If you drive a vehicle, it’s usually in your best interest to have car insurance. Without car insurance, an accident or other mishap could leave you hundreds or even thousands of dollars in the red. However, the cost of car insurance is not cheap. The average cost of car insurance in the U.S. is $100–200 per month depending on a number of factors, including where you live and what your driving history is like. Luckily, if you are looking to lower your car insurance costs, there are ways to do it.
Build credit by paying your bills, subscriptions, and Buy Now Pay Later with Cushion
How to Lower Your Car Insurance Costs
Just like with other types of insurance, such as health insurance and homeowners insurance, there are ways to cut down your car insurance cost. You have to be willing to seek out the deals and take initiative. Some ways that you can reduce your car insurance costs include:
- Take advantage of discounts
- Improve your credit
- Eliminate coverage that you don’t need
- Shop around
- Ask for a lower rate
- Increase your deductibles
- Switch to pay-as-you-go
- Factor in where you live
- Be a safe driver
Take Advantage of Discounts
When it comes to car insurance (or any insurance for that matter) there are discounts left and right. You might have to dig for them, but they’re available — and they could save you a significant amount of money in the long run.
Bundle your auto insurance
Contrary to popular belief, more can be less, especially when it comes to car insurance. You can get discounts on car insurance if you use your provider for other types of insurance, such as homeowners insurance or other coverage.
You can also save on car insurance costs if you add more vehicles to your plan. Insurance companies appreciate when you bring them more business, so they’ll often be willing to offer you a bulk rate or discount if you have multiple cars on your plan. Generally, you can add multiple cars to the same car insurance plan if all vehicle owners are part of the same household and are related by blood or marriage, or if two unrelated people own a single vehicle together.
If you add a child to your car insurance plan, be prepared to spend a higher car insurance premium for them, as they have less experience driving and may be more likely to get into an accident; however, you can usually take advantage of a good student discount if the child maintains good grades in school.
Take a defensive driving course
The safer you are on the road, the less of a liability you are for car insurance companies. That’s why when you successfully complete a defensive driving course, accident prevention course, or other course, your insurer may offer you a discount on your premiums.
Before you sign up for a class, you should talk to a representative of your car insurance company to make sure they offer discounts for completing the course, and the amount that you could save is worth signing up for the course at all. You should also confirm that the course that you sign up for is accredited to ensure that you don’t waste any time or money taking a course that won’t qualify with your car insurance company.
Downsize your vehicle
You may not be buying a vehicle specifically based on how much the auto insurance will cost, but it’s one factor to consider. In general, larger vehicles, such as trucks and SUVs, cost more to insure than smaller, more compact cars. Some auto insurance companies will even offer discounted car insurance rates for hybrid or alternative-fuel vehicles. Keep these things in mind when embarking on your next quest for a car.
Install anti-theft devices
The more precautions that you’re willing to take to protect your own car, the more you will reap the benefits from your car insurance company. Confirm with the company which devices can knock dollar signs off of your premiums, and make sure you are willing to pay the upfront cost of the device in order to take advantage of the discounts. If your only reason for getting an anti-theft device is to lower your car insurance premiums, you’ll want to make sure that the potential savings are at least worth the cost of the device.
Improve Your Credit
When you contact a car insurance company about opening an account, the company will take a close look at your credit score to determine how reliable you are with payments and managing your accounts. Your credit score determines what your rates and terms will be, as well as whether you are financially responsible enough to be a customer at all. Potential customers with higher scores are rewarded with lower monthly auto insurance payments to reflect their good behavior with credit.
If you’ve improved your credit score significantly since first signing up for auto insurance, you should contact your car insurance company and have them run a new credit check. Insurance companies might not run one proactively, so the responsibility is ultimately on you to give them a nudge if you want to see lower car insurance premiums.
