How To Save Money On Car Insurance

According to recent data from the National Association of Insurance Commissioners (NAIC), auto insurance rates are rising and the average cost of insuring a vehicle is inching up toward $900 per year. But the actual rate you pay for car insurance can vary greatly based on what kind of car you drive, where you live, your driving record, and, of course, whether you do any legwork to get the best coverage at the lowest rate possible.

But how do you do that? To find out, we asked auto insurance industry experts for their tips on how to save money on car insurance.

Top Tips For Saving Money on Your Insurance

1. Don’t Stick With One Insurer

When your policy ends, don’t auto-renew: take a step back and see what other auto insurance companies offer you. “The thing is, insurance rates constantly change,” says Sam Lowy, CEO of Life Insurance Star. “So you’ll have a good chance to jump around and eventually find the best deal that suits you.”

Besides—loyalty to one insurance company rarely pays off. In fact, in most cases, you’ll pay more if you stick to one company.

Why? One reason is “price optimization:” your insurer doesn’t believe you’ll switch insurance companies if they charge you more, so they’ll raise your premium by increments over time.

“It may seem easier with everything else going on in your life to just stay with the same insurer year on year,” says Chane Steiner, CEO of Crediful. “But allocating some good time to researching other insurance companies could help you save a lot of money.”

2. Get Multiple Quotes

When you do shop around, don’t settle for the first insurance quote you get. The fact is—auto insurance rates vary widely between insurers, meaning one company may give you a rate that’s significantly lower than the others. You won’t know, however, until you get multiple quotes and compare them.

“Before you just go ahead and pick an insurance company,” George Birrell, CPA and founder of TaxHub advises, “you need to see what other rates and offerings are out there. Once you find this information, you can decide which company offers the best prices for the best coverage.”

Natasha Rachel Smith, personal finance expert, says: “Always compare. Whether it’s the first time you’re buying a car insurance policy or the 15th year you’ll be doing so, always compare what’s on offer. This can save you hundreds in one instant and even thousands of dollars in the long run. Don’t automatically just renew your existing policy.

Also, use online comparison tools. Very few people have time to call every insurance provider to compare quotes. To save time, use one of the many comparison tools online. They’re free and will tell you who’s offering the best deals in your area.”

3. Use Offers To Negotiate Lower Prices

But what if you like your insurance company? Do you have to pay higher rates to get the service you enjoy?

Not necessarily. In fact, even if you prefer your insurance company to all others, you should still look for a better deal. Then, when you find one, use it to negotiate a lower rate with your current insurer.

“Don’t be afraid to leverage offers from other companies,” Jake Hill, CEO of DebtHammer, recommends. “If you know you can get your auto insurance for $70 per month from company A, but you like the policy of company B better, tell them the rate you’re getting with company A. Agents are often authorized to give small discounts, and they will be more inclined to do it if they think they’ll lose you to another company.”

4. Bundle, Bundle, Bundle

If you have car insurance with one company, home insurance from another, and boat insurance from still another, you may be paying more than if you had them all with one company.

Jimmi Lewis from Voi Insurance Solutions agrees: ”Bundling your home, auto and other personal insurance coverages presents one of the best premium reduction strategies available. Discounts of approximately 25% on each policy may be available when you bundle your coverages with the same insurance company.”

5. Choose The Highest Deductible You Can Afford

Deductibles can be a tricky business. Set your deductible low, and you’ll pay less when an accident happens, though not without a cost: because the insurer will pay more, they’ll also make you pay more in premiums.

That means, if you want to lower the cost of insurance, one quick fix is to raise your deductible, preferably to match whatever you have in your emergency fund.

“We recommend that clients choose as high of a deductible as they can reasonably afford at any moment’s notice,” says Jimmi Lewis of Voi Insurance Solutions. “Increasing your deductible can help reduce your premium significantly, as well as reduce the urge to file a claim for a smaller amount of damage, thereby ensuring future premiums remain low.”

Another option is to change your deductible throughout the year, as Nathan Sanchez of Sanchez Insurance Group recommends. “Change your deductibles seasonally depending on the risk factors. Ask your agent if you can have higher deductibles during lower risk times. For example, if you are not in hail season, increase your wind and hail deductible during that time of year. This will save you money without putting yourself at unreasonable risk.”

