How to Lower Car Insurance Premiums

Car insurance is an expensive — and mostly inevitable — aspect to owning a car. Some of the reasons coverage is so costly are things you can't easily change, like your age and where you live. Other factors, though, are within your control. Making the right choices on them could help you save.

Here are eight ways to lower your auto insurance costs.

8 tips to save on car insurance

Many of these suggestions take some time and work, but you'll be repaid with lower yearly premiums, perhaps for years to come.

1. Obtain multiple quotes

One of the best ways to save on car insurance is to compare quotes from multiple insurance companies. In a 2019 poll by Consumer Reports magazine, two thirds of readers who obtained three or more insurance quotes saved money on their premiums.

You can shop around for the best car insurance by directly contacting insurance companies — either online or over the phone.

As a rule, large insurance carriers offer online tools that provide estimates of how much you can expect to pay, depending on the coverage limits you've selected. Keep in mind that these tools are only estimates, and may not paint a precise picture of what you’ll actually pay in the end.

To receive an exact rate quote, you will be required to provide some personally identifying information, including your driver’s license number and the car's vehicle identification number, also known as the VIN.

If contacting multiple insurers and comparing their rates seems intimidating, two shortcut alternatives promise to minimize that hassle:

The first is to have an independent insurance agent or broker compare auto insurance rates from a number of carriers for you. Such companies include online brokers like The Zebra and Policygenius.

The second option is to use an online insurance marketplace or comparison site that allows you to gather information on multiple policies at once. There are a number of such online tools out there, including Money’s car insurance comparison tool.

Ideally, you should also read online reviews for insurance companies you may be considering. It can also be valuable to ask friends and family for suggestions on insurers that have worked well for them in the past.

2. Look for bundling discounts

You can save money by buying auto insurance from a company with which you already have other types of insurance, such as home insurance. You might also be able to bundle your car insurance with pet insurance, if your company offers both. (Bundling with life insurance is more rare, even from companies that offer it along with other insurance types.)

The wording varies by insurance provider, but bundling discounts are often referred to as multi-policy, multi-product or multi-line discounts. And the actual amount you can save will depend on your location and insurer, but some companies cite discounts of up to 25%.

3. Install anti-theft devices

Depending on your insurance company, installing a car alarm or a LoJack could save you money depending on your insurance company. Some insurers offer up to a 25% discount for having such anti-theft devices installed. However, not all insurers are so generous, so be wary of investing in such gear only to get lower premiums.

4. Increase your deductible

Your car insurance deductible is the amount you pay out of pocket before the insurance company covers the remaining cost of a claim.

Comprehensive and collision coverage are the two most common car insurance coverages that include deductibles. Collision coverage protects against losses related to a collision with an object. And comprehensive coverage protects against car theft and damage from inclement weather, fire, vandalism, falling objects or collisions with animals.

In some states, you may also need to add a deductible for personal injury protection or uninsured/underinsured motorist property damage.

A good rule of thumb is to select the largest deductible amount you can comfortably afford. The larger the amount you select, the lower the premium you’ll pay.

The savings can be substantial. For example, increasing your deductible amount, especially if it’s currently very low, on your comprehensive and collision coverages can save you up to $250, as illustrated by these price examples from Progressive.

Changing your deductible can be as easy as making a call to your insurer or agent. If you change your deductible and later find it's too high for your budget, you can always change it back.

5. Consider usage-based insurance

Since the advent of telematics — technology that allows auto insurers to price policies based on how much and how well a person drives — most leading carriers have adopted usage-based insurance programs as an alternative to conventional policies.

While traditional car insurance policies are priced based in part on an estimate of the number of miles you’d be driving, telematics uses a record of your actual driving habits to determine that component of your premium.

Some programs also capture the quality of your driving — how fast you typically drive and accelerate and decelerate, as examples — and factor that data into your premium.

Simply trying out telematics should earn you some savings. The trials can earn you a one-time discount or even a cash payment in exchange for using a smartphone app or monitoring device that records your driving.

Once you complete the trial — and if you've driven safely or within the estimated mileage on your current coverage — you could save between 5% and 15% when you renew your policy. The exact discount varies from company to company.

If you maintain a low mileage or have an impeccable driving record, usage-based insurance programs could save you money. If, on the other hand, you tend to speed or break abruptly, opting for usage-based insurance will likely increase your premium.

6. Improve your credit

Your credit score doesn’t appear to have much to do with how you drive. But according to the Insurance Information Institute, “how a person manages his or her financial affairs… is a good predictor of insurance claims.” For this reason, people with lower credit scores tend to pay higher car insurance rates.

The use of your credit history as a factor in determining premiums has been criticized by some consumer advocates, and is banned in California, Massachusetts and Hawaii. In all other jurisdictions, however, how well you pay your bills and other credit factors are likely to affect your car insurance costs, even if you have an impeccable driving record.