Eliminate Excess Coverage
Just as your wants and needs evolve, so can your car insurance. From year to year, the services that you need access to change, so you shouldn’t hesitate to adjust your car insurance premiums accordingly. Review your coverage line by line. If you no longer need full-coverage car insurance with services like car rentals and roadside assistance, ditch the unnecessary costs.
Just remember: No one expects to get into an accident or have their car broken into. When it comes to cutting down on your car insurance coverage, be strategic and intentional about what you’re eliminating. If something does happen and you have to pay out of pocket, you could find yourself in a difficult financial situation.
Ask for a Lower Rate
There are a number of ways that you can reduce your auto insurance costs, but sometimes just asking your car insurance provider for a lower rate does the trick. Believe it or not, it actually costs banks, insurance companies, and other service providers more money to sign on a new customer than it does to retain an existing one. This can work in your favor.
If you’re not happy with the cost of your auto insurance, ask your insurance company if they’d be able to reduce your rate. Chances are that they will not want to lose you to one of their competitors, so they may be willing to bend on some things. Worst case scenario: They say no. Best case scenario: You save money.
If you’re not able to lock in a lower rate, it may be time to switch insurance providers. Your car insurance wants and needs change — so can your insurance provider. It may cost more upfront to switch to a new insurer. However, if you’re able to lower your car insurance and save money in the long run, it may make financial sense to switch insurance companies despite the initial cost.
Before switching insurance companies get a number of car insurance quotes and be sure to weigh all of your options. You’ll want to take into consideration short-term and long-term costs, contract obligations that you may have to your current provider or future provider, whether there’s a cancellation fee, and the services that you’re looking for. All of these affect whether or not it makes sense for you to actually switch your car insurance.
Increase Your Deductibles
A deductible is the amount of money that you have to pay out of pocket before the insurance company starts picking up the tab. The average car insurance deductible hovers around $500. Unlike other types of insurance, such as health insurance, the deductible does not reset on a monthly or annual basis — each time that there is an incident that would require financial assistance from your car insurance company, you are required to pay the deductible before the company covers any charges.
Generally, the lower that your deductible is, the more that you can expect to spend each year in premiums. Therefore, if you want to lower your car insurance premiums, you should ask a representative of your car insurance company how you could benefit from a higher deductible.
In this case, it’s important to be a careful, sensible driver, as you will end up having to pay more money out of pocket if you do get into an accident. However, if you’re looking to cut down your annual costs, increasing your deductible could save you hundreds of dollars every year.
Switch To Pay-As-You-Go Car Insurance
If you do not drive often — and have a good track record when you are behind the wheel — you could make the move to pay-as-you-go auto insurance. This type of auto insurance, also known as black box insurance, bases your premiums off of how often and far you drive, as well as how safe or risky you are.
By signing up for pay-as-you-go, you give the insurer permission to track your mileage and driving habits using either a mobile app or device. They can then offer you discounts based on your driving history. In order to settle your balance, the insurer will either send you a monthly car insurance bill or deduct costs as you drive.
Keep in mind, the threshold for saving money with pay-as-you-go insurance is quite low. Unless you rarely drive, this solution might not be for you.
If you do opt to pay as you go, consider other forms of transportation, such as mass transit, walking, biking, or carpooling in order to cut down on how much gets added to your bill.
Factor in Where You Live
Unless you’re dead set on cutting down on car insurance costs, you’re probably not going to move to a different city or state just to save. However, where you live does play a role in how much you spend on auto insurance and what services are available to you, so you should take that into consideration when budgeting.
If you do happen to move, it’s important to take a look at the car insurance costs of the companies in your new area. Prices could be lower for the same or similar services, so it’d be wise to make the switch.
Be a Safe Driver
This one should be obvious, but it’s still worth mentioning. The more careful you are on the road, the less your car insurance company will charge you to insure your car. Accidents and traffic violations are reason enough for car insurance companies to raise your rate. If you’re mindful while driving, you can score safe driver discounts through a number of car insurance companies.