‘How can I save money my car insurance premiums,’ is one of the most common questions people have when it comes to insurance. The good news is that there are many things you can do to get much lower rates and discounts on coverage for your car. The bad news, that most other websites won’t tell you, is there can be hidden downsides to each option.
- Driving Record
- Type Of Car
- Safety Features
- Drop Collision Coverage
- Drop Roadside And Rental Coverage
- Avoid Duplicate Coverage
- Minimum Liability Insurance
- Where You Live
- Good Credit
- Avoid Lapsed Coverage
- Pay Annually
- Multiple Cars
- Multiple Insurance Products
- Low Mileage Discount
- Age Related
- Good Grades
- Driving Classes
- Group Membership
- Get Quotes
Therefore, we have included as many different ways to save money on auto insurance as possible. Most will probably not be applicable to your situation, but hopefully you can find a few that are. What really sets this list apart is the fact that we include both the pros and cons of each option.
Before continuing please be advised that all content provided below is for information purposes only. You must check with your insurance company and/or agent before making any changes to your policy. We do not and are not providing any insurance, financial and/or legal advice. Only a licensed insurance company and/or agent can provide you with such advice.
1. Maintain A Clean Driving Record
Your driving record is far and away the most important aspect of your policy. DUIs, accidents, speeding tickets and other moving violations can substantially increase your auto insurance premiums. Get convicted for any of these offenses and you can face a surcharge on your policy that can easily last 3-5 years. Plus, it can easily triple what you have to pay each month.
Pros: By maintaining a clean driving record not only will you have lower car insurance rates but you will also protect yourself, your passengers and other motorists on the road.
Cons: If you have a bad driving record it will take a minimum of 3 years from the date of the last incident to start seeing an improvement in your rates.
2. Drive a Cheaper Car
The car you drive has a very large impact on the rates you pay for coverage. Driving certain cars can easily double the price you pay for coverage. So if you want to have lower premiums you should some research before buying your next car. Fortunately, the Insurance Institute for Highway Safety provides a comprehensive list of which makes and models cost more than others.
Pros: By doing just a little research before buying a new car you save hundreds or even thousands of dollars over the lifetime of your vehicle.
Cons: If you find your current vehicle is among the more expensive models to insure there is nothing you can do, short of buying a new one to take advantage of this discount.
3. Car Safety Features
The safety features included in your car can make a big difference to your car insurance rates. According to GEICO you can get the following discounts:
- You can save up to 40% with full front seat airbags on the personal injury or medical portion of your policy.
- Save up to 5% when you have anti-lock brakes on your collision insurance.
- Save up to 25% on your comprehensive coverage with an anti-theft device.
- Daytime running lights can save you up to 3% on your coverage.
- Finally, by making sure you and your passengers always use their seat belts you can save another 15% off the medical and personal injury portion of your policy.
Pros: These safety devices make driving your car safer, so insurance savings are just a bonus.
Cons: It can be somewhat expensive to buy a car that includes all these safety features. Moreover, you most likely can’t add these to your current vehicle.
4. Raising Your Deductible
One of the most often cited ways of getting an auto insurance discount is to raise your deductible. Essentially, your deductible is the amount you have to pay out of pocket before the insurance company picks up the rest of the tab. So if you have no deductible the insurance company pays for everything. Whereas if you have a $1,000 deductible you would have to pay the first $1,000 of any costs out of pocket and/or all repairs that cost less than $1,000 depending on the type of coverage you have.
Pros: An easy way to get lower rates that you actually have some control over.
Cons: If you get in an accident you could be paying hundreds of dollars more out of pocket than you would have, had you maintained you existing coverage.
5. Dropping Collision Car Insurance Coverage
Another similar option is to drop collision coverage altogether, if you’re currently paying for it. Keep in mind this means if you cause an accident you will no longer be eligible to have your car repairs paid for by your insurance company. This really only makes sense if you’re driving an older model car that isn’t worth very much. Progressive, have a good article outlining when it makes sense to drop coverage.
Pros: Another discount option you can implement right away.
Cons: If you drive a new or expensive car you could be out thousands of dollars if you get into an accident.
6. Drop Roadside and Car Rental Coverage
Another way to reduce premiums is to drop extra coverage options like roadside assistance and/or car rental insurance, if you currently have them on your policy. Many credit cards now offer roadside coverage options that may cost less (or come free) than what you are paying now. Moreover, groups like the AAA might also be able to give you the same coverage for less. Plus, AAA can help you while you’re traveling abroad too, something which your current auto insurance policy probably does not cover.
Pros: Saves you money if you have duplicate coverage elsewhere.
