Paying auto insurance is never fun.
And it feels like the cost of insuring your car only goes up.
There has to be a way to lower the cost of auto insurance.
In reality, there are a number of ways to save money on car insurance.
In this post, I highlight the easiest options and the ones that are guaranteed to save you the most money.
In fact, I’ve used these tips to save $200 a year on my insurance in less than 20 minutes.
So keep reading to find the best way for you to save money on auto insurance.
The Best Tricks To Save Money On Car Insurance
#1. Get Auto Insurance Quotes
The best way to save money on car insurance is to get multiple auto insurance quotes.
Not all insurance companies charge the same rates, so you can save serious money doing this.
For example, I used to be with an insurance company and was paying $900 a year in premiums.
I decided to shop around for coverage and to my surprise, I got a quote with the same coverage for $700 a year.
I saved $200 a year by making a simple phone call!
Today, it is even easier as you can get free online insurance quotes. In less than 15 minutes you will see how much you can save.
Click here to see your savings!
Also, don’t make the mistake of thinking that your current insurer is giving you a loyalty discount.
I was with an insurer for over 10 years and thought I was getting a discount.
But seeing how I was able to save $200 showed me they aren’t giving me a discount.
It’s just like with cable television.
The best deals are for new customers, not existing customers.
#2. Use Technology
Many insurers are now using devices you plug into your car under your dash.
These devices monitor when you drive, how much you drive, where you are driving, how fast you drive, if you swerve, if you brake suddenly, and more.
The idea is if you are a safe driver and don’t drive many miles, you can lower your premium.
Some people however don’t want their insurer spying on them like this, so it is not an option for everyone.
Still, if you are OK with your insurer knowing all this information, it can be an easy way to save money.
#3. Raise Your Deductible
A simple trick to lower your auto insurance premium is to raise your deductible.
Doing this shifts more of the burden to you and as a result, the insurance company will lower your premium.
By simply going from a $500 deductible to a $1,000 deductible can save you up to 20% a year on your premium!
The key is to make sure you have this money saved in case you do need to make a claim.
This is where having an emergency fund comes into play.
While it will take you some time to save up the money to cover a larger deductible, it will be worth the savings.
Additionally, review your other coverages as well.
Do you need rental car coverage? What about roadside assistance?
Many of these addon’s can be canceled, saving you even more money.
#4. Bundle Coverage
Insurance companies offer large savings and discounts when you bundle coverage.
This means having your auto insurance and homeowner’s insurance with them.
By doing this, you can save a substantial amount of money.
Be sure to look at both policies individually however.
When I shopped around for coverage last, a few companies were offering rock bottom auto insurance rates, but my homeowner’s coverage was higher than what I was paying.
I ended up making the switch because the total was still less than what I was paying.
I was going to only move my auto insurance, but they were giving me a large discount for having both my auto and homeowner’s insurance with them.
The bottom line, consider bundling your policies to save even more money.
#5. Buy The Right Car
The car you drive has a huge impact on the amount of your car insurance premium.
A new luxury car will have a higher insurance premium versus an older car.
Typically, the newer, sportier, or higher end the car is, the more it will cost you to insure.
But not all new cars will cause your premium to rise.
I had an older Volkswagen GTI and sold it to buy a minivan for the family.
Even though the minivan was brand new, my insurance went down $200 a year.
Before you buy any car, call your insurer and get a quote for what your annual premium will be.
The last thing you want is to have a higher auto insurance premium to pay.
#6. Look For Additional Discounts
After you go through all of the above tips to save money on car insurance, there is still more you can do.
If you have a teen driver or are an older driver, there are safe driving courses you can take. If you pass, you will get a discount on your premium.
Additionally, if you have a teen driver, their good grades can lower the amount you pay.
And if they go away to college but don’t take the car, you should adjust your coverage. There is no reason to pay a higher rate when they are no longer driving the car.
Finally, look into groups and associations you belong to.
Many have partnerships with auto insurance companies and offer discounts.
A former employer I worked for had a partnership with one company and my college has another partnership.
In either case, I was able to save another 10% on my car insurance premium.
#7. Drop Coverage
If you have an older car, it can make sense to drop comprehensive coverage.
Comprehensive coverage is for things like hitting a deer, hail damage, flood damage, vandalism, etc.
The reason you drop it on older cars is the cost.
If it costs more to insure the vehicle than it is worth, you are throwing money down the drain.
For example, let’s say your car is worth $1,000 and you are paying $500 a year in comprehensive coverage.
Chances are you are not making a claim every year. So by the second year, you paid in premiums the value of the car.
And the next year, you paid more in insurance than the car is worth.
You are better off dropping comprehensive coverage and saving the money for when you need to buy a replacement.
#8. Be A Safe Driver
One of the easiest things you can do to have a low insurance premium is to be a safe driver.
Specifically, pay attention to what is going on.
The fewer distractions you have, the less likely you are to get into an accident. This gives your insurance company less reason to raise your rates.
So put down your phone and don’t try to eat while driving.
#9. Drive Less
Another way to save money on auto insurance is to drive less. The fewer miles you drive, the lower your premium.
This is easy if you work from home or you live in an area where you can walk or take public transit.
You might even consider riding a bike as well.
Before we moved, I would walk the half mile to the grocery store. It gave me physical activity and saved me money on wear and tear and my insurance.
There is even an insurance company out there that specializes in coverage for people who don’t drive a lot.
If you drive less than 5,000 miles a year, be sure to tell your insurance company as you will most likely qualify for a lower rate.
