The best ways to lower car insurance costs are to compare prices among insurers, take advantage of all the discounts you can, and adjust your coverage to fit your budget. While some factors that affect prices can’t be easily changed—like, age, gender, location, and career—others can be. For example, you might be able to save 33% to 50% on your premiums just by switching to a cheaper carrier, according to WalletHub’s research.
With the average cost of car insurance at more than $3,900 per year, it’s important to look for savings opportunities wherever they can be found. Here are some easy ways to lower costs plus some that take a little more work.
8 Tips for How to Lower Car Insurance Costs:
1. Shop around
Insurance companies charge different rates for the same coverage. They also treat the factors that go into your rate (driving history, age, credit history, etc.) differently. Finding the company that is best for the kind of driver you are can save you a lot.
When you shop for insurance, you should always get 3 or more quotes to compare. And be aware that prices change within the industry. You can maximize your savings by comparison shopping every 6 to 12 months, when your policy is about to renew.
2. Search for discounts
Every major insurer gives discounts. Look through all the ones your company offers to make sure you are getting what you qualify for. For instance, you might be able to save money if you:
Bundle policies—save up to 25% for having your auto, home, health and/or life insurance policies with the same company.
Auto-pay or pay upfront—having your premiums automatically deducted from your checking account or paying your entire premium in one payment can save you 5% on your total premium.
Go paperless—view and pay your bill online for 3% off.
Take a defensive driving course—and save up to 10%. Some companies restrict this discount to certain groups, such as seniors.
Maintain a “B” average—if you’re still in school, keeping your grades up can earn you 15% to 25% off your premiums.
Inventory your car’s equipment—anti-theft systems or safety equipment (anti-lock brakes, airbags, daytime running lights, etc.) can reduce collision or comprehensive costs by 5% to 25%.
Think about all your groups—working for certain employers or belonging to certain clubs, alumni associations, professional organizations, social groups or charitable groups can offer savings of up to 25%.
Stay safe—avoiding at-fault accidents and moving violations for at least five years will reduce your bill by up to 20%.
3. Increase your deductibles
Increasing your deductibles will definitely reduce your premiums. Going from $200 to $500 could reduce the cost of your collision and comprehensive coverage by up to 30%. Going from $200 up to a $1,000 deductible could save you 40%. But be careful. If you get into an accident, you don’t want to face paying more out-of-pocket than you can afford.
4. Reduce your coverage
There are two ways to do this. You can lower the limits on your coverage. Or you can eliminate unnecessary types of coverage. Maybe you don’t really need rental car coverage, for example. Comprehensive coverage on an old, low-value car may not be worth the cost, either.
5. Reduce your mileage
How far you drive each year affects your insurance costs. Think about carpooling to work, riding your bike locally, or taking the bus. Driving less than 10,000 miles a year could save you 11% on average.
As an alternative, the electronically monitored, mileage-based insurance offered by some carriers allows you to pay only for the number of miles you drive in a month. You can earn deep discounts. State Farm says that drivers who log relatively few miles in its program save as much as 50% on their insurance.
6. Buy an insurance-friendly car
Luxury cars, sportscars and cars with high theft rates can cost up to 3 times as much to insure as cheaper, less risky vehicles. Before you buy, get a quote on insuring your new car and think about whether that’s in your budget.
7. Improve your credit
In most states, insurance companies take your credit history into account in setting your rates. Improving it can reduce your premiums. People with no credit pay 67% more for car insurance than people with excellent credit, on average, according to a recent WalletHub study.
8. Move to another city or state
You probably won’t plan a move just to save on insurance, but the area you live in significantly affects your rates. Less densely populated neighborhoods with fewer cars and less crime put you at lower risk for accidents, theft, and collisions with injuries. Local weather and road maintenance also factor into your rates.
If you are serious about lowering the costs of car insurance, your first step should be compare the price of your current insurance to quotes from several other companies. It’s also important to visit the website or call the customer service department of your current insurer and make sure you know all the ways you can save with them. Lastly, remember to repeat these steps regularly, at least once a year. Otherwise, you could be throwing money away without knowing it.