Cons: If you don’t have roadside assistance and/or car rental coverage from somewhere else, you may have to pay out of pocket for these services if you need them.
7. Avoid Duplicate Life and/or Medical Insurance Coverage
One easy way to reduce your premiums is to avoid buying duplicate coverage in the fist place. If you have good health insurance either from an employer or purchased on your own, you may not need additional medical auto insurance coverage included in some comprehensive plans. The same goes for life insurance coverage if you already have a policy elsewhere.
Nevertheless, you should make sure you don’t accidentally cancel either required coverage or insurance coverage you want to have. Always check with all your insurance companies before dropping any coverage to make sure you know exactly who will pay what in what circumstances. Make sure you get it in writing so you can’t be denied coverage later.
Pros: You don’t end up paying for insurance coverage twice, saving you money.
Cons: You can accidentally not be fully insured if you aren’t careful when canceling certain portions of your policy. Always makes sure you fully understand all your coverage in different situations before actually canceling anything.
8. Getting Only The Legally Required Minimum Liability Insurance Coverage For Your State
An option that is not really recommended, but will save you money is to buy only the minimum amount of liability coverage you are legally required to have in your home state. This is absolutely legal but could have negative consequences should you get in a car accident where the costs are higher than your coverage. In such a situation you are liable for all costs above and beyond what is stated in your policy.
Pros: Can substantially reduce how much you are paying for car insurance, especially if you have a lot of extra coverage.
Cons: If you cause a serious accident you could be liable for more than you insurance coverage. This can potentially lead to personal bankruptcy in certain cases.
9. Where You Live
One thing you have relatively little control over that still has a big impact on your premiums is where you live. Generally speaking drivers in urban areas, due to higher accident rates, have higher premiums. Moreover, due to the different requirements of each state, insurance premiums from one to the next can vary widely.
For example, the average rate paid by all drivers in the US for car insurance is $1,440 but that hides a huge variation in rates. Vermont due to the fact that its mostly rural has the lowest average premiums at just $892 per year. At the other end you have New York state where New York City drags the average annual rate drivers pay to $2,788. Almost double the national average!
Pros: If you live in a low cost state you’re already getting a bonus. Plus, if you have some flexibility over where you live, you might want to consider the impact on insurance premiums.
Cons: Most people don’t really have that much choice on where they live. Driving longer just to save a few bucks on car insurance doesn’t make sense when you factor in the cost of gas and your time.
10. Have A Good Credit Score
One thing many people don’t know is that their credit history and score can affect the rate and premiums they’re charged for their policy. The simple reason why, is that insurers have found that those who have poor credit are more likely to file a claim. More surprising still is that insurance companies don’t have to tell you that you aren’t getting the best rate due to your credit. So pay off those credit cards to save on your policy.
Pros: A good credit score is associated with other good financial habits like manageable or no debt and on-time bill payment. These are good habits to have regardless of car insurance savings.
Cons: You can’t improve your credit standing overnight.
11. Avoid Any Lapse In Coverage
As long as you own a car you should never let your insurance coverage lapse. Lapsed coverage can result in much higher auto insurance rates when you want to buy coverage again in the future. Insurance companies want to know that you are a responsible driver who takes their road responsibilities seriously.
Pros: As long as you martian your coverage you should never have to worry about this.
Cons: Any lapse in coverage can really hurt your chances of getting car insurance in the future.
12. Pay Your Premiums Annually Versus Monthly
A very simple way to avoid lapses in coverage is to pay your premiums annually rather than monthly or bi-yearly. Better yet, insurance companies will generally give you a small discount to do this. The reason is fairly simple, if you pay annually your insurer knows that they will get payment for the full year and that you are far less likely to jump ship.
Pros: Helps prevent lapsed coverage and it saves you money too.
Cons: You do have to pay the whole amount up front which for some people could be well over $2,000 in one go. Plus, you are more or less locked into one company for the year, so you may not be able to take advantage if a lower priced competitor arrives.
13. Multiple Car Policy Discount
If like most Americans your family has more than 1 car you can potentially save money by getting a multiple car discount policy. For example, companies like GEICO will give you up to 25% off if you insure more than one car with them. Just remember, that the total price you pay should be less than if each policy was bought separately from a different company.
Pros: If you have more than one car you can save some serious money on your auto insurance policy. You already have to insure each vehicle so why not save money by getting them insured together?
Cons: If your family only owns one car then you can’t benefit from this discount as most insurance companies will only offer to those whose cars are registered at a given address. In some cases it can make sense for each person buy separate policies from different companies because the total overall rate between them is lower.
