13 Ways to Lower Your Car Insurance Rates (Without Changing Your Lifestyle)
I recently had the pleasure of signing up for a new car insurance policy.
(That’s sarcasm, if you can’t tell.)
The process, though fairly simple, felt overwhelming — mostly due to the hefty price tag. And it’s not just because of that one fender bender I got into…
Auto insurance rates across the country are higher than ever, according to The Zebra’s 2019 State of Auto Insurance report. The average American is paying an annual premium of $1,470.
And rates continue to increase. In fact, 184 million U.S. drivers — that’s about four out of five drivers — saw an increase in their car insurance bills this past year.
Although these rate increases show no signs of slowing down, there are a few simple steps you can take to lower your car insurance costs.
13 Simple Ways to Lower Your Car Insurance Rates
While I shopped around for a policy that didn’t break my budget — but still offered insurance coverage that thoroughly protected my car, me and other motorists — I researched some tips to help save money.
And, no, I’m not going to suggest anything that requires a drastic life change. Sure, buying a new type of car with high safety ratings, moving to Maine, maintaining a clean driving record or never driving again will all help. But that’s not realistic for most of us.
Here you’ll find the simplest, most practical ways to lower your auto insurance premiums:
1. Shop Around for the Best Rates
Comparing rates sounds like a given, but here’s the thing: Too many people stick with the same auto insurance company and same insurance agent because that’s easy. There’s something to be said for brand loyalty, but it’s also important to shop.
Why? Car insurance companies use different algorithms to determine costs. Additionally, many offer first-year deals to new customers.
The easiest way to compare rates is to use an online car insurance search engine, like The Zebra. It breaks down your insurance “in black and white” and compares your policy options from 204 providers in less than 60 seconds.
Just enter information about your car and your coverage needs, and The Zebra shows dozens of side-by-side quotes from top insurance companies for free. We talked to Artie Januario, who found new insurance through The Zebra and managed to knock off $30 a month — or $360 a year — from his premium.
2. Continue to Shop for a Lower Rate Every 6 Months
Comparing rates once won’t cut it. They can change month to month — even day to day.
There are a number of fluctuating personal factors that can affect your insurance rates, including your age, location, marital status and credit score. But consider external factors, too, like natural disasters, crime rates and the economy.
Experts encourage consumers to compare rates at least once a year — ideally every six months. Set a reminder on your calendar.
To compare rates easily, you can use a free service called Gabi.
With Gabi, you’ll get your free comparison insurance quote now — for the same coverage levels and deductibles you currently have. Then, once you sign up, you never have to shop again. It’ll continue to monitor car insurance rates and will let you know as soon as it finds you savings.
3. Increase Your Deductible
Car insurance deductibles are typically $500 or $1,000 — you choose. This is simply the amount you’ll have to cover out of pocket before your insurance kicks in and covers the rest.
Now, you’re thinking the lower deductible is best, right? In some cases, yes, because if you need to file an insurance claim, you’d rather fork over $500 than $1,000. But opting for a higher deductible can actually save you money on your insurance premium, which could save you money over time.
In fact, if you bump your deductible up to $1,000 from $500, you can save an average of 11%, according to The Zebra.
You’ll have to consider what happens if you get into an accident and have to file a claim. Can you cover that $1,000 deductible? Do some math, and make sure the money you’re saving on your premium is worth the higher deductible.
And drive safely!
4. Pay Your Policy Online, in Full and Early
The Zebra also looked at how much money you can save by adjusting your payment plan. Here’s what it found:
- Save 1.5% with auto-pay.
- Save 4.7% by paying in full.
- Save 3.1% with a seven-day advanced payment.
- Save 3.8% with a 10-day advanced payment.
And if you pay online, in full and early, you could lower your rate by 10%. It might not sound like a ton of money, but if your premium is $1,500, this simple move could result in $150 of savings each year.
5. Maintain Good Credit
Did you know your credit score can have a hefty impact on your car insurance premiums? Drivers with poor credit tend to pay more than twice as much as those with exceptional credit, according to The Zebra.
If your credit score is veering toward the “poor” end of the spectrum, there are some simple steps you can take to increase it. We recommend signing up for Credit Sesame, a free credit-monitoring service that breaks down exactly what’s on your credit report in layman’s terms, how it affects your score and how to address it.
James Cooper, a motivational speaker, raised his credit score 277 points in six months using Credit Sesame. Cooper’s favorite part about Credit Sesame is its personalization. It suggested concrete steps, based on his situation, to better manage his credit score.
