuable policy either, but it's always a good idea to research the car insurance company's reputation and financial strength to ensure timely claim payments.
2. Raise Your Deductible
When you purchase collision or comprehensive car insurance, your insurer will allow you to select a deductible level. This amount is a shared cost you must pay before your insurance coverage kicks in for a covered accident. Typical deductibles range from $250 to $1,000, depending on the car insurance policy and carrier.
As a general rule:
The lower your deductible is, the higher your premiums will cost.
The higher your deductible is, the lower your premiums will be.
For instance, suppose you have a serious car wreck that causes $3,500 in damages? If you have a $1,000 deductible, you must pay this fee before your car insurance company covers the remaining $2,500.
Selecting higher deductible levels on your collision and comprehensive coverage will save you money on your car insurance premiums. Higher deductibles can also help prevent you from filing multiple claims that can increase your car insurance premiums or get you dropped by an insurer. If you select a higher deductible make sure you have enough savings to cover this amount if you file a car insurance claim.
3. Become a Safe Driver
Car insurers offer cost savings to drivers who practice safe driving behaviors. Most state DMVs assign points to a driver's license for every moving violation and at-fault accident a person receives. Carriers track each customer's driving behaviors to determine their risk. This information helps car insurers identify high-risk drivers.
Good drivers pose a lower financial risk to car insurance companies because these individuals have fewer accidents.
Careless drivers pose a higher financial risk to drivers because they have more accidents and file more claims.
If you have an accident-free driving record, you may qualify for cost savings, such as claims-free and safe driver discounts. Even if you have a nearly pristine record, a single at-fault can raise your car insurance rates. If this has happened to you, you can comparison-shop carriers to find better rates.
4. Complete a Defensive Driving Course
Some car insurance companies offer discounts to drivers who complete a DMV-approved defensive driving course. Taking a defensive driving class provides drivers with several advantages.
These courses can reduce the number of points on your license if you've had an at-fault accident or recent tickets for speeding or reckless driving.
Defensive driving courses can also earn you a discount from your car insurance company.
Before you sign up for a defensive driving course, see if you qualify for a discount with your current insurer. Some insurance companies only provide discounts for defensive driving courses when an individual falls into a certain age bracket.
You can find approved defensive driving providers by visiting your state's DMV website or the state department of insurance website.
5. Bundle Home and Auto Policies
Bundling insurance policies can help you get a hefty discount from your car insurance carrier. Most insurers offer discounts to customers who buy more types of coverage from their company, such as auto and homeowners insurance policies.
Bundling your home and auto coverage can provide several benefits:
Save you money on premiums – A multi policy discount can save you up to 25% on your premiums depending on insurer and location.
Easier management of multiple policies – You can easily manage different policies when the same insurer handles them.
Security with one company – If you have multiple car insurance claims, your insurer will be less likely to drop you if you have multiple policies.
6. Get a Multi-vehicle Discount
You can earn a multi-car discount by signing up for multiple car insurance policies in your household with the same carrier. A car insurer may quote a lower rate for customers searching for multiple car insurance policies.
7. Maintain a Good Credit History
Maintaining excellent credit is another way to score cheaper rates on your car insurance rates. Although your driving record influences your auto insurance premiums, your credit score can also have a powerful impact.
Most car insurers use credit-based insurance scores, which correlate with how likely you are to file claims. Only three states, California, Hawaii and Massachusetts, forbid insurers to use credit when setting rates.
To improve your credit score, take the following steps
Pay all your loan and credit card bills on time.
Maintain low credit card balances, below your credit limits.
Only open new credit accounts when necessary, since applying for multiple credit cards can hurt your score.
