The average cost of car insurance in the US increased 17.8% from July 2022 to 2023, far outpacing the cost of inflation. With the average US policy now costing $1668 per year, drivers across the country are looking for ways to save money on car insurance.
If you’re one of those drivers, you’re in the right place. Let’s look at some ways to save money on car insurance.
What Affects the Cost of Car Insurance?
Car insurance costs can vary widely. These are the factors that most insurers will use to calculate the cost of your policy.
- The amount of coverage
- Driving record
- Credit history
- Marital status
- The vehicle being insured
Location is a major factor. The average cost of full annual coverage in California is $2,291 per year, for example, but the same coverage in Maine might be somewhere around $941 annually.
You probably won’t change states to save money on car insurance, but there are plenty of things you can do.
14 Ways to Save Money on Car Insurance
Even though you have no control over some of the factors that influence the premiums you pay, such as your age, gender, and marital status, you can do plenty of good work by focusing on the factors you do control.
1. Update Your Policy
Some of the factors that influence your premiums, such as your age, are beyond your control. Other factors may be managed simply by updating the information in your policy. For example, Additionally, if you have a teen son or daughter who is on your policy, your premiums will rise.
However, teenagers grow up eventually. But if you don’t update your policy information regularly, you will still pay for your teen drivers even though they are in their 20s now, living in different cities, and carrying car insurance policies of their own.
To make sure that you aren’t paying more than you have to, you need to update your policy, especially when you go through any large transitions in your life.
🚗 Learn more: Find out how much car insurance typically costs for a 17-year-old with our detailed analysis.
2. Increase Your Deductible
A deductible is the amount you have to pay from your own money to cover a claim. For instance, if you have a deductible of $500 and the insurance claim is $3,000, then your insurance company is on the hook for $2,500. You cover the rest.
You can save money on car insurance if you are willing to increase your deductible. The decrease in insurance premiums differs from company to company, but it can be substantial.
If you plan to save money on car insurance by increasing your deductible, be sure that you have an adequate emergency fund. You will need it if you ever need to make a claim!
3. Change Your Coverage
Insurance companies offer different types of coverage, including the following:
- Liability insurance covers you in case of personal injuries or property damage from an accident that was your fault.
- Uninsured motorist coverage, which covers you in case a driver with no auto insurance hits you.
- Full coverage car insurance contains both comprehensive coverage and collision protection. Comprehensive insurance protects your car from any damage that is not accident-related, such as hitting a deer or getting vandalized. Collision insurance protects you if you crash into any object, such as a tree or wall.
79% of car drivers in the US opt for comprehensive coverage, and three-quarters buy collision coverage.
You need to meet your state’s minimum requirements, which are usually liability insurance and uninsured motorist coverage. If you are still paying off a car loan, your lender will require full coverage to protect its interest in your vehicle.
Beyond those minimum requirements, the choice of how much coverage to purchase is up to you.
It is a good idea to avoid paying for coverage you don’t need. For example, if you have an old car that isn’t worth much, buying full coverage might not make fiscal sense.
4. Review the Assets Being Protected
If you own more than one car, you can bundle your policies, insure all those vehicles with the same insurance company, and lower your overall costs. The reason is that insurance companies are happy to offer you discounts if you carry multiple policies with them. Think of it as a way to get more of your business.
Combining policies can save you anywhere from 10-25%. What’s more, these bundled policies don’t all need to be car insurance. You can bundle home and car insurance together. If you own a boat, you can add that to the mix.
In addition to offering you savings, bundling policies can make your life more convenient. You can manage different insurance policies all from the same website.
5. Change How You Pay Your Premiums
Most drivers pay their insurance premiums every month. If you pay the entire annual lump sum upfront, your insurance company may be open to lowering your premiums. You could pay for six months in advance, and you should still save money on car insurance.
You might also get a discount if you agree to set up automatic payments. Not only are you choosing the paperless route, but you are also telling the insurance company that you are less likely to miss a payment.
6. Ask About Discounts
Almost every insurance company offers discounts. You may not get them if you don’t ask.
And just so you know what to expect, here are some of the main reasons you might get a discount:
- You are a member of a certain group, such as the AAA.
- You work as a teacher, a nurse, or any other profession that is granted discounts
- You have served in the military.
- You are a senior citizen.
- You have stayed with the same insurance company for some time.
There are many more reasons an insurance company might give you a discount, and the good news is that you can stack the different discounts, one on top of the other, helping you shave loads off of your premium.
If you have other family members on your policy, such as a son or daughter, there are some discounts you should look into:
- Good student discounts. If your teen has good grades at school, your insurance company may offer you a discount.
- Distant student discounts reduce your premiums if your son or daughter is away at a school more than 100 miles away from where you live, as their car isn’t driven by someone else.
You may be able to get an employer-based discount, a special rate employers obtain for their staff through an agreement with an insurance company. You will only get an employer-based discount if you remain with the employer who got you that special rate. If you leave that job or are fired, you will lose that discount.
