How To Save Money on Car Insurance: 12 Ways to Lower Rates

It's a good thing that if you have a car and want to drive it, you're legally required to insure it. We just wish car insurance didn't cost so much. The average cost of liability car insurance is $104, and full-coverage insurance costs $186, according to data from Insurify.

But you might pay substantially more if you live in an expensive state. Fortunately, there are things you can do to secure car insurance at lower rates.

For starters, we recommend keeping your driving record clean, boosting your credit, and researching discounts. But this is just the tip of the iceberg, and there's a lot more where that came from.

If you're looking for ways to save on car insurance, start with these strategies.

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1. Consider whether you're paying for coverage you don't need

If you want to save money on car insurance, first, take a look at your current policies to see how much coverage you have and what you're already paying. Your car insurance premiums are largely determined by the kinds and amounts of coverage that your auto insurance provides.

Many auto insurance policies include:

• Collision coverage
• Property damage
• Bodily injury liability
• Personal injury protection
• Comprehensive coverage
• Uninsured motorist coverage

Not all drivers need all types of car insurance, or you might be able to get away with lower limits. Consider if there are types of coverage or add-ons you can cut, especially if you don't drive often.

While we would never suggest having less coverage than you need to feel safe, you may decide that your car is worth less than you're paying in insurance. An older car, for instance, might not need comprehensive and collision coverage if you could pay for repairs out of pocket (although lenders often require comprehensive/collision when you're still financing your car).

2. Switch to a higher deductible

A car insurance deductible is what you pay out of pocket before your insurance kicks in. You pay your deductible every time you file a claim, but if you never or rarely use your insurance, you could be paying a premium for a low deductible you aren't taking advantage of.

Opting for a higher deductible can significantly lower your premium, potentially saving you money whether you get into an accident or not. For instance, increasing your deductible from $200 to $1,000 could save you 40% or more on comprehensive and collision coverage, according to research from the Insurance Information Institute.

Reviewing your deductibles is one of the best ways to reduce your annual auto insurance costs. You can usually change your deductible at any time during your policy and don't have to wait until it renews, so we recommend looking into this first. To do it:

• Log in to your account to compare costs before updating your policy.
• Call your insurance company or agent and ask about rates.

3. Think about downgrading your insurance on older vehicles

An easy way to save money on car insurance? Compare your car's current value to your premiums. If your annual car insurance premium is equal to or more than 10% of your vehicle's value, you might be overpaying.

Keeping insurance rates lower than your car's value can be tricky as it ages, however. Cars are depreciating assets, meaning they become less valuable over time. If you have an older car, it might cost less to replace it than to insure it.

So what coverage can you safely forego? For older or less valuable cars, you can probably skip comprehensive coverage, which protects against theft, vandalism, or weather damage. It might also be more cost-effective to skip collision coverage that protects your car and start saving for any potential repairs out of pocket, instead.

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4. Make sure you're getting all the discounts you possibly can

Many of the best car insurance companies offer discounts that could lower your premium, but they don't always advertise them well. Taking even just a few minutes to look into discounts is one of the best ways to save money on car insurance. Commonly available discounts include:

• Automatic payment discounts
• Safety feature discounts
• Defensive driving discounts
• Good student discounts (if you've got a college student on your policy, many insurers offer a discount for good grades)
• Military service discounts
• New car discounts
• Low mileage discounts
• Telematics discounts (like Progressive's Snapshot)
• Loyalty discounts
• Bundling or multiple-policy discounts
• Anti-theft device discounts
• Discounts for parking in a garage (vehicles are safer from theft, vandalism, or damage when parked in a garage)

Do some sleuthing and ask your insurer about every possible discount. Be sure to save the documentation to qualify for those discounts, such as proof of taking a defensive driving course.

5. Shop around + compare quotes

You aren't married to your car insurance policy (though you could save on it if you're actually married), and the best way to lower your car insurance might be to switch companies altogether.

The goal is to find the best coverage at the best price, not just the cheapest. Shopping around could save you hundreds or even thousands per year, depending on your coverage needs. Here are some of our tips for comparing companies:

• Get multiple quotes: You can talk to an insurance agent, but you can also easily shop around and get quotes yourself. Decide on the car insurance coverage you want, then collect car insurance quotes from each company.
• Use quote comparison sites: You have better things to do than enter the same information over and over to get car insurance quotes from several insurers. Instead, we suggest using online insurance comparison sites like QuoteWizard or The Zebra to see multiple potential offers at once.
• Try bill negotiation apps: Certain money apps could also help you find a better price on car insurance. Trim, for example, can negotiate bills on your behalf or alert you to opportunities to save, such as pointing you to providers that might offer you a better deal on car insurance.

