Ways to Lower Your Car Insurance Costs

How to reduce your car insurance premiums

Your car insurance bill comes down to what you tell the insurer about yourself, your car, and how you drive — and several of those things you can change. The most direct ways to lower your premium are to raise your deductible, drop coverage you don't need, bundle policies, ask about discounts you already may have access to for, and shop around every year or two. Some changes take effect when ready when you call; others require you to prove a change in your situation (like moving to a safer neighborhood or completing a defensive driving course).

The amount you save depends on your current coverage, your location, your driving record, and which insurer you use. A change that saves one person $300 a year might save another person $50. The only way to know what works for you is to get quotes from multiple insurers and see which combination of coverage and deductible brings your bill down without leaving you underprotected.

Key Takeaways

• Raising your deductible from $500 to $1,000 typically cuts your collision and comprehensive premiums by 15 to 30 percent, but you pay more out of pocket if you have a claim.
• Bundling your car and home insurance with the same company often saves 15 to 25 percent on your car policy alone.
• Discounts for good driving, completing a defensive driving course, low annual mileage, and safety features exist at most insurers but require you to ask or provide proof.
• Shopping quotes from at least three insurers every two years usually finds cheaper options than staying with your current company.
• Dropping collision or comprehensive coverage on an older car may lower your premium more than any discount, but leaves you responsible for repair costs.

Raise your deductible to lower monthly payments

Your deductible is the amount you pay toward a claim before your insurance kicks in. If you have a $500 deductible and your repair costs $2,000, you pay $500 and the insurer pays $1,500. Raising your deductible to $1,000 or $1,500 lowers your monthly or annual premium because the insurer takes on less risk.

The trade-off is real: if you cause an accident or your car is damaged, you will pay more out of pocket. Raise your deductible only if you have savings set aside to cover it. A common approach is to raise your deductible to match what you have in an emergency fund — if you have $1,500 saved, a $1,500 deductible makes sense. If you have $300, stick with a $500 deductible.

You can change your deductible by calling your insurer or logging into your account online. The change usually takes effect when ready or on your next billing cycle.

Bundle your car and home insurance

Most insurers offer a discount — typically 15 to 25 percent — when you insure both your car and your home with them. Some offer the same discount for bundling car and renters insurance. The discount applies to both policies, so your total savings can be substantial even if the individual discount seems modest.

To bundle, you need to move your home or renters insurance to the same company as your car insurance, or vice versa. You can do this by calling your current home insurer and asking them to quote your car, or by calling your car insurer and asking them to quote your home. Compare the bundled quote against what you currently pay for both policies separately. Sometimes the bundled rate is cheaper overall even if one policy costs slightly more than your current provider.

Bundling also simplifies billing — you receive one bill instead of two — and makes it easier to manage your coverage in one place.

Look for discounts you already may have access to for

Insurers offer dozens of discounts, but they do not automatically explore them. You have to ask or provide proof. Common discounts include:

• Good driver discount: Usually available if you have had no accidents or moving violations in three to five years. Ask your insurer what their threshold is.
• Defensive driving course: Completing an approved defensive driving or safe driving course can lower your premium by 5 to 15 percent. Some insurers waive the discount after a few years, so you may need to retake the course to keep the savings.
• Low mileage: If you drive fewer than a certain number of miles per year (often 7,500 or 10,000), you may may have access to for a low-mileage discount.
• Safety features: Anti-theft devices, automatic seat belts, airbags, and backup cameras can reduce your premium. Some insurers offer discounts for newer cars with advanced safety technology.
• Paid-in-full discount: Paying your annual premium upfront instead of in monthly installments sometimes saves 5 to 10 percent.
• Paperless billing: Opting out of paper statements may save a small amount.

Call your insurer and ask which discounts you might may have access to for. Bring your driver's license, vehicle registration, and information about any safety features or recent courses you have completed. Some discounts require documentation — for example, a defensive driving course requires proof of completion.

Shop for quotes from other insurers

Insurance companies price the same coverage differently based on their own data and risk models. One insurer might charge you $1,200 a year while another charges $900 for identical coverage. The only way to find the best rate is to get quotes from multiple companies.

Gather your current policy details: your coverage limits, deductibles, vehicle identification number (VIN), driving history, and annual mileage. Then contact at least three insurers — you can call, use their websites, or use comparison tools — and ask for quotes with the same coverage and deductibles. Write down each quote and what it includes.

Shop around every two years, or sooner if your situation changes (you move, add a vehicle, or have a major life event). Insurers often offer lower rates to new customers, so even if you were happy with your current company last year, switching may save money now.

Drop collision or comprehensive coverage on older vehicles

Collision coverage pays for damage to your car if you hit something or something hits you. Comprehensive coverage pays for damage from theft, weather, vandalism, or animals. If your car is paid off and has low market value, the cost of these coverages may exceed what you would receive in a claim.

A rough rule: if your annual collision and comprehensive premiums add up to more than 10 percent of your car's market value, dropping them may make financial sense. For example, if your car is worth $5,000 and collision and comprehensive together cost $600 a year, you are paying 12 percent of the car's value annually — dropping them could save $600 a year. If you have an accident, you pay for repairs yourself.

Before you drop these coverages, check whether you have a loan or lease on the car. Lenders and leasing companies require collision and comprehensive coverage as a condition of the loan or lease, so you cannot drop them until the car is paid off.

Improve your driving record and credit score

Your driving record and credit score both affect your insurance premium. Accidents and moving violations stay on your record for three to five years (depending on your state and the insurer), and each one raises your rate. If you have recent violations, there is no quick fix — you straightforward have to wait for them to age off your record.

Your credit score influences your rate at most insurers because insurers have found a correlation between credit behavior and insurance claims. Improving your credit score takes time, but paying bills on time, reducing credit card balances, and checking your credit report for errors all help.

If you have had a recent accident or violation, ask your insurer whether they offer a forgiveness program or whether your rate will drop once the incident ages off your record. Some companies forgive one accident or violation if you have been a customer for a certain number of years.

Frequently Asked Questions

Will switching insurance companies hurt my credit?

No. Switching car insurance does not affect your credit score. Insurance companies may check your credit as part of the quote process, but this is a soft inquiry that does not lower your score. You can get quotes from multiple insurers without any credit impact.

How much can I save by raising my deductible?

Savings vary widely by insurer, location, and your driving record. Raising your deductible from $500 to $1,000 typically saves 15 to 30 percent on collision and comprehensive premiums, but the exact amount depends on your specific situation. Get quotes at different deductible levels to see what you would save.

Do I need collision and comprehensive coverage?

If you have a loan or lease, your lender requires it. If you own your car outright, it is optional but recommended if your car has significant value or if you could not afford to replace it. If your car is worth less than a few thousand dollars, dropping these coverages may make financial sense.

How often should I shop for new insurance?

Every two years is a good baseline, or sooner if your situation changes — you move, add a driver, or have a major life event. Insurers offer lower rates to new customers, so switching every few years often saves money even if you were satisfied with your current company.

Can I get a discount for taking a defensive driving course?

Yes, most insurers offer a 5 to 15 percent discount for completing an approved defensive driving course. The course must be state-approved or recognized by your insurer. Some insurers require you to retake the course every three to five years to keep the discount active.