7. Drive Safely
The simplest thing to do to lower your insurance cost is to drive safely. The fewer accidents you have on your record, the lower the premium you will have to pay. Any form of driver negligence, such as speeding tickets, DUIs, and other traffic violations, will increase your premiums.
🚗 Learn more: Uncover the sobering car accident statistics and learn about the annual toll on our roads in our latest analysis.
8. Take Driving Courses
In the pursuit of being a safer driver, you might want to explore taking a defensive driving course. This will help in two ways. First, the course can lower the number of violation points on your license. Second, insurance companies may be willing to lower your premiums once they see you’ve finished the course and earned a certificate.
There are two caveats worth mentioning here:
- You should only sign up for accredited courses. Otherwise, you might end up wasting your money and time. Every state sets its own rules regarding accreditation.
- Before signing up for the course, be sure that your insurance savings exceed the course costs. Ask your insurance agent about how much of a discount you can expect after completing the course.
Even if you have a spotless driving record, taking a defensive driving course could still help you save money on car insurance.
9. Drive Less
How much you drive every year can affect your insurance premiums. The rationale here is that more miles on your odometer translates to higher chances of you getting into an accident.
If you can lower the amount you drive each year, you can save on your premiums. Better yet, you want your insurance company to see you as a low-mileage driver, which would usually require you to drive less than 7,500 miles every year. What qualifies as a low-mileage driver can vary by state, age, and gender.
To reduce your annual mileage, you can take the public transit system or carpool when possible.
10. Try Usage-Based or Pay-Per-Mile Insurance
If you are a very safe driver, it’s worth considering usage-based insurance. This is when the insurance company tracks your driving through your phone and charges you according to your driving habits. These programs typically track data like:
- Miles driven
- Nighttime driving
If you meet company criteria you can save money on car insurance.
You can also try pay-per-mile insurance. You will pay a base rate along with a per-mile rate. If you drive a low number of miles you can save money on car insurance.
Not all insurance companies offer this type of insurance, so you might have to switch companies if you feel this is the right choice for you.
11. Buy an Insurance-Friendly Vehicle
Some vehicles are cheaper to insure than others, and this is even more so if you are purchasing collision and comprehensive coverage.
You may not want to switch vehicles, but if you’re shopping for a car or considering replacing an existing vehicle you can save money on car insurance by selecting a car that’s cheap to insure.
There’s no universal rule for what cars are cheapest to insure, and the cheapest vehicles may vary from state to state. Insurers consider repair costs and rates of accidents and theft in a given area before setting rates.
It’s worth taking the time to look into what vehicles are cheapest to insure both nationally and in your area before choosing a car.
12. Install Anti-theft Devices
Another way to make your vehicle more safe is to put in an anti-theft device. For example, GEICO can reduce your premium by up to 23% if you install an anti-theft device.
Ask your insurance company which devices will entitle you to a reduction in premiums. You’ll need to decide for yourself whether these savings are worth the cost and hassle of installing the device.
13. Improve Your Credit Score
Your credit score can play a huge role in lowering your premiums. In some cases, it could have a larger impact on your premiums than your driving record.
There are some states where your credit score has no effect on your premiums because these states prohibit insurers from using your score to decide your rates. These states are California, Hawaii, Massachusetts, and Michigan.
In any other state, a better credit score can help you save money on care insurance, along with many other benefits!
14. Shop Around
You may have tried to lower your premiums with your current insurer but gotten nowhere. You may be unhappy with your coverage in general. You may be able to save money on car insurance by shopping around and opting for a cheaper insurance company.
Even though they all use the same inputs, different insurance companies use different models to calculate your premiums. For instance, one company might weigh your age more heavily than another, so if you are young, the first company would charge you more than the latter.
A company that might be cheaper for you might also be more expensive for someone else. This is why you need to actually request quotes and compare them side-by-side. Online research isn’t going to cut it.
When conducting quote comparisons, you should always compare apples to apples. In other words, make sure that you are requesting the exact same coverage from each insurance company and that all the other details, including your deductibles and payment schedule, are identical.
As you compare quotes, don’t forget to consider factors other than cost. For example, does the insurance company have an app that you can access? How good is its customer service? How quickly do they pay their claims?
Putting It All Together…
To lower your car insurance costs, you have one of two options: Get a better rate from your current insurer, or switch insurers. If you want to stay with your current insurer, then the best way to obtain a better rate is by changing your policy, improving your driving record, replacing the vehicle you are insuring, and boosting your credit score.
Whatever you do, be sure that you are covered at all times. Insurance companies hate seeing gaps in your insurance records. The longer your insurance record is, the better the rate you can expect from an insurer.
Trying to save money on car insurance is much like saving money on anything else. Understand what you’re buying, understand how it’s priced, shop around, and don’t be afraid to ask for a better deal!