11 Savvy Tips on How to Save Money on Car Insurance
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.
The good news is that some car insurance companies are offering lower rates as the economy attempts to bounce back and more people resume travel plans. If you’re shopping around for car insurance or considering a switch, there are plenty of incentives to help you find the best rates.
You can start by looking into discounts and breaks (no pun intended) offered by major insurance companies like Geico, Progressive, 21st Century, and others. For instance, some insurance companies may offer incentives for being a good driver, using less mileage, 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, increasing your deductible to improving your credit score.
Simple Ways to Cutting Your Car Insurance Costs
We’ve all come across similar car insurance ads on TV that stress the importance of having car insurance in the event of an accident or to avoid expensive out-of-the-pocket costs and liability. But how do we actually save money on car insurance and find good coverage? We’ve highlighted a few quick pointers on how you can cut car insurance costs.
- Try bundling on auto, home, and life insurance for extra savings and discounts.
- When in doubt, always consult with an insurance agent and make several calls to different providers to find the best rates and perks.
- Look into less known perks like anti-theft discounts on car insurance. Read more here.
Tip 1 - Keep up the “good driver" record.
Having a good driving record can have a huge impact on your car insurance premiums. Ultimately, being a safe driver can help save you money in the long run (plus, you’re doing your part to keep yourself and others on the road safe). We can all do our part to be better drivers on the road by avoiding distractions and being more aware of our driving habits. This practice may help you avoid getting speeding tickets or other violations or infractions that could increase your car insurance rates. Some insurance companies will even offer a “good driver discount" to help you save more money on car insurance. So, if you have a clean driving record, keep it up; if not, you may be in for high car insurance premiums.
Tip 2 - Research competing car insurance companies and their rates.
Before locking in the annual premium for auto insurance, it’s best to read all the fine print to know exactly what it is you’re signing up for. Be sure to compare rates, discounts, type of insurance coverage, policies, and rating/reputation. NerdWallet has a helpful guide that lets you compare car insurance rates and find the best providers here.
Insurance companies may have their own criteria for setting their rates according to various factors. For instance, these factors may include everything from age, location, DUI record, credit score, and drivers with an accident on their record. It’s okay to spend a little more time shopping around before committing to an insurance company!
Tip 3 - 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 or not. Studies by the Federal Trade Commission show that individuals with a low to poor credit score directly correlates to an increased risk of filing a claim, which is a higher risk for the insurer; hence, higher insurance premiums if you have a bad credit score.
Tip 4 - Bundle your home and auto insurance with the same company.
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 homeowner’s, auto, or other insurance policies together with one main 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 higher premiums, among other benefits such as a smooth-sailing payment process.
Tip 5 - Look for recent or ongoing discounts at auto insurance companies.
Before committing to an auto insurance company, check to see what type of discounts and perks they offer. This could range from multiple policies to mature driver, student, or safe driver discounts. Other discounts include an Anti-Lock Brake Discount currently offered by Allstate or the Select Professionals and Alumni Associations Discount by AAA.
Tip 6 - Drive a used or old car that is inexpensive to insure.
If you’re on a budget and want to lower your monthly car insurance premiums, you might not want to shop for a brand new expensive car. Choose a resourceful or older car model that doesn’t run up the bill. According to Money Management, some of the inexpensive cars to insure include models like the Honda Odyssey LX or Jeep Renegade Sport, compared to expensive cars like a Mercedes that might have a higher annual premium. Essentially, if it looks and drives like a race car, it most likely will raise your car insurance rate.
Tip 7 - Save with multi-car insurance policies.
If you have multiple car drivers under the same household, you could save even more on car insurance. According to Insurance.com, a multi-car policy refers to insuring more than one vehicle that is at the same household address. Typically, insuring one vehicle might cost more than if you were to bundle and insure several household members that drive cars. Consult with an insurance agent and ask about other ways you can save by adding more household members. Geico offers the best savings of up to 25% when it comes to multi-car policies. Before you go with a multi-car insurance policy, be sure to do your homework and compare other rates and discounts with other providers.
Tip 8 - Increase your deductible and enjoy more savings.
Consider increasing your car insurance deductible to pay less for your premium. According to Mercury Insurance, a car insurance deductible is something you pay out of pocket before the insurance chimes in to cover any additional expenses. When you pay a higher deductible, you’ll most likely have a lower coverage premium.
Tip 9 - Auto insurance savings and courses for mature drivers.
Many insurance companies offer perks and discounts for being mature drivers and taking a driving test to lower insurance premiums by a certain percentage. Several states in the U.S. reward discounts to drivers over 55+ for having a good driving record or taking a defensive driver course. Upon completion of the online course, drivers can receive a multi-year discount on their auto insurance and learn best practices to avoid getting into an accident or receiving a traffic violation. If you’re looking to signup, AARP offers an insightful course on good driving habits and defensive driving for drivers ages 50 and older.
Tip 10 - Change or reduce your collision and comprehensive deductible.
State of Auto Insurance in 2021 recommends slightly changing or reducing both your collision and comprehensive deductible to help you save on car insurance premiums. A drastic switch or reduction in coverage might result in additional annual savings and overall costs depending on your situation. Reducing coverage might be ideal for those who might own an old car or don't need comprehensive coverage for the time being.
Tip 11 - Consider usage-based insurance if you don’t drive that much.
If you don’t drive often or have low mileage under 11,500 miles per year on your car, it’s worth looking into usage-based insurance. You can save up to 10% to 15% annually with this type of insurance.
For instance, Geico offers its new DriveEasy program which uses special technology to track how well you’re driving on the road. They’re able to produce an individualized score based on how frequently you brake, your speed, distracted driving, and other driving behaviors. AutoInsuranceQuote reports that Geico’s DriveEasy app can provide Geico customers a discount of up to 25% through its “pay how you drive" car insurance incentive. Other insurance companies also offer usage-based insurance incentives and discounts, so be sure to compare coverage and rates.
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, discounts, and other auto insurance incentives.