Ways to Lower Your Car Insurance Costs

The main ways to reduce what you pay for car insurance

Car insurance costs come down when you change your coverage, your deductible, or the risk you present to the insurer. The fastest reductions usually come from raising your deductible (the amount you pay out of pocket when you file a claim), bundling your car policy with home or renters insurance, or asking about discounts you may not know exist. Bigger savings take longer — switching insurers, improving your driving record, or moving to a safer vehicle — but they can cut your premium by hundreds of dollars a year.

The amount you save depends on your age, where you live, what kind of car you drive, and your driving history. A 25-year-old in a rural area will see different savings from the same changes than a 45-year-old in a city. This guide walks you through the levers you can actually pull.

Key Takeaways

• Raising your deductible from $500 to $1,000 typically cuts your collision and comprehensive coverage costs by 15 to 30 percent.
• Bundling your car insurance with home or renters insurance usually saves 10 to 25 percent on your car premium alone.
• Common discounts include good driver discounts (for three to five years without an accident or ticket), low-mileage discounts, and discounts for completing a defensive driving course.
• Switching to a different insurer can save hundreds per year, but the savings vary widely by company and location, so you need quotes from at least three insurers to compare.
• Improving your credit score, if it is low, can lower your rate because insurers use credit-based insurance scores to set premiums.

Raise your deductible to cut collision and comprehensive costs

Your deductible is the amount you pay toward a claim before your insurance pays the rest. If you have a $500 deductible and your car needs $3,000 in repairs after an accident, you pay $500 and your insurer pays $3,000. If you raise that deductible to $1,000, you pay $1,000 and your insurer pays $2,000.

Raising your deductible lowers your monthly or annual premium because the insurer's risk goes down — you are absorbing more of the cost yourself. The trade-off is that you need to be able to pay that higher amount if you file a claim. A $1,000 deductible saves more than a $750 deductible, which saves more than a $500 deductible. The exact savings depend on your insurer and your location, but you can see the difference by getting a quote at your current deductible and then asking what the rate would be at a higher one.

This only affects collision coverage (damage from accidents) and comprehensive coverage (damage from theft, weather, or vandalism). It does not affect your liability coverage, which is what you pay if you cause injury or damage to someone else.

Bundle your car insurance with home or renters insurance

Most insurers offer a discount when you buy more than one policy from them. If you have renters insurance or homeowners insurance, moving your car insurance to the same company usually saves 10 to 25 percent on your car premium. Some insurers call this a "multi-policy discount" or "bundling discount."

To use this discount, you need to get a quote for both your car and your home or renters policy from the same insurer, then compare that bundled price to what you are paying now. Sometimes the bundled rate is cheaper overall even if one of the individual policies costs more than your current provider. Sometimes it is not. The only way to know is to ask for a quote.

If you do not have renters or homeowners insurance yet, bundling can make both policies cheaper than buying them separately, so it is worth exploring even if you were not planning to add coverage.

Look for discounts you may already be may have access to to

Insurers offer dozens of discounts, but they do not always tell you about them unless you ask. Common ones include:

• Good driver discount: Three to five years without an accident or traffic ticket. The exact time frame varies by insurer.
• Low-mileage discount: Driving fewer than a certain number of miles per year (often 7,500 to 10,000). You may need to certify your mileage or install a monitoring device.
• Defensive driving course discount: Completing an approved defensive driving or safe driving course. Some insurers offer this as a one-time discount; others renew it every few years if you retake the course.
• Paperless or autopay discount: Receiving your bill online and paying automatically from a bank account.
• Student discount: Maintaining a certain grade point average (usually 3.0 or higher) if you are a full-time student under 25.
• Occupational discount: Working in certain fields like teaching, nursing, or engineering.
• Safety feature discount: Having anti-theft devices, airbags, or automatic braking systems in your car.

Call your insurer or log into your account and ask which discounts you currently have and which ones you might be missing. If you recently completed a defensive driving course or your student finished college, your status may have changed and opened up new discounts.

Compare quotes from different insurers

Insurance rates vary widely between companies for the same driver and car. One insurer might charge $1,200 a year while another charges $1,800 for identical coverage. The only way to find the lowest rate is to get quotes from multiple insurers.

Get quotes from at least three different companies. You can do this online on their websites, by phone, or through an independent agent who represents multiple insurers. When you get quotes, use the same coverage limits and deductibles for each one so you are comparing apples to apples. A quote that looks cheaper because it has a lower deductible is not actually cheaper.

Switching insurers usually takes a few days. You can often start your new policy on a specific date, and your old policy will end on that same date. Do not let your coverage lapse between policies, even for a day, because driving without insurance is illegal in every state.

Improve your credit score if it is low

Most insurers use a credit-based insurance score to help set your premium. This is different from your credit score for loans, but it is based on similar information from your credit report. If your credit score is low, improving it can lower your insurance rate.

Improving your credit score takes time — usually several months to a year of on-time payments and lower credit card balances. But if you are planning to shop for insurance in the next year anyway, working on your credit now can mean a lower rate when you do. Check your credit report for errors at annualcreditreport.com (the only free, official source) and dispute anything that is wrong.

Some insurers weight credit scores more heavily than others, so even if your credit is not perfect, you may find a company that offers a better rate. This is another reason to get quotes from multiple insurers.

Choose a safer or less expensive car when you replace yours

Insurance costs more for cars that are expensive to repair, are frequently stolen, or have poor safety ratings. If you are shopping for a new or used car, asking your insurer for a quote on different models before you buy can reveal big differences in what you will pay to insure them.

A used Honda Civic might cost $200 less per year to insure than a used Dodge Charger, even if the Charger costs less to buy. A new car with advanced safety features like automatic emergency braking might may have access to for discounts that offset some of the higher cost of insuring a newer vehicle. These differences add up over the years you own the car.

If you already own your car, this is not a change you can make right now, but it is worth keeping in mind the next time you are in the market for a vehicle.

Frequently Asked Questions

How much can I save by raising 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 driving history. The only way to know what you will save is to get a quote at the higher deductible and compare it to your current rate.

Will bundling my car and home insurance always save me money?

Not always. Sometimes the bundled rate is cheaper overall, but one of the individual policies might cost more than your current provider. Get a quote for both policies bundled together and compare the total to what you are paying now before you switch.

Do I need to take a defensive driving course to get a discount?

No. A defensive driving course is one way to get a discount, but it is not required. You may already be getting discounts for being a good driver, having safety features in your car, or paying by autopay. Ask your insurer which discounts you currently have.

How long does it take to see savings from a better credit score?

Improving your credit score takes several months to a year of on-time payments and lower balances. Once your score improves, your next insurance quote should reflect the change. You do not need to wait for your policy to renew — you can shop for new quotes anytime.

Can I switch insurance companies in the middle of my policy?

Yes. You can switch anytime, but make sure your new policy starts on the same day your old one ends so there is no gap in coverage. Driving without insurance is illegal. Your old insurer may charge a cancellation fee depending on your state and policy, so ask before you cancel.