The best ways to lower your car insurance premiums are to compare prices among insurers, take advantage of all the discounts you can, and adjust your coverage to fit your budget. Drivers can save an average of 64% by switching from full coverage to minimum coverage, for example.
8 Ways to Lower Your Car Insurance Costs
- Shop around for a lower rate
- Search for discounts
- Increase your deductible
- Reduce your coverage
- Reduce your mileage
- Buy an insurance-friendly car
- Improve your credit
- Move to another city or state
With the average cost of full coverage car insurance at $1,997 per year, it’s important to look for savings opportunities wherever they can be found. And while some factors that affect insurance rates can’t be easily changed – like age, gender, location, and career – others can be. Below, you can learn more about how to lower your car insurance premiums using WalletHub’s eight tips.
How to Lower Your Car Insurance
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 of money.
When you shop for insurance, you should always get three or more quotes to compare. And you can maximize your savings by comparison shopping every 6-12 months, when your policy is about to renew.
To learn more, check out WalletHub’s guide to switching car insurance companies.
Every major insurer gives discounts based on your driving history, vehicle features, and policy choices. For example, many insurers offer discounts that allow drivers to save up to 25% by going paperless, paying online, agreeing to automated payments, and paying for their entire policy up front.
You should look through all of the discounts that your insurer offers to make sure you’re saving as much as possible. To learn more, check out WalletHub’s guide to car insurance discounts.
The higher your deductible is, the less that you’ll pay for your premium. For example, going from $250 to $500 could reduce the cost of your collision and comprehensive coverage by up to 30%. And if you go from $500 to $1,000, you could save an additional 31%.
But be careful not to make your deductible too high. There are very few scenarios in which you can avoid paying a car insurance deductible, and if you get into an accident, you don’t want to be faced with paying more out of pocket than you can afford.
To learn more, check out WalletHub’s guide to car insurance deductibles.
There are two ways that you can save on car insurance by reducing coverage. First, you can lower your policy limits. The other option is to drop unnecessary types of coverage. For example, if you own an old car that isn’t worth very much, you might consider dropping collision and comprehensive coverage.
If you do decide to reduce your coverage, make sure that you are still complying with your state’s insurance laws, as well as any coverage requirements from your lender or lessor.
Insurers take your annual mileage into account when they calculate your premium, so think about carpooling to work, riding your bike locally, or using public transportation. Alternatively, some insurance carriers offer electronically monitored, usage-based insurance that bases your rate on your driving habits. With some programs, you can earn deep discounts. For example, State Farm says that drivers who log relatively few miles in its program can save as much as 50% on their insurance.
Factors that affect how much a car costs to insure include its value, body type, make, and age. Expensive cars, sports cars, and cars with high theft rates are more expensive to insure than cheaper, less risky vehicles. Before you buy a new car, you should get an insurance quote and decide whether or not the cost of coverage fits within your budget.
Since your credit history is correlated to your likelihood of filing an insurance claim, insurers in most states take credit data into account when setting your rate. On average, drivers with no credit pay 67% more for car insurance than drivers with excellent credit, according to WalletHub’s analysis.
By gradually building and improving your credit, you’ll eventually start to see a drop in your insurance premiums. To help you do this, WalletHub offers personalized credit-improvement advice, along with free credit scores and reports.
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. And if you live in an area that is especially prone to certain natural disasters, you’re probably more likely to file a claim at some point.
Bottom Line: How to Lower Car Insurance
If you are serious about lowering the cost of car insurance, your first step should be to compare the price of your current insurance policy 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.
Ask the Experts
To gain more insight about lowering car insurance premiums, WalletHub posed the following questions to a panel of experts. Click on the experts below to view their bios and answers.
1. What is the best way for drivers to lower their car insurance?
2. How often should drivers shop around for lower car insurance rates?
3. Can car insurers really save drivers as much as they advertise when switching companies?