How to Lower Your Car Insurance Costs

The fastest way to cut your premium is to compare quotes from at least three insurers

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

You can get quotes online in minutes without committing to anything. Most insurers let you enter your information once and see a price estimate before you provide payment details. Collect quotes from at least three different companies — major national insurers like State Farm, Geico, and Progressive, plus regional or direct-to-consumer companies that operate in your state. The lowest quote is often from a company you have not heard of.

When you compare quotes, make sure the coverage limits are identical across all of them. A quote that looks cheap because it includes only the state minimum liability coverage is not the same as one with higher limits. Write down the deductible, liability limits, and any other coverage for each quote so you are comparing the same thing.

Key Takeaways

• Comparing quotes from at least three insurers usually reveals price differences of $500 or more per year for the same coverage.
• Bundling home and auto insurance with the same company often saves 15 to 25 percent on your car insurance premium.
• Raising your deductible from $500 to $1,000 typically lowers your collision and comprehensive coverage costs by 15 to 30 percent.
• Discounts for good driving records, safety features, and low annual mileage can reduce your rate, but only if you ask about them when you get your quote.
• Your driving history, age, location, and the car you drive have the biggest impact on your rate — factors you cannot change quickly, but factors that change over time.

Bundle your home and auto insurance to get a multi-policy discount

Most insurers offer a discount when you buy more than one type of insurance from them. If you own a home or rent an apartment, bundling your renters or homeowners insurance with your car insurance usually saves money on both policies. The discount typically ranges from 15 to 25 percent on your auto premium, though the exact amount varies by insurer and by state.

To use this strategy, you need to get a quote for both policies from the same company. Some insurers make bundling straightforward by letting you add renters or homeowners coverage during the car insurance quote process. Others require you to call or chat with an agent. Ask about the bundle discount explicitly — it is not always applied automatically, and some companies require you to ask for it.

Bundling only saves money if the combined cost is lower than buying each policy separately from different insurers. Before you bundle, get a standalone quote for your home or renters insurance from another company and compare the total. Sometimes buying car insurance from one company and home insurance from another is cheaper than bundling.

Raise your deductible to lower your collision and comprehensive costs

Your deductible is the amount you pay out of pocket when you file a claim for collision or comprehensive coverage. If your deductible is $500 and you have a $3,000 repair bill, you pay $500 and insurance pays $2,500. A higher deductible means lower monthly or annual premiums because the insurance company is taking on less risk.

Raising your deductible from $500 to $1,000 typically reduces your collision and comprehensive premiums by 15 to 30 percent, depending on your insurer and your location. Raising it to $2,500 saves even more. The trade-off is that you have to be able to afford the deductible if you get into an accident or your car is damaged by weather, theft, or vandalism.

Only raise your deductible if you have savings set aside to cover it. If you cannot afford a $1,000 deductible, a $500 deductible is the right choice for you, even if it costs more per month. The goal is to lower your premium without creating a financial crisis if you need to file a claim.

Look for discounts you actually may have access to for

Insurance companies offer dozens of discounts, but you have to ask about them — most are not applied automatically. Common discounts include good driver discounts (for drivers with no accidents or violations in the past three to five years), safety feature discounts (for cars with anti-theft devices or automatic emergency braking), low mileage discounts (if you drive fewer than a certain number of miles per year), and bundling discounts (covered above).

Some insurers offer discounts for completing a defensive driving course, for being a student with good grades, for paying your premium in full instead of monthly, or for setting up automatic payments. A few companies offer usage-based or telematics discounts that monitor your actual driving habits through an app or a device plugged into your car — if you drive safely, you get a discount.

When you get a quote, ask the insurer which discounts you may have access to for and how much each one saves. Do not assume you are getting all available discounts just because you have a clean driving record. Some discounts require you to opt in or provide proof (like a defensive driving certificate or your insurance ID card from your previous insurer).

Choose a car with lower insurance costs when you are shopping for a vehicle

If you are buying a car soon, the insurance cost should be part of your decision. Insurance rates vary significantly by make, model, year, and trim level. A Honda Civic costs less to insure than a Dodge Charger because repair costs are lower, theft rates are lower, and safety ratings are higher. A 2015 model-year car costs less to insure than a brand-new model because parts are cheaper and the car is worth less.

