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Car insurance cost varies dramatically from one person to the next. Yet, many times the only thing standing between you and lower car insurance rates is knowing the right questions to ask.
Because it’s no surprise that insurance companies profit from clients being unaware of money-saving discounts and policies.
So to help you save your hard-earned money, we’ll show you how to lower your car insurance by knowing what to ask, where to go, and what to say when shopping prices.
That way you can stop overpaying for car insurance and start building wealth.
20 Ways To Lower Car Insurance Rates
Actively taking steps to lower car insurance rates can easily save you hundreds of dollars a year.
In some cases, you can save up to 50% on your policy with the following tips to reduce car insurance.
1. Do Your Research
When purchasing car insurance, you’re faced with a flood of choices and options that require on-the-spot decision-making.
Understanding your options before you place that call is critical to making money-smart choices about your insurance coverage.
To get the best rates on car insurance, you need to understand the different coverages, discounts, and options available.
First of all, there are several types of car insurance coverages to choose from, protecting you from three kinds of losses:
- Damage to yourself and your property
- Damage to others and their property
- Loss of personal assets
The three types of damage are split into a variety of insurance coverages, such as:
- Bodily Injury Liability
- Property Liability
- Medical Payments
- Personal Injury
- Uninsured & Underinsured Motorists
Additionally, you can add extras such as roadside assistance, and rental car coverage.
2. Avoid The Cheapest Policy
When purchasing car insurance, your goal should be to find the lowest rates on the type of car insurance coverage that fits your needs.
Be careful, though, not to get caught up looking for the cheapest car insurance because you might end up compromising on the coverage you actually need.
- Skipping uninsured motorist coverage can cost you thousands of dollars if you get hit by an uninsured driver.
- Not purchasing comprehensive coverage means you're out of luck if your car gets vandalized, stolen, or damaged beyond what you can afford to pay.
- Purchasing the lowest coverage amounts means you’re responsible for any costs that exceed your coverage. Worst-case scenario, this could mean losing your home, assets, and bank account.
3. Compare Rates From Different Companies
If you feel like your current car insurance premium is steep, you don’t need to keep suffering from a hefty bill.
Head over to a comparison website like Insure.com, enter all your information, and get car insurance quotes in seconds.
Insure.com can save you a great deal of time and money — and it’s free to use!
There are so many auto insurance providers out there that the competition can help you get great rates.
You might even show your current provider that there are better rates out there, and they could offer to match the rate you could have had if you switched. Know your options, and get the best rate for you!
4. Negotiate With Your Agent
There are many ways to reduce car insurance – negotiating with several agents is one of them.
Negotiation can significantly lower car insurance rates and save you money.
When an insurance agent knows what they’re competing against (e.g. how much another company quoted you) it can provide more incentive for them to find you deeper savings.
Pick up the phone and talk to insurance agents directly to get a more accurate quote on your car insurance, but don’t commit after the first phone call. Instead, use your quote to negotiate with the next agent.
How does negotiating work? Let agent #2 know what price you received from XYZ insurance company.
Then, wait to see if they can work up a price that gives you the same coverage for a better price.
The show doesn't stop here: Negotiate again with a third agent, and see if they can find you an even lower rate.
5. Get An Insurance-Friendly Vehicle
The age of your car also plays a role into how much your insurance will cost.
Next time you’re looking for a new car, be sure to remember that insurance providers are hesitant to provide great prices for older cars, since they can be more of a liability than a newer car due to updated safety standards and the cost of older replacement parts.
Moreover, insurance companies use data to determine which car models get into the most accidents and which ones cost them the most money in payouts.
This results in car insurance prices that vary according to what kind of car you drive.
According to Forbes, most of the least-expensive cars to insure are large and midsize SUVs because they tend to have lower injury, medical, and bodily injury payouts.
Lastly, some insurance companies also provide discounts for hybrid car owners.
6. Get The Essential Coverage
When you’re signing up for a policy, you’ll have several options for coverages.
Here’s a quick cheat sheet to help you organize and decide on coverages:
- Collision Insurance – this covers your car when you’re in an accident.
- Liability Insurance – this covers damages that happen to other people and vehicles when you’re in an accident.
- Comprehensive Insurance – this is “fill in the gap” insurance, if you will. It covers things like theft, natural disasters, and damage from animals.
- Medical Payments Insurance – this covers some medical payments associated with collisions.
- Uninsured Motorist Insurance – in the case that you had an accident with another party who was uninsured, this would cover your damages if they couldn’t.
Okay so which of these coverages are non-negotiables?
The first three are pretty necessary, and typically legally required in most states. The last two are really up to you.
7. Claim Club Discounts
Are you a member of a club or organization that offers discounted auto insurance rates?
Check the membership benefits of any clubs, organizations, or affiliations you belong to, and be sure to claim any discounts your membership provides.
8. Reevaluate Every 6 Months
If you’ve moved, gotten older, changed cars, put bad driving history further behind you — these are all events that can help to lower your insurance rates.