6. Drop Coverage You Don’t Need

You don’t always need an insurance policy with all the bells and whistles. For example, if you drive a car that’s as old as time, you probably don’t need to spend extra money on collision and comprehensive, as the cost of having these policies most likely outweighs the value of the car.

“Many people don’t review their automobile coverage levels,” says Jason Krueger of Ameriprise Financial. “Often we see cars with full-coverage even though they have depreciated significantly since the policy was taken out. Consider potentially reducing or eliminating collision insurance if your vehicle has lost a significant portion of its value.”

7. Improve your credit score

Most insurance companies use a credit-based insurance score to set insurance rates. That means, if your credit score is low, you may be paying more for insurance because of it.

“A credit score in good standing can help auto rates stay low,” says Michael Gordy of Country Financial. “Pay your bills on time and check for sketchy activity on your credit history often.”

Read more: Your Credit Score and Your Insurance Premium

8. Ask About New Discounts

Insurance companies offer several discounts, everything from anti-lock brakes to alumni affiliates to discounts for signing a few days before your policy kicks off. Other discounts include:

• Defensive driving course completion.
• Accident-free or safe driver.
• Low mileage.
• Good-student.
• Employee discounts.
• Academic or professional organization affiliation.
• Military or federal employee.
• Multi-car.
• Paid-in-full.
• Electronic billing.

How do you know which discounts for which you qualify? “Generally, the VIN of your car will pull up all the applicable discounts,” says Jennifer Benson from AutoInsureSavings, “However, ask your agent if you are getting all those that apply.”

“Don’t forget about smart technology,” Aaron Norris of Property Radar adds. “For example, companies like Alarm.com, Ring, SimpliSafe, Moen, and Belkin have rolled out sensors and shutoff valves for water, which, if they detect a problem, can stop it from becoming a high insurance claim. Having smart technology installed and operating can greatly reduce your premium.”

9. Working From Home? Tell Your Insurer

If your job is remote, you can probably get a heavy discount on your car insurance. “If you are working from home, be sure to tell your agent,” says Jennifer Benson from AutoInsureSavings, “Your premium should decrease because you are driving less.”

10. Compare Insurance Providers In Your Area

Lastly, insurance prices will vary from state to state, from provider to provider and the best thing you can do is compare what’s available right now for your own needs.

11. Consider Usage-Based Insurance

“Many companies like State Farm now offer [telematics-based insurance]. This is an app installed on your phone that monitors your driving tendencies. If it registers you accelerating or decelerating at a high rate, or other unsafe driving habits, your rates may go up, but safe drivers are rewarded with rate savings up to 15 %.

Another factor in determining your rates is the type of car you drive. A solid, safe used car will get you lower rates than a newer flashy ride.” – Josh Berman, Personal Injury Attorney specializing in car accident cases

12. Be Transparent and Ask Questions

“Do your homework and be transparent with the insurance company when you call them. Search around for different insurance websites, especially comparison sites, to see who is going to give you the best deal and coverage. Ask your friends and family who they use as this is often the best way to learn more about the field from people you trust.

Most importantly, call up potential insurers or walk into a storefront and ask them questions. Explain your situation and budget and they may find you different options that are unavailable online. – Zoe Meeken, Money Editor for Reviews.org

13. Pay for Your Policy Upfront

“One way you can save significant money is by paying your car insurance in full. Although this is a much larger amount to hand over in one go, it can add up to hundreds of dollars in savings over a policy’s period because of the charges that are added to monthly repayments. Don’t be fooled into thinking a monthly repayment is the year’s policy price split into 12 parts; it’s that plus, effectively, interest on top for the luxury of a payment plan.

If you can’t afford such a big amount in one go, consider applying for a 0% spending credit card to pay the policy in full, then divide the total by the number of months you won’t be charged interest by the credit card provider to know how much you must repay it monthly. That will secure you the cheap “in full” rate, while allowing you to spread the cost. – Natasha Rachel Smith, Personal Finance Expert.

Bottom Line

Your insurance rate isn’t set in stone. While some things you may not be able to change—like your age and where you live—other things can help you cut your insurance costs. If you’re struggling to lower your premium, hop on a call with an independent insurance agent. They can shop for insurance companies for you, find the best deals, and even help you find discounts for which you qualify.