12 Easy Ways to Save Money on Car Insurance
There’s no way around car insurance for most US drivers. It’s a significant cost that we all have to navigate. And even if you consider yourself a fairly savvy consumer, you might feel like you’re spending more than you need to. And you’re probably right! Most people overpay for car insurance, which means there are plenty of opportunities to lower your monthly car insurance bill. Here are 12 little hacks everyone should consider to save money on car insurance and pay off your loan faster:
How to Save Money on Auto Insurance
1. Make insurance shopping part of auto shopping
The best time to start thinking about the cost of car insurance is when you start shopping for a vehicle. The size, age, mileage, make, model, and condition of the vehicle and the typical cost of parts and labor for repairs all get factored into the rates for insurance policies.
Carrying insurance can be the single largest ongoing expense of vehicle ownership aside from a monthly car payment, if you have one. For this reason, you don’t really know whether a car fits into your budget until you know how much it will cost to insure it.
It’s wise to comparison shop for auto insurance at the same time you shop for a vehicle. Call a minimum of three insurance companies and ask them for quotes for different vehicles you are considering purchasing. Having a clearer picture of the insurance costs may cause you to rethink the kind of car you want to buy – and how much you should spend on it.
2. Bundle your policies
Most insurance companies offer bulk discounts if you insure multiple drivers in your family or purchase multiple policies.
If you bundle insurance coverage for your family and have a teenage driver on your policy, their rate is likely to be relatively high, since younger, less experienced drivers are more prone to accidents. However, some insurance companies offer a good student discount. If your adolescent driver is a good student, be sure to ask about this.
Inquire also about combining other types of insurance you might need, such as homeowner’s insurance or renter’s insurance with auto insurance. Bundling multiple kinds of policies with the same insurance company often results in better rates. It’s essentially a loyalty discount.
3. Pay your entire policy premium at once
Many insurance providers offer a discount if you pay for your entire six-month policy at once, rather than in monthly installments. If you can manage the up-front expense of six months’ worth of car insurance premiums, this can be an easy way to save on the overall cost of the policy.
4. Consider a higher-deductible policy
Opting for a higher deductible will often lower your premium payment. The deductible is the amount you have to pay out of pocket in the case of an accident or other claim before your insurance starts to cover costs.
Of course, you should always keep enough money in the bank to meet the deductible in case of a claim. Otherwise, you may find yourself without a vehicle and unable to use the insurance you have to make needed repairs.
Insurance premiums are regular expenses that add up over time, whereas you only have to pay a deductible very rarely, when something happens that causes you to file an insurance claim. It may be a smarter financial move to raise your policy’s deductible and put aside the savings on your premiums for a period of time to cover that amount.
Once you’ve saved up to cover the deductible, you can use the ongoing premium savings for whatever you like. Look into how much you’d have to raise the deductible in order to reduce your insurance premium to see if the tradeoff seems worthwhile. This is a very personal judgment and there are risks either way, so consider your options carefully.
5. Drive less
Insurance companies usually ask how much you drive when they set your rates. The more mileage you put on your vehicle, the more your policy typically costs.
If you’re able to tell an auto insurer that you only use your vehicle on weekends because you commute to work on public transit, or that you commute to work every day but it’s a short trip and you rely more on a bicycle on the weekends, it’s possible you’ll qualify for a cheaper policy through a low-mileage discount. Usage-based insurance may also be a good option, although this isn’t available in every state.
Driving less can be better for your physical and mental health and the environment, too!
6. Drive safely
Your driving record factors significantly into the cost of your auto insurance. The cleaner your driving record, the better your car insurance rates will be (and the safer you will keep your neighbors on the roads).
If you have an accident history or points on your license, ask your insurance company if taking a defensive driving class might help put you back in their good graces and lower your rate.
7. Dig into discounts
Even if you have a good driving record, opting to take a defensive driving course may lower your rates with some car insurance companies. Installing certain anti-theft devices can also garner a discount. There may also be discounts available for AARP members, members of professional organizations, military personnel, and more.
Chat with an insurance agent to see what voluntary ways to save may be available to you. You’ll need to consider the cost of these measures versus the car insurance discounts they will earn you. (Learning to be a safer driver and making your vehicle more theft-resistant may be worthwhile in their own right, too).
8. Maintain a good credit score
Your credit score is one factor your auto insurance company uses to set rates. Regularly check your credit report for accuracy, and take steps to improve your credit and you may see the cost of your car insurance policy improve.
9. Get the right coverage for your car’s value
Comprehensive coverage is usually wisest to reduce the financial risk of accidents and theft, but if your car is very old or high-mileage, this may not be worth the cost. The amount your insurance company would pay out if the vehicle were totaled likely won’t allow you to replace it, so paying for collision coverage may not be financially prudent.
In this case, it may make more sense to pay for only the most basic, legally mandated liability coverage and put aside the premium savings toward your next vehicle purchase.
10. Take advantage of group discount rates
Membership in certain organizations (e.g. credit unions, banks, and academic groups) may allow you to access a more favorable group rate. Check with your employer as well as any other organizations you’re a member of to see if they have a group rate available with an insurer.
11. Read your policy in detail
Reading the fine print of your auto insurance policy is not much fun, but it can save you money. Understanding your policy will help you to use it more prudently. You be be surprised what it covers, and what it doesn’t. Also, look for any optional line-items that seem frivolous, and look into cutting them if possible.
12. Comparison shop – even after you’ve bought a policy
Shopping for auto insurance is almost no one’s idea of fun. Many people never look at their policy again after purchasing, continuing to make payments for years, often until the car dies or they decide to sell it.
Insurance companies can benefit from people’s disinterest and disdain around comparison shopping. But you can benefit financially from putting in a small amount of effort to ensure you’re still getting a good deal.
Try to find time once a year to review your policy and call up two other insurance companies for a quote. Think of it like going to the dentist – not fun, but likely to save you more trouble (and money) in the long run.