Evaluate your current discounts and check in with your insurance company on a periodic basis to find out if there are additional discounts or promotions that can save you money.
9. Raise Your Deductible
Higher deductibles mean lower car insurance rates, so if you’re looking to lower your payments immediately, consider a higher-deductible policy.
If your budget allows and your financial situation is stable, you might consider lowering your insurance rates by purchasing a high-deductible policy.
Although, be careful not to adjust to a deductible you can’t handle, and never switch to a higher deductible unless you can cover the expense.
10. Pay Your Premium In Full
Making monthly payments on your car insurance usually means paying additional fees.
So check with your agent and see if by paying your premium in full each year you can cut your auto insurance costs.
11. Take A Defensive Driving Class
One of the ways to reduce car insurance is to complete the defensive driving courses.
Many insurance companies provide lower car insurance rates for drivers who took the course. Because, statistically, safe driving education lowers your risk of getting into an accident.
Defensive driving courses often require very little time (a few hours) and can be taken online for as low as $25, with insurance discounts lasting about three years after completion of the course.
For example, the State of New York mandates a 10% discount for three years after completing a defensive driving course.
12. Install An Anti-Theft Device
Cars with security systems or other anti-theft devices may qualify the driver for a discount on their car insurance.
But before installing an anti-theft device in your car, check with your agent to see if the $$$ you save on auto insurance will cover the cost of the device and still save you money over time.
13. Improve Your Credit Score
Credit score can play a major role in determining your car insurance rate. If you have good credit, you’ll likely pay less for car insurance. So there you have another compelling reason to pay off your debt and build wealth!
14. Get A Military Discount
If you’re on active duty, retired, or a member of the National Guard or Reserve, be sure to ask your car insurance company about military discounts on your auto insurance because most of them have them.
15. Bundle Your Insurance
Next time you’re choosing a car insurance provider, consider buying other insurance policies through the same company.
For example, bundling your auto and homeowners insurance can save you up to 20% with some companies.
16. Move To An Insurance-Friendly Neighborhood
Your zip code has an impact on the price of your car insurance.
If you’re in a neighborhood that's close to family and friends, or simply love your community and can’t imagine living anywhere else, stay put.
But if you’re living in the cheapest apartment you could find and are not attached to the community, recalculate how much you’re really saving by living there.
- Are you paying a significantly higher amount of money for car insurance because of the neighborhood that you live in?
- Do groceries, travel, and car insurance eat up the savings you thought you’d enjoy?
17. Call Your Insurance Company When Violations Expire
Drivers with no accidents, tickets, or DUIs on their record can save a significant amount of money on car insurance rates.
If you’ve had a recent violation, you’ll need to wait out the time it takes for your rates to come back down.
There can be a gap between when you’re allowed to claim lower rates (due to your history expiring) and when the insurance company lowers your rates.
Call your agent and ask for the adjustment as soon as it's due to ensure that you’re not overpaying for car insurance.
18. Install A Safe-Driving Tracking App
Typically, you’ll download an app that tracks your driving, and gives you a discount after a certain period of driving to reward you for the “good behavior”.
It tracks the way you drive, speed limit, stop for stop signs, and come to a slow stop at lights.
Does this sound like something you could benefit from?
Then check with your provider if they offer this perk and take advantage of your safe driving.
19. Lower Your Mileage
The fewer annual miles you drive your car, the less your car insurance costs.
Hence, if you don’t do a lot of driving, check to make sure that your insurance policy reflects your low mileage, which can reduce the cost of your insurance.
20. Get Good Grades
Next time you choose Netflix over studying remember that college students with high GPAs are often eligible for car insurance discounts.
When you’re in college every last penny counts so why waste money on car insurance?
Bonus – Car Insurance Rate Hikes To Avoid
Now that you are familiar with all the ways to lower car insurance rates, watch out for the following terminology that insurance providers often use to take more money out of your pockets.
And remember to read the small letters!
“Up To” Discounts
When you see the term “up to” used in insurance promotions, such as “save up to 20%,” find out exactly how much you’ll save before you figure in the discount.
“Up to” only means that you’ll receive somewhere between 1% and 20%, so be clear on the amount in advance. In most cases, it’s not 20%.
Discounts That Apply To Only A portion Of Your Rates
Before you get excited about a car insurance discount, find out if the percent savings applies to your whole policy, or only to a portion.
For example, if you're considering installing an antitheft device to save a few dollars on your car insurance, find out if the dollar amount will eventually cover the device's cost.
Some car insurance companies promote a perk called “accident forgiveness”, which means they won’t raise your rates after the first accident on your policy.
What insurance companies sometimes fail to mention is that you often have to be insured through their company for a certain period before accident forgiveness kicks in.
Lower Your Car Insurance With These 20 Tips
When it comes to lower car insurance rates the key point is to take a proactive approach!
Begin by understanding what type of coverage you’d like to purchase and learning what discounts you can apply to your auto policy.
Finally, compare rates by shopping around online before calling a few car insurance companies to negotiate pricing.