You can’t avoid having to pay for car insurance, but you can avoid unnecessarily high premiums. Here we’ll look at some steps you can take at any time to lower your car insurance premiums and potentially save hundreds of dollars per year. Some are quick fixes and some are longer-term strategies.
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1. Drive Safely
Obviously the best way to keep your car insurance premium low is to not let it get high in the first place. Accidents and moving violations, especially in recent years, mean a high premium.
All things being equal, more points on your record equates to a higher premium. Drive safely and keep a clean driving record to keep your premium low. Additionally, every year you go without a claim should result in a larger discount; more on those later.
2. Shop Around
An obvious step you can take to lower your car insurance premium is to shop around from different insurance carriers. Prices can vary significantly between different companies, and despite loyalty discounts, some carriers gradually raise your rate as years go by. Get several quotes for the same coverage to make sure you’re comparing apples to apples, and shop for a lower rate every few years. Some carriers sell through networks of agents; others sell directly to consumers online.
It doesn’t hurt to get quotes. You may be able to use a new quote from another carrier to get your current insurer to match it. It’s realistic to expect a savings of a few hundred dollars per year between carriers. Quotes can vary greatly by state. The cheapest insurer in one state may be the most expensive in another.
Gabi is basically the Kayak of home and auto insurance, allowing you to quickly and easily compare multiple quotes. They use agents to manually review your current policy and see if there are opportunities for you to save. It’s free to use.
Insurify is very similar to Gabi. It uses artificial intelligence to scan for other policies that match your current coverage to see if you can get a better price. It’s also free. Utilizing both tools casts the widest net to check for savings.
3. Get a Different Car (Next Time)
Another obvious way to lower your car insurance premium is to insure a different vehicle. This one is more of a long-term plan for the future rather than a short-term fix, but the premium on a brand new sports car is obviously going to be more than one on an old truck.
Higher value and “sportiness” of a vehicle result in a higher price for insurance. On the flip side, safety features like airbags, security system, and anti-lock brakes mean can mean a lower premium. Vehicles with these features are statistically less likely to be involved in accidents or theft.
Keep these things in mind when you’re buying your next car.
4. Reduce Your Coverage
Many drivers are over-insured. Chances are you don’t need as much coverage as you’re paying for, perhaps without realizing it, especially if you’ve got an older car on which you probably don’t need that Comprehensive coverage.
If the value of your vehicle is extremely low, it probably doesn’t make sense to maintain that additional coverage, as collision and comprehensive coverage never pays more than the value of the car. You can use Kelley Blue Book to check your car’s value.
Many policies also automatically include things like roadside assistance and rental car coverage. If you don’t need these things, ask about dropping them from the policy.
Check your state’s minimum required coverage here and consider going with that, provided it fits your liability needs.
5. Drive Less
Similarly, update your insurer anytime your average annual mileage decreases, which may be particularly applicable as more people start to work from home. The less you drive, the lower your premium will be. Taking advantage of public transit can lower your mileage as well.
6. Increase Your Deductible
Similarly, a higher deductible can mean significant savings on your monthly premium. Your policy’s deductible is the minimum out-of-pocket cost you incur before your insurance policy kicks in. If you’re worried about the increased cost if you file a claim, just put the difference in your emergency fund to cover it if the time comes.
It’s likely you can raise your deductible by simply logging in to your account online. If not, call an agent with your insurance carrier and ask about raising it.
Obviously if you regularly file claims, don’t raise your deductible, as the savings on your premium wouldn’t outweigh the higher deductible with each claim.
7. Clean Up Your Credit
Your credit score and history can affect your car insurance premiums. Statistically, higher credit scores are associated with fewer insurance claims. Check for and correct any inaccuracies on your credit report with Credit Karma, and then actively take steps to improve your credit score. I delved into the details of how to raise your credit score here. In a nutshell, correct any discrepancies, pay down your credit card debt as much as possible as quickly as you can to decrease your credit utilization, don’t miss any payments, and don’t close old accounts.
8. Combine Multiple Insurance Policies
Getting multiple types of insurance from the same carrier usually results in a small discount. This can be home, auto, renters, life, etc. But, it may also be the case that policies from separate carriers end up being cheaper. Remember, use Gabi and Insurify to shop around.
Similarly, it usually helps to put multiple cars and drivers on the same policy. Carriers offer these bulk rates because they want your business, of which multiple policies brings in more revenue for them than a single one. Typically, multiple drivers must live in the same household.
9. Ask About Discounts
Some insurance carriers offer discounts for being part of certain professional, business, and alumni groups, associations, or clubs. Most offer discounts for things like:
- Good grades (if a student is on the policy)
- Anti-theft devices
- Defensive driving course completion – you can do these online!
- Prepayment of multiple months’ premiums at once
- Automatic payments
- Clean driving record
- Home ownership
- Garage parking
- Low annual mileage
- Customer loyalty
- Safe driving (plug-in driving behavior trackers)
- Hybrid or electric vehicle
Be sure to ask about any discounts you can apply for to lower your premium.
Disclaimer: While I love diving into investing-related data and playing around with backtests, I am in no way a certified expert. I have no formal financial education. I am not a financial advisor, portfolio manager, or accountant. This is not financial advice, investing advice, or tax advice. The information on this website is for informational and recreational purposes only. Investment products discussed (ETFs, mutual funds, etc.) are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. Do your own due diligence. Past performance does not guarantee future returns. Read my lengthier disclaimer here.
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