#10. Pay Your Premium Less Frequently
How often do you pay your premium?
If you pay monthly, your insurer is most likely charging you convenience fees, costing you more money.
On the flipside, when you pay annually or even semi-annually, you often get an additional discount and you avoid the convenience fees.
How do you do this if money is tight?
Take your annual premium and divide by 12. Every month, take this amount and put it into a dedicated savings account.
When your premium is due, use the money you saved to pay the bill.
For example, let’s say your premium is $1,000 for 12 months. The monthly amount you need to save is $83.
Transfer this amount to a savings account every month and then use it to pay the bill.
And here is a bonus tip.
Put the saved money into an account with CIT Bank.
This is where I save my money and love it. Mainly because it is so simple to use. But also because they actually pay a decent interest rate.
What this means is I am making money on my savings!
When I need to pay my premium, I transfer the money back to my checking account and pay the bill in full.
It really is as simple as it sounds.
This is last on the list because it is extreme.
You can move to lower your car insurance premium.
This is especially true if you live in a high cost of living area.
By moving to a lower cost of living area, you will save money on everything, not just car insurance.
I went to college in a lower cost of living area.
A comparable house cost $99,000 there versus $250,000 in my hometown.
Everything was less expensive.
Of course, you need to be happy there and find a job, so this trick isn’t as easy to implement as the others.
Frequently Asked Questions
Here the most common questions I get asked from readers about how to lower your auto insurance premium.
I’ll add to this list as more questions get asked.
Can you negotiate car insurance?
No, you cannot negotiate your car insurance.
The premium you are charged is based off detailed calculations from the insurance agencies actuaries.
What they say goes, no matter how much you beg and plead for a different price.
Will using a device in my car to monitor my driving raise my insurance rates?
The insurance companies that allow you to plug devices into your car to monitor your driving habits state that these devices will not directly cause your premiums to rise.
While I will take them at their word, I think that these devices can be used as a reason for raising your rates.
For example, most insurance companies state that the use of the device will not “directly” cause your rates to go up.
The use of that word is interesting, because it means the insurance company could use the device as supporting evidence as to why it is raising your rate.
And the insurance company won’t admit that to you.
How can I make my auto insurance cheaper?
The best way to make car insurance cheaper is to compare quotes from other companies.
Since each insurer calculates your premiums individually, you can save a lot of money by switching.
Click here to get a free quote and see how much you could save on auto insurance.
From there, raising your deductible will lower the premium you pay.
How can I lower my car insurance after an accident?
There are a couple of things you can do to lower your car insurance after an accident.
First, you can see if your current insurer offers accident forgiveness. In this case, they will overlook your accident and not raise your rates.
If yours does not offer that, then talk to your agent.
The insurance agency might have things you can do, like taking a driving class, that will limit the increase in your rate.
If neither of those is an option, look at switching insurance companies.
You might find another one offering a lower premium even when taking into account your accident.
Click here if you are interested in getting a free quote.
Does credit score effect car insurance?
Your credit score does have an effect on your car insurance.
The lower your score, the higher your premium tends to be, because you are viewed by the insurance company as riskier.
However, this does not mean if you raise your credit score, you will have your premium go down.
Your credit score is just one of a handful of variables that effect your overall auto insurance premium.
At the end of the day though, the more things you have in your favor, like a high credit score, bundling of coverage, being a smart driver, etc. all compound to keep your rates as low as possible.
Will insurance companies match quotes?
Unfortunately, insurance companies do not match quotes.
I tried this a few times and got the same answer every time.
Each insurance company has actuaries that calculate their premiums, which is based on their customer demographic base.
They do this so they can cover claims and not go bankrupt.
So just because one car insurance company offers one quote, the next one will not match it.
They will base it off your driving history, car, and their other customer demographics.
How long does it take for your car insurance to go down?
This varies depending on who is asking the question.
For example, if you are a teen driver, you can expect your car insurance rates to drop almost every year, assuming you don’t have any accidents.
This is because as you get older, you are viewed as a safer driver.
Additionally, when you get married, you can expect your auto insurance to drop.
Again, married people are viewed as less risky and therefore have lower premiums.
If you were in an accident, you can expect your rates to drop in a few years of accident free driving.
This is because accidents stay on your driving record for 3-5 years, so insurance companies will see it and take into account when pricing your policy.
How much does your car insurance go up after a ticket?
First, we have to be clear about moving and non-moving violations. A ticket for illegally parking is a non-moving violation and will not have an impact on your car insurance.
A moving violation, like speeding, running a red light, DUI, etc. will have an impact on your rate.
The amount of the increase varies by the severity of the ticket, where you live, and your insurance company.
However, on average you can expect to see a 20-25% increase when you get a speeding ticket.
If you get a ticket for reckless driving or DUI, you are looking at a 75% increase.
Those are serious increases.
If your premium is $1,000 now, getting a speeding ticket will increase it to $1,200. A DUI will increase your premium to $1,750!
The good news however is that the increase won’t go into effect until your policy is up for renewal.
Because of this, you have some time to save money.
While you still will have to pay the increased premium, you at least will be able to soften the blow by having money saved to cover it.
There are a lot of things in your control when it comes to saving money on car insurance.
In fact, many of the things listed here can be put into action today.
At the end of the day, the biggest factors are the company you choose to insure your vehicle, how safe a driver you are, and if you bundle coverage.
I encourage you to shop around for coverage now and see how much you can save.
Click here to get your first free quote.
And then make sure you shop around every 2 years or so to continue saving money.