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6. Drive safely + keep your record clean

The cleaner your driving history, the lower your car insurance premium is likely to be. When we say "clean," we mean accident- and incident-free.

Your car insurance premium is the amount you pay in exchange for your insurance to cover some or all of your losses in the event of an accident. But how you drive outside of claims is important. Your driving record comes down to how safely and responsibly you drive in the eyes of law enforcement.

If you're the type of person who gets a lot of speeding tickets, parks in no-parking zones, or is known to get into a fender bender here and there, an insurance provider will see you as much riskier than a driver who doesn't do these things.

Car insurance companies don't really want you to actually use your insurance to file claims because this costs them money. If you're regularly getting yourself into trouble on the road, no matter how minor, this can translate to higher costs for you as your provider attempts to get ahead of what you might cost them.

7. Improve your credit

If you live in California, Hawaii, Maryland, Massachusetts, Michigan, Oregon, or Utah, this doesn't apply to you. These states don't allow car insurance companies to base rate decisions on credit scores.

Another important factor in determining your premiums is your credit. Your credit score is another way for providers to assess your financial risk, and companies may give lower rates to drivers with good credit or higher rates to drivers with bad credit. That's because in the world of insurance, drivers with poor credit and financial habits are more likely to file claims.

In many states, certain information in your credit report, such as outstanding debt, payment history, and new credit applications, may be used to calculate an insurance score.

Your "insurance score" is often a credit-based score that assesses your likelihood of filing claims. It's separate from your true credit score or credit report because it can include details about past auto insurance claims. Many major insurers, including Progressive, Nationwide, and Allstate, use insurance scores.

The rule for insurance scores is that your credit can't be the only determining factor, so having bad credit won't necessarily doom you to a high rate. Still, improving your credit could potentially lower your car insurance.

To improve your credit, try:

• Asking for higher credit limits on cards in good standing to lower your credit utilization ratio.
• Paying down balances on revolving debt.
• Paying more than just the minimum payments on your credit cards.
• Checking your credit reports and disputing errors you find so they don't drag down your score.

8. If you don't drive often, make sure your insurer knows that

According to Douglas Heller, insurance director of the Consumer Federation of America, insurance companies factor your annual mileage into your premium. If you don't drive often or far in the average year, look into whether your current insurance company (or a different one, if you're itching to switch) would let you report your mileage by sharing odometer readings or self-reporting it to an agent.

Doing this can help ensure you're not paying for heavier-duty coverage than you need, since you're not on the road as much as other drivers and shouldn't be charged as if you were.

9. Bundle your home and car insurance

Chances are, you probably need renters' insurance or homeowners' insurance. See how much you could save on car insurance by bundling these together from an insurer that offers both. You may also be able to get a discount for a multi-car policy.

Many auto insurance companies will lower your rate if you hold multiple policies with them, such as auto and home insurance or auto and renters insurance. For example, you could cut your renter's insurance bill by 20% or 30% by bundling it with your auto insurance, depending on your coverage, company, and area.

If you currently have several insurance policies with different companies, consider getting auto insurance quotes from each company and consolidating your policies with a single insurer. Before you switch, compare coverage and prices across quotes to make sure you really come out on top.

10. Pay your premiums in full annually, not monthly

Making monthly installment payments on your auto insurance might be more practical than paying in full, especially if you're paying more than $1,000 a year to insure your car. But many car insurance providers offer discounts for paying in full. If you have enough savings to cover the cost of a six- or 12-month policy, we recommend paying upfront and getting your premiums over with.

11. Use an anti-theft device to protect your car

Your car insurer doesn't want to pay for any claim, let alone a stolen car. If you have comprehensive car insurance coverage, your insurance will most likely cover the theft of your car, up to the actual cash value.

That means that if your car has a market value of $15,000, your insurer will pay $15,000 (minus your car insurance deductible) for this covered loss. But though it will pay under this coverage, it would much prefer you not get your car stolen.

This is why installing certain safety features, such as an anti-theft device, in your vehicle can be a good way to lower your auto insurance premium. Many companies offer discounts for certain approved anti-theft devices.

If you're adding an anti-theft device yourself, confirm with your insurance company that it offers discounts for this and check the requirements to qualify.