Some states have outlawed the use of credit in determining car insurance costs. These include California, Hawaii and Massachusetts.
6. Bundle Your Insurance Policies
You’re probably paying for additional insurance policies, right? Like homeowners insurance or renters insurance? Once you find a company you like and trust, consider bundling your policies to save some money.
The Zebra found that bundling policies could save you up to 10%.
7. Pay Your Insurance Per Mile
A lot of the advice will tell you to reduce the miles you drive to save money with a low-mileage discount. But here’s the thing: That’s simply not realistic for most of us. It’s not like we’re taking daily joyrides; we’re commuting to work.
But if you already don’t drive a whole lot — say, no more than 30 miles a day or 200 miles a week — you might save some money by opting for a pay-per-mile insurance policy.
An insurer called Metromile lets you pay by the mile if you live in California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia or Washington. If you only drive 5,000 miles per year, you could save $611, according to Metromile’s calculations.
A few things to keep in mind:
- Your car must be a 1996 or newer to qualify.
- After you sign up, the company will mail you a free device that plugs into your car and tracks mileage. (That’s how it saves you money!)
Find out whether a pay-per-mile policy could help you save by snagging a free quote.
8. Take a Defensive Driving Course
OK, so maybe you recently got a speeding ticket. Or you didn’t see that stop sign and received a moving violation. Whatever the case, taking a defensive driving course can be a great way to wipe the points from your driving record and help offset an increase in insurance costs.
And guess what? You don’t have to sit through a weekend of classes. There’s this thing called the internet, and you can take online defensive driving courses through AARP, the National Safety Council or your state’s DMV. The cost of the course will vary by state, but you shouldn’t pay more than about $40.
Even if you’re a safe driver with a good driving record, you can still take the course for an insurance discount — just be sure to check with your insurance agent to make sure the discount applies (and that it’s worth the cost of the course).
9. Brag About Your Community Involvement
When signing up for car insurance, ask your agent if you can tap into discounts for organizational involvement. For example, when I signed up for my new insurance policy, the company asked if I was involved in a sorority or fraternity, or an alumni organization.
You can also get discounts if you’re involved in an educational, business or military organization.
10. Know Your State’s Minimum Requirements
Each state requires different liability coverage amounts, so study up on your state’s minimum requirements.
For example, in Maryland, motorists are required to have insurance that covers at least $30,000 in bodily injury per person, $60,000 in bodily injury per accident and $15,000 in property damage. (This is often referred to as 30/60/15.)
The minimum coverage is the cheapest, but you’ll likely want more.
A good rule of thumb? Secure coverage that equals the total value of your assets (think: car, home, investments, savings), suggests the Wall Street Journal. Why? If your insurance doesn’t adequately cover an accident, your assets could be seized to help cover car repairs and medical costs.
To find out your state’s required minimums, visit your DMV online.
11. Understand Collision and Comprehensive Coverage
In addition to the state minimums, you’ll also need to consider adding collision and comprehensive coverage to your auto insurance policy.
Comprehensive insurance will cover any non-accident related damage. Think: hail, theft, flooding, vandalism, fire, falling objects, animals — anything that doesn’t involve another car. Some states call this “other than collision” coverage.
Then there’s collision coverage, which pays for damage done to your car. If you own an older car that’s not worth a lot, collision coverage might not be worth the increase in your insurance bill.
Both of these add-ons are optional, but they could benefit you, so consider your circumstances carefully.
12. Ask About Additional Discounts
We’ve covered a couple of discounts so far, but it never hurts to ask your auto insurer about any additional discounts you might qualify for. Some of the most common ones include:
- Good student
- Multi-car (include more than one car on your policy)
- Safe driver
- New car
- Anti-lock brakes
- Airbag (usually for older cars made before 1990)
- Anti-theft devices
- Paperless (view your bill online)
Honestly, there are too many to list, so it never hurts to inquire. Chances are, your agent will be able to dig up something to help you out.
13. Use Your Negotiation Skills
When in doubt, hop on the phone. Yup, for this final tip we’re getting back to the basics… It’s time to negotiate!
You can negotiate just about any of your monthly bills, including your car insurance. Contact your agent or a company representative and let them know you need to find additional ways to save money… or else.
(Just kidding. Don’t say that last part.)
Carson Kohler ([email protected]) is a staff writer at The Penny Hoarder. To be honest, finding affordable car insurance wasn’t as difficult as she thought it’d be!