How to Save on Car Insurance

The average driver's car insurance costs more than $1,500 per year. However, you can reduce your car insurance rates by taking advantage of a few simple ways to save. For example, simply switching to paperless billing or setting up autopay could result in a 10% reduction in your car insurance bill. Furthermore, by making larger changes such as improving your credit or experimenting with usage-based insurance, you could save up to 50% on your car insurance.

1. Change how you pay your bill

Rethinking your payments is the simplest way to reduce your car insurance premium. Most national insurance companies provide discounts for paying your premiums online, opting for paperless statements via email, and enrolling in automatic payments. You can also save money by paying for a 12-month policy in advance rather than making monthly payments.

Depending on the insurer, drivers who take advantage of these simple car insurance discounts could save up to 10%. Most insurance companies, however, have a cap on how much you can save with discounts, or only offer signup discounts on your first six-month or 12-month bill.

2. Find membership savings

Many car insurance companies offer 2% to 10% auto insurance discounts to drivers who belong to certain affinity groups or work in specific professions. Geico, for example, provides a 3% discount to drivers who belong to one of the hundreds of professional and alumni organizations on its partner list. This includes fraternities and sororities, honor and academic societies, as well as trade and professional organizations.

Your job may also entitle you to a 9% discount on auto insurance from companies such as Geico, Farmers, Liberty Mutual, and Nationwide. For example, if you are a teacher, nurse, emergency responder, military member, or federal employee, you may be eligible for a discount.

3. Rethink your coverage

Another simple way to reduce your car insurance bill is to go over your policy carefully and remove any coverage you don't need or use. For example, if you have a brand-new car that is still under warranty, you may not need roadside assistance coverage because most manufacturers provide free roadside assistance for the first three to five years.

Consider dropping collision and comprehensive coverage if your car is worth less than a few thousand dollars or is more than ten years old. Switching from a full coverage policy with collision and comprehensive coverage to a minimum liability policy could save you $1,500 per year on your car insurance.

4. Increase your collision and comprehensive deductible

If you can afford it, increasing your collision and comprehensive insurance deductibles is a simple money-saving tip. According to our research, raising your deductible from $50 to $1,000 could save you up to 56% on comprehensive and collision coverage. In addition, increasing your deductible from $500 to $1,000 could help you save up to 25% on your insurance costs.

You should keep in mind that you'll have to pay more out of pocket for car repairs after an at-fault accident or when filing a comprehensive claim, so this option is best for drivers who have a healthy emergency savings fund.

5. Bundle your insurance

When you bundle multiple insurance policies with the same company, you can save between 5% and 18% on your annual auto insurance premium. This can include auto and home insurance, renters insurance, condo insurance, umbrella insurance, life insurance, and health insurance. The most common bundle is auto plus home insurance, which typically saves you 15% on auto insurance and up to 35% on home insurance.

Aside from bundling, you can also combine all of your vehicles under one policy and save up to 25% with a multi-vehicle policy discount. Even if they are on the same policy, you can still customize the coverage for each vehicle.

6. Track your driving with telematics

Usage-based insurance is an excellent choice for safe drivers who don't drive frequently and want to save 30% to 50% on their annual premiums. A black box device or app tracks your driving and provides you with a discounted rate based on your driving ability and risk level with telematics or usage-based insurance.

7. Keep young drivers on a parent's policy

Having a young driver on their parents' policy typically results in significantly lower auto insurance costs. We discovered that adding young drivers to their parents' plan can save 66 percent on car insurance when compared to the cost of insuring a teen driver on their own policy.

However, if your teen has a history of accidents, claims, or tickets, you should expect higher insurance rates, whether they are on your policy or their own. In this case, it's a good idea to compare prices for a separate policy for your teen driver versus keeping them on the family policy.

8. Update your policy details

It's a good idea to double-check your car insurance policy and coverage details on a regular basis to ensure they're correct. Even minor details, such as your car's trim level and safety features, can have an impact on your rates. For example, our research discovered that there could be a $1,950 annual difference between different Honda Civic trim levels from the same model year.

Check to see if you're getting credit for all of the discounts you're eligible for, such as being a homeowner or a student with good grades. Also, if your situation changes, double-check your policy. For example, if you've built a carport or poured a new driveway and no longer park your car on the street, you might see slightly lower rates.

9. Improve your credit score

One of the factors influencing your car insurance rates is your credit score. According to our research, raising your credit score to the next tier saves most drivers an average of 16 percent to 17 percent on their annual car insurance rates. You'll save the most money if you raise your score from fair to good.

10. Compare car insurance quotes

Obtaining multiple quotes is the most convenient way to find lower car insurance rates. We discovered that comparing quotes to find the cheapest policy can save you up to 50% on your annual car insurance costs when compared to using an insurer with average rates.

When determining rates, insurers take into account a variety of factors, which means that the cheapest company for you may differ depending on your driving profile. Your age, driving record, and the type of vehicle you drive all have an impact on your auto insurance rates, and comparing quotes is the only way to determine which company can help you save the most money.

FAQs

Should car insurance rates decrease every year?

It all depends on what has changed in your life in the last year. Young drivers can typically expect lower rates for each year of safe driving, as long as they maintain a clean driving record free of tickets, accidents, or claims. Once you reach your 30s, interest rates tend to level off until you reach the age of 60.

Your rates may rise if other factors change in addition to your age, such as trading in your car for a more expensive model to insure or moving to a big city.

When is the best time to get car insurance?

It's a good idea to get new quotes after a life event, such as getting married, or when you reach a certain age, such as 18, 21, or 25, because those changes can lower your rates. Most companies will not penalize you for switching car insurance at any time, as long as you do not have a lapse in coverage when you switch to your new policy.

One reason you might put off switching is if you expect your rates to rise, such as if you recently received a ticket. Insurers typically won't notice those changes until you go to renew, so it's often best to wait until renewal and then get a few quotes to see which company is the most lenient and offers the best rates.