Before you buy a car, get an insurance quote for it. Most insurers let you enter the vehicle identification number (VIN) or the year, make, and model to see how much it would cost to insure. A car that costs $2,000 more to buy might cost $500 less per year to insure, which adds up over time. Luxury cars, sports cars, and high-theft vehicles are the most expensive to insure.

If you already own your car, you cannot change this factor, but it is worth knowing that your insurance cost will drop as your car gets older and as you pay off your loan (if you have one). Once you own the car outright, you can also drop collision and comprehensive coverage if you choose, which lowers your premium significantly.

Review your coverage limits and drop coverage you do not need

Liability coverage is required by law in every state and pays for damage or injuries you cause to other people. Collision coverage pays for damage to your own car from an accident. Comprehensive coverage pays for damage from weather, theft, vandalism, or hitting an animal. Uninsured motorist coverage protects you if you are hit by someone without insurance.

Most states require you to carry liability coverage, so you cannot drop it. However, you can choose your liability limits. The state minimum is usually around $25,000 per person and $50,000 per accident, but many financial advisors recommend higher limits like $100,000 and $300,000 because a serious accident can result in a lawsuit that costs far more than the state minimum.

If your car is paid off and is worth less than $5,000, dropping collision and comprehensive coverage might make sense because the premium you pay could exceed the value of the car. If you are financing or leasing your car, your lender or leasing company requires you to carry collision and comprehensive coverage, so you cannot drop them. If your car is worth more than $10,000, keeping these coverages usually makes financial sense.

Shop for insurance every one to three years, even if you stay with the same company

Insurance rates change constantly. Your rate might go up because you had an accident or a traffic violation, or it might go down because you have been a safe driver for several years. Rates also change because insurers adjust their pricing, because you moved to a different location, or because you turned a certain age (rates often drop at 25 and again at 65).

Even if you are happy with your current insurer, getting quotes from competitors every year or two can reveal that you are now paying more than you need to. Some people stay with the same company for years without realizing that a competitor is offering the same coverage for $300 or $400 less per year. Switching is usually straightforward — you can often start your new policy on the same day your old one ends, with no gap in coverage.

Mark your calendar to shop for insurance quotes when your policy renews, or set a reminder to do it every two years. It takes 15 to 30 minutes to get quotes from three or four companies, and the time investment often pays off in real savings.

Frequently Asked Questions

Does paying my insurance premium in full instead of monthly really save money?

Some insurers offer a small discount — usually 5 to 10 percent — for paying your full annual premium upfront instead of in monthly installments. The discount varies by company and by state. When you get a quote, ask whether paying in full qualifies you for a discount and how much it is. If the discount is small and you need the monthly payment flexibility, paying monthly is the right choice for you.

Will my rate go down if I take a defensive driving course?

Many insurers offer a discount for completing a defensive driving course, typically 5 to 10 percent off your premium. The discount usually lasts for three years, after which you can take another course to renew it. Some states also allow you to dismiss a traffic ticket by completing a defensive driving course. Ask your insurer whether they offer this discount and what course they recommend.

Can I lower my rate by driving less?

Yes, if you drive fewer miles per year, you may may have access to for a low-mileage discount. Most insurers define low mileage as 7,500 to 10,000 miles per year or less. If you work from home, use public transportation, or retired, you might may have access to. When you get a quote, tell the insurer your annual mileage and ask whether a low-mileage discount applies.

What happens to my rate if I get a speeding ticket or accident?

A speeding ticket or at-fault accident typically raises your rate for three to five years, depending on your insurer and your state. The increase is usually 15 to 40 percent for a minor violation and higher for serious violations. After the violation or accident ages off your record, your rate should drop back down. This is another reason to shop for quotes regularly — some insurers are more forgiving of violations than others.

Is it cheaper to insure an older car?

Yes, older cars cost less to insure because they are worth less and repair costs are lower. However, once a car is very old or has high mileage, you may want to drop collision and comprehensive coverage, which can save you hundreds per year. At that point, you are only paying for liability coverage, which is required by law but is the cheapest type of coverage.