Ways to Lower Your Car Insurance Costs

How to lower your car insurance costs

Your car insurance rate depends on what you tell the insurer about yourself, your car, and your driving history — and some of those things you can change. The most direct ways to lower your premium are to raise your deductible, drop coverage you don't legally need, bundle policies, ask about discounts you already meet, and shop your rate every one to three years. Some changes take effect when ready when you call; others require you to change your actual driving or car situation. None of them work for everyone, and some cost you money upfront to save money later.

The strategies that work depend on your situation. If you have a loan on your car, you cannot drop collision or comprehensive coverage no matter how much you want to save. If you live alone and rarely drive, a low-mileage discount may save you more than bundling. If your driving record is clean but your car is old, raising your deductible might be the single biggest lever you have.

Key Takeaways

• 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 an accident.
• Dropping collision or comprehensive coverage is legal if you own your car outright, but a lender or lessor will require you to keep it.
• Bundling your car policy with home, renters, or umbrella insurance usually saves 10 to 25 percent on your car premium, depending on the insurer.
• Discounts for good driving, safety features, low mileage, and paid-in-full premiums exist at most insurers but require you to ask or provide proof.
• Your rate can drop significantly if your driving record improves, you move to a lower-risk area, or you switch to a safer car model.

Raise your deductible to lower collision and comprehensive costs

Your deductible is the amount you pay toward a claim before your insurance pays the rest. Collision coverage (damage from hitting another car or object) and comprehensive coverage (damage from theft, weather, or vandalism) both have deductibles. Raising your deductible from $500 to $1,000 typically cuts your premium for these coverages by 15 to 30 percent, depending on your insurer and location.

The trade-off is real: if you cause a $3,000 accident, you pay $1,000 instead of $500. Raise your deductible only if you have cash set aside to cover it without borrowing. If you rarely have accidents and can absorb a $1,000 hit, this move saves money over time. If you have a history of claims or live where accidents are common (dense urban areas, high-theft neighborhoods), the savings may not be worth the risk.

You can change your deductible whenever you renew your policy or sometimes mid-term by calling your insurer. The change takes effect on your next billing date. Some insurers allow you to set different deductibles for collision and comprehensive — for example, $500 for comprehensive (theft and weather are less common) and $1,000 for collision (you control whether you drive).

Drop collision or comprehensive coverage if you own your car outright

If you own your car and owe no money on it, you can legally drop collision and comprehensive coverage. If you have a loan or lease, your lender requires you to keep both. Dropping these coverages eliminates their premiums entirely — often $30 to $100 per month depending on your car's age and value.

The risk is that you pay for all repairs yourself. A stolen car, a tree falling on your vehicle, or a single-car accident becomes your expense. Most insurers recommend keeping comprehensive if you live in an area with high theft or severe weather, and keeping collision if your car is worth more than you can afford to replace. If your car is worth less than $5,000 and you have savings, dropping both may make financial sense.

Call your insurer to remove these coverages. The change takes effect on your next renewal or when ready if your policy allows mid-term changes. Before you drop them, check your loan or lease documents to confirm you are not required to keep them — some lenders have clauses that require coverage even after the loan is paid off.

Bundle your car policy with other insurance to get multi-policy discounts

Most insurers offer discounts when you bundle car insurance with home, renters, or umbrella policies. The discount typically ranges from 10 to 25 percent on your car premium, though it varies by insurer and what you bundle. Some companies offer the discount on both policies; others only on one.

To use this discount, you need to move your other insurance to the same company. If you currently have homeowners insurance elsewhere, getting a quote from that insurer for your car can show you the bundled price. Some people find that bundling saves more than shopping for the lowest single-policy rate, especially if your home or renters policy is already competitively priced.

Ask your current home or renters insurer what they charge for car insurance with the bundle discount applied. Then compare that total to your current car premium plus what you pay for home or renters coverage. If the bundled total is lower, switching your car policy makes sense. Keep in mind that you may lose discounts on your current car policy when you switch, so factor those into your comparison.