8. Select Car Models with the Cheapest Insurance Rates
When shopping for a new car, compare car insurance rates for the automobile models you plan to buy. Choose vehicle models that have a good safety record, and make sure to report your vehicle's safety features to qualify for a safety equipment discount. You can select a vehicle model that's cheaper to insure to save money on your car insurance premiums. New cars are often more expensive to insure because these vehicles have higher repair costs and more expensive parts. Also, there may be a greater cost with new cars that are being leased or financed because full coverage is required on these cars. Models with the lowest insurance rates usually include moderately priced sedans, minivans and small minivans.
9. Consider Low-Mileage or Usage-Based Insurance If You Don't Drive Much
You can apply for a low-mileage or usage-based discount if you don't drive much. Car insurance companies offer these cost savings to motorists that drive fewer miles on average every year. Low-mileage drivers are people who drive fewer than 10,000 per year. If you qualify as a low-mileage driver, consider signing up for a usage-based insurance program (also known as black box insurance).
Several national insurers offer usage-based programs to their customers, including Allstate, Nationwide and State Farm.
Usage-Based Discount Programs
Car Insurance Carrier
Discount for Enrolling
Up to 20%
Up to 15% at renewal; up to 10% for young drivers; money rewards based on driving scores
5% to 30% during the policy's term
Up to 40%
5% to 30%
Up to 5%
Up to 30%
Your car insurance carrier will install a telemetric device in your car to track how many miles you drive and in your car in exchange for usage-based discounts. Your carrier will calculate your car insurance discounts based on the length of your trips and how well you drive.
In addition to usage-based and low-mileage discounts, your car insurance carrier may also offer price cuts for remote employees and people who carpool or ride mass transit systems to work.
10. Lower Your Costs Using Car Insurance Discounts
Most insurance companies offer special discounts that can help cut your car insurance premiums. Speak with your local insurance agent to ensure you can take advantage of every policy discount. Here are some discounts offered by several car insurers.
Remember to compare rates and premiums to get the best policy rates. Even though a company provides discounts, this doesn't mean you're receiving the lowest premiums.
Allstate promises drivers can earn big savings when purchasing a car insurance policy from their company. The car insurer offers discounts for new cars, multiple policies, smart students, safety features, early signing and more.
Nationwide offers a range of car insurance discounts that can help customers lower their monthly premiums. The national car insurer offers discounts for multi-policies, defensive driving, safe driving, being accident-free and more.
State Farm offers several car insurance discounts to customers. Available discounts include those for safe driving, defensive driving, accident-free driving records and others.
11. Review Your Auto Insurance Coverage Annually
Every year, review your insurance policy to learn if you can eliminate coverages that you no longer need. For example, if you own an older car, consider dropping collision and comprehensive coverage.
According to the Insurance Information Institute, if your older car is worth less than ten times the insurance premium, then paying for collision and comprehensive coverage may be a waste of money.
Check your car's value on these websites:
12. Garage Your Car, Move to a Safer Neighborhood
Your location can have an enormous impact on your car insurance rates. Here are several examples of how zip codes can affect car insurance rates:
Your car's garaging location can affect your premiums. A zip code gives car insurers information about the area's population size and crime rates which can affect the likelihood of theft or car accidents.
Drivers may also have higher car insurance premiums if they live in areas prone to severe weather events, like hurricanes, hail or tornadoes.
Only two states, California and Michigan, forbid car insurance companies from using someone's zip code to determine rates.
Buy the Cheapest Car Insurance Coverage
There are several ways you can score cheaper rates on your car insurance. First, eliminate unnecessary coverages on your policy or raise the deductibles on them. Additionally, insurers offer several discounts, so see if you qualify for one or more. If you're shopping for a car, select a car model that qualifies for a lower rate
The best way to lower your car insurance rate is to shop around. SmartFinancial offers free car insurance quotes from top insurance companies and can save you up to 40% on your premiums. Enter your zip code below and answer a few questions to get started.
Get a Free Auto Insurance Quote Online Now.
In Case You Missed It
Looking for Auto Insurance?
Compare rates from dozens of companies in less than 3 minutes.