Ways to Lower Your Car Insurance Premium

What actually lowers your car insurance rate

Your insurance company calculates your rate based on risk factors they can measure: your driving record, the car you drive, how much you drive, where you live, and how much coverage you buy. You cannot change some of these overnight — your age, your accident history, your zip code. But you can change others right now, and each change typically saves money on your next renewal or when you switch insurers.

The size of the savings depends on your current rate, your insurer's pricing model, and which changes you make. A clean driving record for three years might save you 10 to 30 percent with some insurers and almost nothing with others. Bundling home and auto insurance might save 15 to 25 percent, or it might save 5 percent. The only way to know what you will actually save is to get a quote after making the change.

Key Takeaways

• Raising your deductible from $500 to $1,000 typically saves 15 to 30 percent on collision and comprehensive coverage, but you pay more out of pocket if you have a claim.
• Bundling your car and home insurance with the same insurer usually saves 15 to 25 percent on your car premium, though you should compare the total cost against separate quotes.
• Discounts for low mileage, good grades (if you are under 25), defensive driving courses, and safety features on your car can each save 5 to 15 percent depending on your insurer.
• Your driving record affects your rate for three to five years after an accident or ticket, so the fastest way to lower your rate is often to switch insurers if yours has raised you significantly.
• Paying your premium in full upfront instead of monthly installments saves the installment fee, which can be 2 to 5 percent of your annual premium.

Raise your deductible if you have savings set aside

Your deductible is the amount you pay out of pocket when you file a collision or comprehensive claim. The most common deductibles are $250, $500, $1,000, and $2,500. Raising it from $500 to $1,000 typically cuts your collision and comprehensive premiums by 15 to 30 percent, depending on your insurer and your location.

The trade-off is real: if you hit another car and your repair bill is $3,000, you pay $1,000 instead of $500. Only raise your deductible if you have that amount in savings and can afford to pay it without borrowing. If you cannot, keep your deductible where it is. A lower deductible costs more per month but protects you from a financial crisis if you cause an accident.

Your liability deductible (the amount you pay if you injure someone or damage their property) does not exist in most states — you pay nothing out of pocket for a liability claim. Check your policy to confirm what type of deductible you are changing.

Bundle your car and home insurance

If you own a home or rent an apartment and carry renters insurance, bundling it with your car insurance under one insurer usually saves money on both policies. Most insurers offer a bundle discount of 15 to 25 percent on your car premium, though the actual amount varies by company and location.

Before you switch to bundle, get a quote for both policies combined from the new insurer and compare it to what you currently pay for both. Sometimes the bundle discount is smaller than the rate difference between insurers, so bundling with a more expensive company can cost you more overall. Use an online quote tool or call insurers directly and ask for a bundled rate on both your car and home or renters policy.

Take a defensive driving course

Many insurers offer a discount — typically 5 to 15 percent — if you complete an approved defensive driving course. The course teaches accident prevention and is usually available online. You take it once, and the discount typically lasts three years before you need to retake it.

The cost of the course is usually $20 to $50, so you break even in savings within a few months if your discount is substantial. Check your current insurer's website or call them to ask which courses they recognize and what discount you will receive. Some insurers require you to take the course before the discount applies; others let you take it anytime during your policy period.

Report low mileage or a major life change

If you drive fewer than 10,000 miles per year — because you work from home, use public transit, or retired — tell your insurer. Low-mileage discounts typically save 5 to 15 percent. You may need to certify your mileage with an odometer reading or by letting the insurer install a telematics device that tracks your driving.

Other life changes that can lower your rate include moving to a safer neighborhood, getting married, or becoming a homeowner. Each of these changes your risk profile in ways insurers measure. Call your insurer or log into your account and update your information. They will recalculate your rate, and if it is lower, the new rate takes effect at your next renewal or when ready, depending on your policy.

Switch insurers if your rate has jumped

Insurance companies raise rates for many reasons: an accident or ticket on your record, a claim you filed, a rate increase across your entire zip code, or straightforward because you have been with them for years. If your rate has jumped significantly, get quotes from at least three other insurers. You may find the same coverage for substantially less elsewhere.

Switching insurers takes 15 to 30 minutes. You provide your driver's license and current policy information, and the new insurer quotes you on the spot. Once you accept the quote, you choose a start date. Make sure your new policy starts the day your old one ends so you have no gap in coverage. Switching does not affect your driving record or your claims history — those follow you to the new insurer, but the new company may price them differently.

Check for discounts you may not know about

Beyond the major discounts, insurers offer smaller ones for safety features on your car (anti-theft devices, automatic braking, backup cameras), good grades if you are under 25, paying your bill in full instead of monthly, paperless billing, and setting up automatic payments. None of these alone saves much — usually 2 to 10 percent each — but they stack. If you may have access to for four of them, you might save 15 to 30 percent combined.

Log into your insurer's website or call and ask what discounts you currently receive and what others you might may have access to for. Some insurers do not automatically explore discounts; you have to ask. Write down the ones you may have access to for and make sure they are on your next bill. If they are not, contact your insurer and ask them to add them.

Understand what you cannot change quickly

Your age, driving record, and accident history affect your rate for years. A ticket typically stays on your record for three to five years, depending on your state and the insurer. An accident stays for three to seven years. You cannot erase these, but they do age off eventually. If you have a recent accident or ticket, the fastest way to lower your rate is often to switch insurers, because different companies weight these factors differently.

Your location also affects your rate. If you live in a city with high theft or accident rates, your premium will be higher than in a rural area, even with the same car and driving record. Moving is not a practical way to lower your insurance, but if you do move, update your address with your insurer when ready — your rate may change.

Frequently Asked Questions

How much will my rate go down if I raise my deductible?

Raising your deductible from $500 to $1,000 typically saves 15 to 30 percent on collision and comprehensive coverage, but the exact amount depends on your insurer, your location, and your current rate. Get a quote from your insurer showing your rate at different deductible levels to see the actual savings.

Will switching insurance companies hurt my credit score?

No. Switching car insurance does not affect your credit score. Insurance companies do a soft inquiry that does not show up on your credit report. Your driving record and claims history move with you to the new insurer, but your credit is not involved.

Can I get a discount if I have had an accident?

An accident typically raises your rate for three to seven years, depending on your state and insurer. You cannot undo the accident, but you can take a defensive driving course, maintain a clean record going forward, and switch insurers if one company is charging you significantly more than others for the same coverage.

Do I have to take a defensive driving course in person?

Most insurers now offer online defensive driving courses that you can take at your own pace. Some states require in-person courses for traffic ticket dismissal, but for an insurance discount, online courses are usually accepted. Check with your insurer about which courses they recognize.

What happens to my rate if I move to a different state?

Your rate will likely change because insurance is regulated by state, and rates vary by location within each state. When you move, update your address with your insurer when ready. They will recalculate your rate based on your new zip code, and it may go up or down depending on accident and theft rates in your new area.