Ways to Lower Your Car Insurance Costs

How to reduce what you pay for car insurance

Car insurance costs depend on what you drive, how you drive, who you are, and what coverage you choose. You can lower your premium by changing some of these things — bundling policies, raising your deductible, dropping coverage you don't need, or taking a defensive driving course. The savings vary by insurer and by state, so comparing quotes from different companies is usually the fastest way to find lower rates.

Most people pay more than they need to because they haven't shopped in years, haven't adjusted their coverage as their car aged, or don't know which discounts their current insurer offers. This guide walks through the concrete steps that typically reduce premiums, what each one costs you in trade-offs, and how much difference they usually make.

Key Takeaways

• Bundling your car insurance with home or renters insurance often saves 15 to 25 percent on your car premium, though the exact amount varies by insurer and state.
• Raising your deductible from $500 to $1,000 typically lowers your collision and comprehensive premiums, but you pay more out of pocket if you have a claim.
• Dropping collision or comprehensive coverage on an older car may save money if the car is worth less than ten times your annual premium.
• Defensive driving courses, good driver discounts, and low-mileage discounts are common but vary widely in size — ask your insurer what they offer.
• Comparing quotes from at least three insurers takes 20 to 30 minutes and often reveals rate differences of hundreds of dollars for the same coverage.

Bundle your car insurance with other policies

Most insurers offer a discount when you buy car insurance and home or renters insurance from the same company. This is called bundling. The discount typically ranges from 15 to 25 percent on your car premium, though some insurers offer more or less. The exact amount depends on the insurer, your state, and what other policies you bundle.

To use this strategy, you need to move either your home insurance or your car insurance to match the other. If you already have home insurance with one company and car insurance with another, getting a quote from the company that holds your home policy will show you the bundled rate. Compare that bundled quote to your current car insurance cost — the difference is what you would save. Some people find that the bundled rate is lower even if the home insurance premium goes up slightly, because the car discount is large enough to offset it.

Bundling also simplifies billing: you pay one company, one bill, and one renewal date. If you move or have a claim, you contact one insurer instead of two.

Raise your deductible

Your deductible is the amount you pay out of pocket before your insurance covers the rest of a claim. Common deductibles are $250, $500, $1,000, and $2,500. Raising your deductible lowers your premium because the insurer pays less if you have a claim.

Moving from a $500 deductible to a $1,000 deductible typically saves 10 to 15 percent on your collision and comprehensive premiums. Moving to $2,500 saves more, but the trade-off is steeper: if you hit another car or a tree, you pay $2,500 before insurance kicks in. This strategy makes sense if you have savings set aside to cover the higher deductible and if you don't have frequent claims.

Your deductible applies separately to collision coverage (damage from hitting something) and comprehensive coverage (damage from weather, theft, or vandalism). You can raise one without raising the other. Some people raise their comprehensive deductible but keep collision lower, or vice versa, depending on their risk.

Drop collision or comprehensive coverage on older cars

Collision and comprehensive coverage pay to repair or replace your car if it's damaged. Liability coverage (which pays for damage you cause to someone else) is required by law in every state. Collision and comprehensive are optional if you own your car outright — they're required only if you have a loan or lease.

If your car is old and worth less than ten times your annual collision and comprehensive premium combined, dropping these coverages may save money. For example, if your car is worth $5,000 and your collision and comprehensive premiums total $600 per year, you're paying 12 percent of the car's value annually — a sign that dropping coverage might make sense. If your car is worth $15,000 and those premiums are $600, you're paying 4 percent — keeping the coverage is probably wiser.

Before you drop coverage, check whether you have a loan or lease. If you do, your lender requires collision and comprehensive, and you cannot drop them. Also consider whether you could afford to replace the car if it's totaled. If you couldn't, keeping coverage is the safer choice even if the math suggests dropping it.

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 safe driving habits. Some insurers require the course to be taken in person; others accept online courses. The discount usually lasts three to five years, after which you can take the course again.

The cost of the course varies by provider and state, ranging from $20 to $100 or more. Calculate whether the discount over three years exceeds the course cost. If your premium is $1,200 per year and the discount is 10 percent ($120), the course pays for itself in one year if it costs less than $120. Check your insurer's website or call them to find out which courses they recognize and how much the discount is.

Some states offer a discount on traffic tickets if you complete a defensive driving course, which is a separate benefit from the insurance discount. Ask your insurer which courses they recognize before you enroll.

Look for discounts you may not know about

Insurers offer many discounts beyond bundling and defensive driving. Common ones include good driver discounts (for drivers with no accidents or violations in a set period), low-mileage discounts (if you drive fewer than a certain number of miles per year), paperless billing discounts, and discounts for safety features like anti-theft devices or automatic emergency braking.

Some insurers offer usage-based discounts, where they track your driving through an app or device and lower your rate if you drive safely. Others offer discounts for paying your premium in full upfront instead of monthly. The discounts vary widely by insurer — one company might offer a 20 percent low-mileage discount while another offers 5 percent or none at all.

Call your current insurer and ask what discounts you're not using. Many people find they're missing discounts they already may have access to for. If you're shopping for a new insurer, ask about discounts before you get a quote, so you know what to compare.

Compare quotes from multiple insurers

Insurance rates vary significantly between companies for the same driver and the same coverage. One insurer might charge $1,200 per year while another charges $1,600 for identical protection. The only way to know the lowest rate is to get quotes from at least three insurers.

When you compare, use the same coverage limits and deductibles across all quotes so you're comparing the same thing. Include any discounts you may have access to for — bundling, good driver, low-mileage, or others. Most insurers let you get a quote online in 10 to 15 minutes. Collecting three quotes takes 30 to 45 minutes total.

Rates change over time, so comparing quotes every one to three years is worth doing even if you're happy with your current insurer. People who switch insurers save an average of several hundred dollars per year, though the amount varies by location and driving history. Your state's insurance commissioner's office publishes a list of insurers licensed in your state if you need help finding companies to contact.

Frequently Asked Questions

How much can I save by switching insurers?

Savings vary widely depending on your driving history, age, location, and the car you drive. Some people save $300 to $500 per year by switching; others save more or less. The only way to know is to get quotes from multiple companies using the same coverage. Your current rate is not a ceiling — a different insurer may charge significantly less for the same protection.

Will my rates go up if I raise my deductible and then have a claim?

Raising your deductible does not cause your rates to go up at renewal. However, filing a claim may cause your rates to increase at your next renewal, regardless of your deductible. The increase depends on your insurer's policy and your driving history. Some insurers forgive one accident; others do not. Ask your insurer about their accident forgiveness policy before you have a claim.

Can I drop liability coverage to save money?

No. Liability coverage is required by law in every state. You must carry it to legally drive. The minimum amount varies by state, but you cannot drop it entirely. You can choose to carry only the state minimum, which is cheaper than higher limits, but that leaves you exposed to lawsuits if you cause a serious accident.

Do I have to stay with the same insurer for a discount?

No. Bundling discounts, good driver discounts, and other discounts are available from any insurer that offers them. You do not have to stay loyal to your current company to receive discounts. If another insurer offers a better bundled rate or a larger discount, you can switch. Loyalty discounts exist at some insurers, but they are usually smaller than the savings you get by shopping around.

How often should I get new insurance quotes?

Getting quotes every one to three years is a good practice. Rates change as you age, as your driving record changes, and as insurers adjust their pricing. A quote that was expensive three years ago may be competitive now, or vice versa. If you have a major life change — moving, getting married, buying a new car — that's a good time to shop around when ready.