14. Buying Multiple Insurance Products From The Same Company
Another very similar discount is to buy more than one type of insurance from the same company. Most commonly this means getting home and auto insurance bundled together. For example Allstate will give you up to a 10% discount on both your home and auto insurance policies if you buy both from them.
Pros: Can save you money when you are already buying several different types of insurance. Can also save you time and effort as you only have to deal with one company rather than several.
Cons: Just because a company offers you the best rate on car insurance does not mean they’ll have the best rate for your home insurance. You have to compare the total cost of coverage rather than just focusing on the discount offered.
15. Low Mileage Car Insurance Discounts
These days many people are opting to drive less because gas is getting too expensive. Although nobody likes high gas prices, driving less can offer you an insurance discount. Those driving less than 7,500 miles a year might to able to qualify for a low mileage discount. This in turn can save you up to 25% on your rates.
When you drive can also have an impact on rates. If you no longer use your car to get to work you may be able to switch from being considered a daily commuter to being a considered a pleasure driver. Just keep in mind that your auto insurance company may ask for proof of your lower driving habits.
Plus, if you get into an accident while driving to work, but have said that you don’t use your car to drive to work, they may deny your claim. Just be clear with your insurance company exactly what the terms and conditions of your new policy are.
Pros: If you’re already driving less it is worth asking if you can get a discount.
Cons: It can impact when and how much you can drive. If the number of miles you drive and/or when you drive are outside what is laid out in your policy, your car insurance claim could be denied in the case of an accident.
16. Age Related Discounts
Your age is one of the larger factors affecting your auto insurance premiums. Young drivers, especially those under 25, pay far more for auto insurance. The simple reason why is that younger drivers get in more accidents than more experienced ones. The good news is that once you turn 25, you should automatically see a reduction in your rates of up to 25%.
What many drivers fail to realize is that they can get extra discounts once they become a bit older. Depending on your insurance company, you may qualify for discounts once you reach 50, if you’ve been claim free for a substantial period of time. Moreover, some insurance companies will also given discounts to those who’ve retired, on the expectation that they’ll drive less because they no longer have to commute to work.
Pros: One of the few benefits of getting older are the potential savings on car insurance.
Cons: Nothing you can do to speed up the process.
17. Good Student Discount – Getting Good Grades
Now if you are a driver between the ages of 16-25, you’re going to pay a lot for car insurance. However, if you are a full time student you may be able to catch a bit of a break. Major auto insurance companies are often willing to reduce your rates by up to 15% if you can maintain good grades, usually a ‘B’ equivalent average. This holds true if you are a high school student, college student or university student. Insurance carriers have found that students with better grades tend to get in fewer accidents.
Pros: Good grades are always something to aim for, getting a discount on auto insurance is just a bonus.
Cons: Young people who are not full-time students, may not be able to take advantage of this particular discount. Also if you are not a good student, then you won’t see any savings.
18. Discounts For Taking Driving Classes/Driver’s Education
The good news is that even bad students can do something to lower their car insurance rates. Taking a driver’s education course (either through your high-school or privately) can reduce your auto insurance premiums by as much as 10%. However, Drivers Ed. classes aren’t just for young drivers. Elderly drivers can also see substantial rate reductions by opting for a mature driver course. Finally, all drivers can benefit from taking defensive driving lessons as well.
Pros: Driving classes can make you a better driver and save you money on insurance too. What’s not to like?
Cons: The only real con is the cost and time of the course itself.
19. Group Membership/Affiliation Discounts
If you are a member of certain organizations you may be bale to get a discount on your insurance. Those serving in the military are eligible for particularly large savings through companies such as USAA. Members of the AARP are another group that can often get good deals on auto insurance.
However, if you aren’t a member of either of these two groups don’t worry. Many carriers have large lists of organizations whose members are able to get a discount. For example, GEICO gives discounts if you belong to one of over 275 different groups.
Pros: Group affiliations offer potential savings for just being a member of a group you would be otherwise.
Cons: The savings may not fully offset the membership fees/other life costs of being part of a given organization.
20. Shopping Around By Getting Online Car Insurance Quotes
Finally we’ve save the best for last. After maintaining a clan driving record the biggest factor affecting your car insurance rates is the company you decide to buy your policy from. The fact of the matter is that you have to shop around to get the best deal.
The only way to do that is get quotes either from our website, for free below, by phone from each insurance company individually or from your local insurance agent. By getting online auto insurance quotes you can compare far more quotes, far faster than you can by the other two methods. So the choice is really up to you.
Pros: Fast, Easy, Free and you can compare auto insurance policies from many different companies almost instantly.
Cons: It takes a few minutes (Generally less than 15) to get a quote.