Rate changes often require some form of government approval, although the exact process differs by state. That means companies can't negotiate car insurance rates with individuals.

But you can usually save on your auto policy by shopping around, using discounts and adjusting your coverage.

Can you negotiate car insurance?

Auto insurance rates are calculated using complex formulas that consider factors such as your age, the type of car you drive and your driving history. These rate formulas differ by company, which is one reason why you'll get different quotes when shopping for car insurance.

Where you live also impacts your monthly auto insurance rate. That's because state laws and regulations influence the factors companies are allowed to consider when setting rates.

For example, some states ban or limit the ability of companies to use credit scores when deciding how much to charge you for car insurance. Moving from a state that lets companies use credit scores when setting rates to one that forbids the practice could save you money if you have poor credit.

7 ways to save on car insurance

You can't save money on your auto policy by negotiating your monthly rate, but there are other ways to lower your car insurance bill.

Compare quotes

Switching car insurance companies can save you hundreds of dollars per month, without sacrificing coverage or service. Car insurance rates differ significantly by company because some companies are run more efficiently than others. Plus, the formulas used by auto insurance companies to determine your rate are all somewhat different.

These factors have nothing to do with the quality of coverage or service you get. Many of the best companies for auto insurance offer affordable quotes.

Bundle your insurance policies

Bundling your auto and home coverage is one of the best ways to save on car insurance. An average home-auto bundling discount knocks 17% off the price you pay for both policies. That rises to 24% if you have coverage through State Farm, the best company for bundling your home and auto insurance.

Renters insurance bundling discounts are smaller because renters insurance costs much less than homeowners coverage. But you can still save an average of 2.6% by bundling your policies.

Take advantage of discounts

Many companies let you save on your monthly rate with a range of discounts, including common ones such as:

When shopping for coverage, it's always a good idea to ask your agent or broker to find all of the discounts you may be eligible for. If you're not using an agent or broker, call your top coverage choices or visit their websites to get more information about discounts.

Remember, you can use more than one discount on your auto insurance. Qualifying for several discounts is one of the best ways to save on car insurance.

Raise your credit score

Most states let companies consider your credit history when setting auto insurance rates. Companies believe drivers with worse credit tend to make more auto insurance claims. This means you may get more expensive quotes if you have a poor credit history.

The best way to boost your credit score is by making timely payments on all outstanding loans. It's also a good idea to pay off your credit card in full every month to reduce the amount you owe relative to your credit limit, called your credit utilization.

Consider raising your deductible

The amount you pay before coverage starts is called your auto insurance deductible. For example, if you have a $1,000 deductible and it costs $1,200 to repair your windshield, then you would pay the first $1,000 and your company would pay the remaining $200.

Raising your deductible is a good way to save on your monthly rate, but it's important to make sure you have enough money in savings to easily cover the full cost of your deductible.

Otherwise, you could find yourself with an expensive repair bill the next time you get into an accident.

Adjust your policy limits

You could save more than $1,300 per year, on average, by moving from a full to a minimum coverage auto policy. Before you switch, it's a good idea to make sure this move is right for you.

Dropping comprehensive and collision coverage may make sense if you drive a car that's 8 to 12 years old or worth between $5,000 and $10,000.

It is usually not a good idea to carry only the minimum coverage requirements for your state. That's because you have to pay anything above your policy limits. So, if you have $25,000 of property damage coverage and you get into an accident with a luxury car valued at $100,000, you would be responsible for paying the remaining $75,000 after your policy reaches its limit.

Limit your claims

Auto insurance companies often increase rates after a claim. You can prevent this by covering small fixes out of pocket. For example, if it costs $700 to replace your side view mirror and you have a $500 deductible, then the $200 you'd get from your insurance company could end up costing you $400 over the course of a year if your insurance company raises your monthly rate by $50 at renewal.

It's important to remember that companies can only raise your rate when your policy renews. If you file a claim in April and your renewal date is in September, then the claim won't affect your monthly rate for at least five months.

Frequently asked questions

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Sources and methodology

Information regarding insurance underwriting practices and state-level regulations came from the Texas Department of Insurance and the Washington State Office of the Insurance Commissioner.