If you’re looking to lower your car insurance rate but your credit score is lower than ideal, you can take steps to improve it. Those begin with looking at your credit reports and checking for incorrect items or inconsistencies that may be affecting your score. You can remove items from your credit report by filing a dispute with the credit reporting agency or with the business that submitted the information.

While improvements in your financial record may not immediately affect your insurance rate, it's likely that your premiums will eventually decrease as your credit score increases.

7. Be a safe driver and complete a driving course

Having multiple accidents and traffic tickets can raise your car insurance premium. By staying mindful on the road, you can avoid the accidents and moving violations that will negatively impact your driving record — and, in turn, raise the insurance rate you pay.

If you get a ticket for a moving violation, you may be able to get the ticket dismissed by taking a driving safety or defensive driving course. In other cases, taking some form of “drivers ed” may even allow you to get some points taken off your license.

Also, ask your car insurance company if they offer any discounts for completing an accredited defensive driving course. Each state has different requirements for these, so check with your insurer to see which ones are approved in your jurisdiction — and to confirm that investing in a course will translate into premium savings. Many such classes can now be taken online.

8. Switch to a smaller vehicle

If you need a new car, make the cost of car insurance for your new wheels one of your buying criteria. Premium costs will vary depending on the car’s size and price, along with its incidence of claims and repair costs compared to other vehicles.

Insuring a sizable SUV may cost more than covering a smaller and more affordable vehicle. Honda's smaller SUVs, for example, often rank among the cheapest cars of all to insure. As a rule, insurance for larger cars tends to be more expensive because they’re more costly for insurers to replace, explains the Insurance Information Institute. Due to their weight, more sizable vehicles also tend to cause greater damage to other cars and property when they crash.

Car type matters as well. Premiums are typically lower overall for sedans than for SUVs or sports cars, for example. That said, premiums vary from model to model within each vehicle type. In part, that’s because of attributes such as safety features; a higher safety score for a particular model may offset such negative factors as purchase price or accident record.

If you plan to shop based on safety, the Insurance Institute for Highway Safety's 2021 Top Safety Picks is a good place to look at evaluations and safety ratings. Many car insurance companies offer discounts for features that reduce the likelihood of theft or personal injuries, such as alarms, airbags and anti-lock brakes.

While a certain model being a top safety pick won’t guarantee you a lower rate, it’s definitely a good starting point — and it will also make you better-protected on the road.

When to ask about lowering car insurance costs

You can approach your insurance company, agent and broker at any time about cost-saving measures; you don't have to wait until your policy is expiring to make changes to your coverage.

That said, coverage adjustments are often made after major life changes or when you change vehicles.

Here are some good times to consider money-saving moves on your car insurance.

When renewing your car insurance policy

A great time to see if there’s any way to lower your auto insurance premiums is when you need to renew your policy. That’s especially useful in the event your new rate is higher for the same level of coverage, which may make you particularly motivated to look for savings.

When your life changes

Significant milestones in your life like getting married or divorced, or moving to a new city, can require revisiting your car insurance. And while you’re making changes to your coverage, you can also look into ways to save.

Another example is when you need to insure new drivers in your household. You should be able to get a discount on your auto insurance policy by adding any children under 25, who are in school and unwed, to your policy. Such a break can help offset what is likely to be a considerable increase in your overall premium, since young drivers — especially teenagers — are among the most expensive drivers to insure.

As with older drivers, ask about discounts for young people on your policy who are prepared to take defensive driving or driver's ed courses, are studying away from home and drive infrequently. You may also qualify for a multi-car discount if your child drives a separate car or a good student discount if your child maintains a certain GPA.

These discounts may not be available from all insurance companies or in all states. Furthermore, the Insurance Information Institute recommends focusing on the final price of your coverage, rather than on overall discounts. A company may offer fewer discounts, yet still provide a lower price.

The bottom line on lowering your car insurance premium

Here’s a summary of the best strategies to cut down on what you pay for your car insurance policy. You can use one or more of these tips to get the lowest possible car insurance rates.

• Insurance carriers differ in how they use pricing algorithms, and in the customers they want, so comparison shopping is one of the best ways to save.
• Most companies offer car insurance discounts to those who purchase multiple policies or types of coverage, so consider buying car insurance from the same carrier that sold you your homeowners or renters insurance policy.
• Installing anti-theft devices such as a LoJack or car alarm could help you save up to 25% on premiums.
• Opting for a higher deductible if you can afford it, is certain to lower your premium.
• If you're a good driver or don't drive often, consider a pay-as-you-drive or pay-how-you-drive insurance program.
• Depending on your state, your credit history could influence your premium. Taking steps to improve your credit could help you lower your car insurance rate.
• Be a responsible driver. There is no surer way to lower your car insurance premium. Taking a defensive driving course could also help you obtain additional discounts.
• Larger vehicles are more expensive to insure because they're more expensive to replace. Switching to a smaller SUV, for example, can reduce the amount of money you pay for car insurance.

If you're looking for additional ways to save, check out Money’s best cheap car insurance for the best deals on coverage.