12. Switch to pay-per-mile insurance

If you're an infrequent driver asking yourself, "How do I lower my car insurance?" consider whether pay-per-mile car insurance is a good fit. This is an optional policy offered by some insurers in which your premium is split between a base rate and a variable rate based on your mileage, so the less you drive, the less you pay.

However, we wouldn't recommend this type of policy unless you're confident your driving will remain minimal, because you could end up paying more for pay-per-mile insurance than standard insurance. But if you put fewer than 10,000 miles on your car each year, or less than 250 miles a day, you could be a good candidate.

Check if your insurer offers pay-per-mile insurance policies if you want to stick with your current company, or look for insurers that do. Nationwide, USAA, Allstate, and Metromile are a few top insurers that offer this type of policy.

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Bottom line

Car insurance is a necessary expense, but if you're looking to buy low-cost car insurance, it doesn't have to break the bank. By implementing these strategies, you can potentially lower your car insurance rates to save hundreds or even thousands of dollars a year.

Remember, the key is to balance cost savings with adequate coverage. Don't sacrifice protection just to save a few bucks. Your future self will thank you.

Reasons people switch car insurance providers

Drivers often change car insurance companies when rates increase or they find a policy that better fits their needs. Major life changes or dissatisfaction with claims handling also prompt people to shop around.

FAQs

Ask the experts

Making adjustments to your car insurance coverage can lead to significant savings, yet individual quotes vary for a number of reasons. For more insight, we turned to a panel of experts and asked about their opinions on family rates and bundling options. Here's what they had to say:

Why do insurance rates go up?

Chris Miller, Ph.D.

Instructor of Accounting, School of Business | University of Indianapolis

• Inflation: The cost of goods and services tends to rise over time, and insurance companies adjust premiums to account for this. For example, repair costs for cars or homes can increase, leading insurers to raise their rates to cover potential future claims.
• Increased claims: If there has been an uptick in claims or large-scale events (like natural disasters, accidents, or health emergencies), insurers may raise premiums to offset the costs of those claims.
• Natural disasters: For homeowners' insurance, natural disasters like wildfires, hurricanes, or floods can result in widespread damage. If insurers have to pay out more for these events, they may raise rates across the board to cover future risks.
• Changes in risk assessment: Insurers continually assess the risks of their policyholders. If the risk of claims increases in a particular area (e.g., a rise in car accidents or a spike in crime), they may raise rates for customers in that area.
• Regulatory changes: Governments may impose new rules or taxes on insurance companies, leading them to pass those costs on to customers. For example, changes in healthcare regulations can impact health insurance premiums.

Emily Goenner-Munson

Associate Professor of Business Communications, Department of Marketing | St. Cloud State University, Herberger Business School

Auto insurance rates are affected by a multitude of factors, and rising rates can have both personal and market-wide drivers. Individual factors like your driving record (accidents, speeding tickets, and other violations) are very likely to increase your insurance rate. However, factors beyond your control may increase rates as well. Vehicle repair costs are rising due to complex technology, supply chain issues, and increased labor costs are affecting repairs, and general inflation is contributing to rising insurance rates.

Other factors, such as severe weather events, location-based variables, and credit history, also impact rising insurance rates. While some factors affecting your insurance rates are within your control, understanding all the variables that influence pricing can help you make informed decisions about your coverage and potentially find ways to manage costs.

Joe Roberts, Ph.D.

Professor, Director of Entrepreneurship Program | Webster University

Insurance rates are increasing due to several factors, including rising repair and replacement costs, inflation, and more frequent severe weather events. Imagine you crashed your car last year, and fixing it cost $2,500. This year, the same repair costs $3,000 because parts and labor have become more expensive. That extra $500 must come from somewhere, so insurance companies raise premiums to cover these costs.

Severe weather events also cause more damage. If an insurance company paid $100 million in claims last year but $150 million this year, it needs to collect more money from customers to stay financially stable. Think of it like a grocery store increasing prices if their suppliers start charging more. It's the same idea.

Is it ever not a good idea to bundle your home and auto insurance?

Chris Miller, Ph.D.

Instructor of Accounting, School of Business | University of Indianapolis

Most companies bundle the house and car, thus giving a discount on both the autos and the home, so typically it's best to insure both at the same company. There is very little (but some) overlap in coverages from the home and auto, but some companies will only charge one deductible if both the house and car are damaged in the same claim (i.e., hail storm or driving the car through the garage door). The only reason I can think to split them is if there were some underwriting issues or if there were significant savings in the premium to split them.

