10 Tips on How to Reduce Your Car Insurance Costs
Disclaimer: We are not financial experts, so please consult with an insurance specialist or finance expert for up-to-date information on rates, premiums, and other car insurance inquiries.
Looking to reduce your car insurance premium? We’ve got you covered.
Car insurance companies are raising insurance rates after a brief dip in rates through 2021. If you’re shopping around for car insurance or considering switching providers, there are plenty of ways to lower your premium.
You can start by looking into discounts and breaks (no pun intended) offered by major insurance companies like GEICO and Progressive. For instance, some insurance companies may offer incentives for being a good driver, driving less, or having good credit.
We’ve compiled a brief guide with tips on how to save money on car insurance — everything from bundling your insurance and increasing your deductible to improving your credit score.
*Note/disclaimer: We are not financial experts, so please consult with an insurance specialist or finance expert for up-to-date information on rates, premiums, and other car insurance inquiries.
Simple Ways to Cutting Your Car Insurance Costs
Jump to the pointers below on how you can easily lower your car insurance costs:
- Improve your credit score.
- Bundle your home and auto insurance.
- Drive an older car.
- Increase your deductible.
- Research other car insurance companies and their rates.
- See which discounts you qualify for.
- Insure more than one vehicle.
- Complete a defensive driving course for drivers over 55.
- Consider usage-based insurance if you don’t drive that much.
- Maintain a good driving record.
1. Improve your credit score.
How’s your credit rating? It’s important to improve your credit rating because that can also impact whether you’re paying a higher insurance premium. Studies by the Federal Trade Commission show that having a poor credit score directly correlates to an increased risk of filing a claim, which is a higher risk for the insurer; therefore, if you have a bad credit score, you can expect to pay more for car insurance (except in the handful of states where it is illegal to use credit score as a rating factor).
2. Bundle your home and auto insurance.
Save money by keeping all your insurance policies under one roof. Instead of conducting extensive research or shopping around for auto insurance with another insurance provider, consider sticking with your current provider. You may be able to simplify payments and save even more once you bundle homeowners, auto, and or insurance policies with one insurance provider. Make sure you inquire about possible discounts, benefits, or long-term savings with your current provider when bundling your auto insurance. When you bundle, you can avoid having to pay a higher premium, among other benefits, such as a simplified payment process.
3. Drive an older car.
If you’re on a budget and want to lower your monthly premium, you might not want to buy a brand-new car. Choose an older vehicle that is more affordable. According to Money Management International, some of the inexpensive cars to insure include models like the Honda Odyssey LX or Jeep Renegade Sport. Essentially, if it looks and drives like a race car, it most likely will cost more to insure.
4. Increase your deductible.
Consider increasing your deductible to pay less for your premium. According to Mercury Insurance, a deductible is the amount you’ll pay out of pocket before your insurance company starts paying. When you opt for a higher deductible, you’ll have a lower premium.
Insurance provider ValuePenguin recommends raising both your collision and comprehensive deductibles to reduce your premium. A drastic switch or reduction in coverage might result in additional annual savings and overall costs depending on your situation. Reducing coverage to manage insurance costs might be ideal for those who own an old car or don't need comprehensive coverage for the time being.
5. Research other car insurance companies and their rates.
Before choosing an auto insurance provider, be sure to compare the rates, discounts, types of coverage, and rating/reputation of other companies. Check out NerdWallet’s car insurance comparison guide and compare car insurance rates to find the best provider.
Insurance companies use various factors to set their rates, including age, location, driving record, and credit score. It’s OK to spend a little more time shopping around before committing to an insurance company!
6. See which discounts you qualify for.
Before committing to an auto insurance company, check to see which types of discounts and perks it offers. There are discounts for having multiple policies, being a mature driver, being a student, or being a safe driver. AAA offers a discount for select professionals/alumni associations.
7. Insure more than one vehicle.
If you own more than one vehicle, you could save on car insurance. According to Insurance.com, a multi-car policy refers to insuring more than one vehicle at the same address. GEICO offers the best multi-car savings compared to other providers, at up to 25% off.
8. Complete a defensive driving course for drivers over 55.
Drivers over the age of 55 who have a good driving record and complete a defensive driver course can get a discount on their car insurance. Through this course, drivers will learn best practices for avoiding accidents and traffic violations. If you’re looking to sign up, AARP offers a defensive driving course.
9. Consider usage-based insurance if you don’t drive that much.
If you don’t drive often, it’s worth looking into usage-based insurance. You can save 10% to 15% annually with this type of insurance.
For instance, GEICO’s DriveEasy program tracks your driving habits and generates a score based on how hard you brake, how fast you accelerate, and other driving behaviors. AutoInsuranceQuote reports that DriveEasy can provide a discount of up to 25% through its “pay how you drive" car insurance incentive. Other insurance companies offer usage-based insurance incentives and discounts, so be sure to compare coverage and rates.
10. Maintain a good driving record.
Obviously, maintaining a good driving record has a huge impact on your car insurance premium. Being a safe driver will save you money in the long run (plus, keeping yourself and others on the road safe is its own benefit). We can all do our part to be better drivers by avoiding distractions and being more aware of our driving habits. This practice may help you avoid getting speeding tickets or being cited for other violations or infractions that could increase your premium. Many insurance companies offer a good driver discount.
We hope you’ve gained a few helpful tips from this savings guide by Savvy. Keep in mind that rates, discounts, and incentives can change, so it’s best to reach out directly to insurance companies for updated information. If you need more help, consult with an insurance agent who can best advise on specific policies, auto discounts, and other auto insurance incentives.