How to Save on Car Insurance

How to Save on Car Insurance

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Car insurance costs more than $1,500 per year for the average driver. But you can lower your car insurance rates by taking advantage of a few easy ways to save. For example, you could cut your car insurance bill by 10% just for switching to paperless bills or setting up autopay. And you could see 50% savings on your car insurance by making bigger changes like improving your credit or trying usage-based insurance.

1. Change how you pay your bill

The easiest way to lower your car insurance premium is to rethink your payments. Most national insurance companies offer discounts for paying your premium online, choosing to receive paperless statements by email and signing up for automatic payments. You can also save by paying for a 12-month policy in full instead of making monthly payments.

Drivers who take advantage of these easy-to-get car insurance discounts could save as much as 10%, depending on the insurer. However, most insurance companies have a limit to how much you can save with discounts, or only give signup discounts on your first six-month or 12-month bill.

Discount
Average annual savings
Autopay discount5%-10%
Paid-in-full discount5%-10%
Paperless discount5%-10%
Quote-in-advance discount3%-10%

2. Find membership savings

Many car insurance companies offer 2% to 10% auto insurance savings for drivers who are members of certain affinity groups or work in specific professions. For example, Geico offers drivers a 3% discount if they belong to one of the hundreds of professional and alumni organizations on its partner list. That includes fraternities, sororities, honor and academic societies, and trade and professional groups.

Your job could also qualify you for a discount of up to 9% from auto insurance companies like Geico, Farmers, Liberty Mutual and Nationwide. For example, you might get a discount if you're a teacher, nurse, emergency responder, military member or federal employee.

3. Rethink your coverage

Another easy way to lower your car insurance bill is to carefully read through your policy and remove any coverage you don't need or use. For example, you might not need roadside assistance coverage on a brand-new car that's still under warranty since most manufacturers offer free roadside assistance for the first three to five years.

If your car is worth less than a few thousand dollars or is more than 10 years old, consider dropping collision and comprehensive coverage. Switching from a full coverage policy with collision and comprehensive coverage to a minimum liability policy could lower your car insurance premium by $1,500 a year.

4. Increase your collision and comprehensive deductible

Opting for a higher collision and comprehensive insurance deductible is an easy money-saving tip if you can afford it. Based on our research, increasing your deductible from $50 to $1,000 could save you 56% on your comprehensive and collision coverage. And jumping from a $500 to $1,000 deductible could help you lower the cost of coverage by 25%.

Note that you'll have to pay more out of pocket for car repairs after an at-fault accident or when making a comprehensive claim, so this option is ideal for drivers with a healthy emergency savings fund.

5. Bundle your insurance

You can save between 5% and 18% on your annual auto insurance premium when you bundle multiple insurance policies with the same company. That can include auto and home, renters, condo, umbrella, life or health. The most common bundle is auto plus home insurance, and typically saves you 15% off auto insurance and up to 35% on home insurance annually.

In addition to bundling, you can also combine all your vehicles under the same policy and save up to 25% with a multi-vehicle policy discount. You can still customize the coverage for each vehicle even if they're on the same policy.

6. Track your driving with telematics

Usage-based insurance is a great option for safe drivers who don't drive much and want to save 30% to 50% on their annual premiums. With telematics or usage-based insurance, a black box device or app tracks your driving and gives you a discounted rate based on your driving ability and risk level.

7. Keep young drivers on a parent's policy

Having a young driver on their parents’ policy usually results in much lower auto insurance costs. Compared to the cost of insuring a teen driver on their own policy, we found that adding young drivers to their parents' plan can save 66% on car insurance.

However, if your teen has a history of accidents, claims or tickets, expect higher insurance rates whether your teen is on your policy or their own. It’s wise to explore pricing for both a separate policy for your teen driver versus keeping them on the family policy in this case.

8. Update your policy details

It's a good idea to regularly check your car insurance policy and coverage details to make sure the details are correct. Even small details like your car's trim level and safety features can affect your rates. For example, our research found there could be a difference of as much as $1,950 a year between different Honda Civic trim levels of the same model year.

Make sure you're getting credit for all the discounts you qualify for, like being a homeowner or a student who gets good grades. And check your policy when your situation changes. For example, you could see slightly cheaper rates if you've built a carport or poured a new driveway and no longer park your car on the street.

9. Improve your credit score

Your credit score is one of the factors that affects your car insurance rates. Bumping your credit score up to the next tier saves most drivers an average of 16% to 17% on their annual car insurance rates, according to our research. You'll see the biggest savings by improving your score from fair to good.

10. Compare car insurance quotes

Shopping for multiple quotes is the easiest way to find lower car insurance rates. We found that comparing quotes to find the cheapest policy can save you as much as 50% on your annual car insurance costs compared to going with an insurer with average rates.

Insurers consider a number of elements when setting rates, meaning the cheapest company for you may vary depending on your driver profile. Your age, driving record and what car you drive all have an effect on your auto rates, and comparing quotes is the only way to identify which company can help you save the most.

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Should car insurance rates decrease every year?

It depends on what's changed for you in the last year. For young drivers, you can usually expect lower rates for each year of safe driving, as long as you maintain a clean driving record without tickets, accidents or claims. Once you reach your 30s, rates tend to stabilize until you hit age 60.

Your rates could go up if there are other factors that change besides your age, such as if you trade in your car for a more expensive model to insure, or you move to a big city.

When is the best time to get car insurance?

It's a good idea to get new quotes after a life event like getting married or when you hit an age milestone like age 18, 21 or 25, since those changes can lower your rates. You can switch car insurance at any time without penalties from most companies, as long as you don't have a lapse in coverage when you switch to your new policy.

One case where you might wait to switch is if you're expecting your rates to go up, such as if you've recently gotten a ticket. Insurers usually won't see those changes until you go to renew, so it's often best to wait until renewal and then get a few quotes to see which company is most lenient and offers the best rates.

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