Tony D. Sellars

Professor, Marketing/Social Media/Multimedia | Rose State College

There may be individual instances where it makes sense not to bundle, but generally, your combined rates will be significantly less when you include both home and auto under one insurer.

From recent personal experience, I can tell you that my car insurance went up more than 20% when I sold my home and the auto policy became stand-alone. Most companies offer hefty discounts when you bundle your policies.

Prachi Gala, Ph.D.

Assistant Professor of Marketing | Kennesaw State University, Coles College of Business

Yes — if one provider isn't competitive on both fronts. Sometimes, separate policies with specialized insurers can outperform bundles in cost and coverage. Always compare before committing.

Example: If you find that your auto insurer offers a competitive rate but your home insurer doesn't, it might be better to keep them separate. For instance, Geico may offer great auto rates, but your home insurance could be significantly cheaper with a provider like State Farm.

How can drivers lower their car insurance rate without compromising on coverage?

Paul Traynor

Assistant Professor of Law | University of North Dakota, School of Law

Drivers can lower car insurance premiums by driving carefully for the conditions, obeying traffic laws and speed limits, and driving defensively. Stay off of cell phones and pay attention to driving as your primary responsibility.

Jie Ying, Ph.D.

Assistant Professor of Finance | Southern Illinois University Edwardsville, School of Business

Drivers can always inquire with insurers about bundling auto, home, or renters insurance, as many insurance companies offer discounts to promote multi-policy coverage. It is also recommended for drivers to explore available discount programs, such as those for students, teachers, and first responders, to maximize their savings. Enrolling in telematics programs that track driving behaviors can further help drivers qualify for discounts based on their driving habits.

Barry Evans, Ph.D.

Associate Professor of Business | Northwestern Oklahoma State University

Car insurance rates are calculated based on a number of factors. Fortunately, many of these are under the driver's control! A driver can lower their rate by doing several things:

1. Make sure you pay all bills on time and have a correct (and high!) credit rating by the three rating agencies. A great credit score is a major factor in your rate.
2. Make sure you drive safely and have no moving violations on your record.
3. Choose a car that is not a higher risk for accidents/tickets than others. For example, a turbo-charged sports car will likely have a higher insurance premium than a family sedan. Cars that are built to go fast will typically have higher car insurance premiums.

What are the most effective ways to negotiate on your auto insurance?

Stephen A. LeMay, Ph.D.

Professor, Department of Commerce | University of West Florida

• Do your homework and know market rates before calling.
• Highlight your loyalty and good driving record, but don't exaggerate. They know the data.
• Ask specifically about discounts you might qualify for. If you don't ask, they may not check.
• Price match if you have competitive quotes.
• Work with an independent insurance agent.
• Time your negotiation for when your policy is up for renewal.
• Be prepared to walk away if necessary.

Randal Ice, Ed.D.

Barnabas Professor of Finance Emeritus | University of Central Oklahoma

Know that different companies charge different rates in different locations. Insurance companies generally like to spread their risk geographically. We see this most dramatically in states with particular property risks like wildfires and hurricanes. It is less risky for a firm to have business all over the country rather than in one place, and they tend to price policies accordingly to generate a more diverse risk pool.

Shop around and be sure to mention to the firms that you will combine insurance coverages, like home and auto, together to get a good rate. You should always get at least three quotes from different companies, and then periodically update your quotes, though often existing carriers will discount for a good claim history.

Barry Evans, Ph.D.

Associate Professor of Business | Northwestern Oklahoma State University

If drivers have worked to raise their credit scores since they first obtained their auto insurance, it may be worth contacting the insurance agency and asking if they now qualify for a lower rate. Similarly if a driver has taken a safe driver course to drop points off their driving record, then a call to the insurance agency to ensure they have that information is also worth doing.

Drivers should know that it is difficult to negotiate for a lower rate for car insurance since that rate is based on many statistical factors that determine the likelihood that the insurance agency will have to make a claim payment. Drivers should also read their policies carefully to ensure they are not paying for something they don't need.

For example, many policies offer an option for a rental car if involved in an accident. If your family has two other vehicles to drive while your car is being repaired, then that additional premium for this option can be deleted, saving money.

Responses were lightly edited for clarity.

Save On Your Auto Insurance

• You could save up to $600 with some companies.
• Compare dozens of providers in under 5 minutes.
• Fast, free, and easy way to shop for insurance.
• Quickly find the perfect rate for you.

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