Ask about discounts you may already meet

Insurers offer discounts for circumstances you may not realize lower your risk in their eyes. Common ones include good driving records (often called "safe driver" or "accident-free" discounts), safety features on your car (airbags, anti-theft devices, automatic braking), low annual mileage, paying your premium in full rather than monthly, completing a defensive driving course, and being a student with good grades. Some insurers offer discounts for bundling usage-based insurance (a mobile app that tracks your driving) or for paperless billing.

The size of each discount varies by insurer — one company might offer 5 percent for good driving while another offers 15 percent. You typically have to ask for these discounts or provide proof. For a good-driver discount, your insurer already has your record. For a safety-feature discount, you may need to send a photo of your car's door jamb label or provide your vehicle identification number (VIN) so they can confirm the features. For a defensive driving discount, you submit a certificate from an approved course.

Call your insurer and ask which discounts you meet. Many people save $200 to $500 per year by claiming discounts they didn't know existed or forgot to mention when they first bought the policy. Some insurers automatically explore discounts; others require you to request them.

Shop your rate every one to three years

Insurance companies use different formulas to calculate risk, so the same driver pays different amounts at different insurers. Your rate also changes as you age, as your driving record changes, and as your car ages. Getting quotes from three to five other insurers every one to three years often reveals that you can save money by switching.

When you shop, provide the same coverage limits and deductibles to each insurer so you can compare apples to apples. Most insurers let you get a quote online in 10 to 15 minutes using your driver's license number and VIN. You don't have to switch — sometimes your current insurer will match a lower quote if you ask — but many people find that switching every few years saves hundreds of dollars annually.

The best time to shop is before your policy renews, so you can switch on your renewal date without a gap in coverage. If you find a much lower rate mid-policy, check whether your current insurer charges a cancellation fee; some do, and the fee might eat into your savings. Keep track of any discounts you currently receive so you can ask new insurers whether they offer the same ones.

Improve your driving record and consider a safer car

Your insurance rate reflects your driving history. Accidents and traffic violations (speeding tickets, reckless driving, DUIs) raise your premium for three to five years, depending on your state and insurer. As violations age and fall off your record, your rate drops. If you have recent accidents or tickets, your rate will naturally decrease over time as long as you don't add new ones.

Your car model also affects your rate. Insurers charge more for cars that are expensive to repair, commonly stolen, or involved in more accidents. Switching from a sports car or luxury sedan to a mid-size sedan or compact car can lower your premium. If you're considering buying a new car, checking the insurance cost for different models before you buy can reveal significant differences — sometimes $500 or more per year between models in the same price range.

Moving to a lower-crime area also lowers your rate, though this is rarely a decision made for insurance reasons alone. If you do move, tell your insurer your new address so they can recalculate your premium. Some insurers also offer discounts if you install anti-theft devices or park your car in a garage rather than on the street.

Frequently Asked Questions

Will lowering my deductible raise my premium?

Yes. A lower deductible means the insurer pays more of each claim, so they charge you a higher premium. Lowering your deductible from $1,000 to $500 typically raises your collision and comprehensive premiums by 15 to 30 percent. Most people raise their deductible to lower costs, not lower it.

Can I get a discount if I don't drive much?

Many insurers offer low-mileage discounts if you drive fewer than 7,500 or 10,000 miles per year (the threshold varies by company). Some use a mobile app to track your actual mileage. If you work from home or use public transit most days, ask your insurer whether a low-mileage discount applies to you.

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

A speeding ticket typically raises your premium by 10 to 30 percent for three to five years, depending on your state, insurer, and how fast you were going. The increase is smaller for minor speeding (5 to 10 mph over the limit) and larger for serious violations. After the violation ages off your record, your rate returns to its previous level.

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

Many insurers offer a small discount (usually 2 to 5 percent) for paying your annual premium in full rather than in monthly installments. The discount reflects the insurer's cost of processing monthly payments. If you can afford to pay in full, this is an straightforward way to lower your premium by $20 to $100 per year.

Should I drop liability coverage to save money?

No. Liability coverage is required by law in every state and pays for damage you cause to other people or their property. Driving without it is illegal and leaves you personally responsible for accidents you cause. You can lower your liability limits only if your state allows it, but most financial advisors recommend keeping limits of at least $100,000 per person and $300,000 per accident.