How to lower your car insurance premiums: 12 Effective strategies

Managing your money wisely is important in many areas of life, like paying for things like gas, rent, and phone bills. And just like with those expenses, it’s essential to be smart about how much you spend on car insurance.

On average, people in the US spend about $1,556 a year on car insurance if they have a good driving record. But even small savings, like cutting costs by 5% to 10%, can add up over time. Sometimes, you can even save a lot more, like 30% or more. To help you save money on car insurance, here are ten tips to consider.

1. Shop Around

Smart shoppers don’t just look for good deals on things like electronics and clothes; they also want to save money on important things like car insurance.

Whether you’re getting your first insurance policy, renewing your current one, or thinking about switching to a new insurer, it’s essential to compare rates from different car insurance companies. Prices can vary a lot between insurers, even if you’re getting the same coverage.

If you don’t compare prices, you might miss out on a chance to save money. Experts recommend getting quotes from at least three insurance companies to make sure you’re getting the best deal for the coverage you need.

It’s crucial to make sure you’re comparing the same things when you look at different policies. This way, you can see which one offers the best value for your money.

2. Review Your Deductibles

Rebekah Nelson, a representative from USAA, suggests that policyholders review the deductible on their car insurance policy to see if increasing it could save them money.

Your deductible is the amount you pay out of pocket before your insurance kicks in when you file a claim for comprehensive or collision coverage. By raising your deductible, you can lower your premium. This works because when you agree to pay more upfront in case of a claim, your insurance company often charges you less each month.

According to the Insurance Information Institute, increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage costs by 15% to 30%. Going even higher, to $1,000, could save you 40% or more.

It’s essential to be financially prepared if you raise your deductible since you’ll have to pay more out of pocket if you file a claim. For example, if you have a $5,000 repair bill after a collision and a $1,000 deductible, your insurance company would pay $4,000, and you’d be responsible for the remaining $1,000.

3. Bundle Insurance Policies

TV ads often promote the benefits of combining your auto and home insurance policies. This is called bundling, and many insurance companies offer discounts for it. But it’s not just for auto and home insurance—you can also bundle other policies like motorcycle or boat insurance.

These discounts, also known as bundling or multi-policy discounts, can save you anywhere from 5% to 25% on your premiums.

In addition to saving money, Rebekah Nelson points out that bundling makes managing your insurance easier. Having all your policies with one insurer means less paperwork and simpler communication.

4. Explore Car Insurance Discounts

Auto insurance companies offer various discounts to help drivers save money. Here are some common ones:

1. Multi-car discount: If you insure more than one vehicle on the same policy, you could save between 8% and 25%.

2. Vehicle safety discount: Cars with advanced safety features like anti-lock brakes and airbags may qualify for a discount.

3. New car discount: If your car is less than three years old, you could get a discount of 10% to 15%.

4. Good driver discount: If you have a clean driving record without accidents or violations for a certain period, you could save between 10% and 40%.

5. Good student discount: Students with good grades (usually a B average or higher) can save between 8% and 25% on their insurance premiums.

5. Let Your Insurer Track Your Driving

Some car insurance companies offer programs that could lower your premiums based on your driving habits. These programs use either a mobile app or a device installed in your car to track things like how much you drive, your speed, and how often you brake suddenly.

If you show safe driving behavior according to the data collected, you could qualify for discounted rates. For example, participants in USAA’s SafePilot program can get discounts of up to 30%. Other examples include Snapshot by Progressive, Drive Safe & Save by State Farm, and Drivewise by Allstate.

However, it’s essential to know that signing up for these programs might not always reduce your premiums. According to TransUnion’s “Insurance Trends and Outlook” report for 2022, some drivers might end up paying more. These programs are typically best suited for drivers who don’t drive much, avoid driving at night, and have a history of safe driving practices.

6. Take a Defensive Driving Course

Taking a defensive driving course that’s approved by your insurance company could lower your car insurance premiums. For example, in Texas, if you finish an online course endorsed by Geico, you might get a discount of up to 10% for three years. Likewise, in New York, completing an approved driving safety course could mean a 10% reduction in your insurance rates for three years.

7. Park in the Garage

Some insurance companies may give you a discount on your car insurance if you park your car in a garage at home instead of leaving it in your driveway or on the street. This is because statistics show that cars parked in garages are less likely to be stolen or damaged in accidents.

8. Drive a Safe Car with Low Repair Costs

When you’re buying a car, whether at a dealership or online, it’s crucial to consider the type of vehicle you’re getting. Some cars cost less to insure than others.

Insurance companies look at several factors, including the make and model of the car, along with your age and driving history, to determine insurance rates. They consider things like how likely the car is to be stolen, how expensive it is to repair, its safety ratings, and how often similar models are involved in insurance claims.

You can find helpful information from resources like the Insurance Institute for Highway Safety, which provides safety ratings for different car models, and the National Insurance Crime Bureau, which lists the most commonly stolen vehicles. These resources can help you make a more informed decision when choosing a car.

9. Boost Your Credit if Possible

Most states allow insurance companies to use credit-based insurance scores when setting car insurance rates. This score predicts how likely you are to file a claim. Generally, lower scores suggest a higher chance of making expensive claims. By improving your regular credit score, you might also boost your insurance score, which could mean lower car insurance rates.

According to Forbes Advisor, drivers with poor credit often pay premiums that are 76% higher on average than those with good credit.

10. Pay Your Premium in Full if Possible

Instead of paying your car insurance premium every month, consider paying it all at once. Many insurance companies offer a small discount to policyholders who choose this payment method. Big names like Progressive, Allstate, American Family, and Farmers are some of the companies that give this discount to their customers.

11. Research insurance costs before deciding on what car you want

Your choice of vehicle can greatly affect how much you pay for insurance. Some models have higher insurance costs than others. For example, insuring a high-performance sports car is usually more expensive than insuring a safety-focused minivan.

When you’re thinking about buying a new car, it’s important to consider how much it will cost to insure. Remember, just because a car is affordable doesn’t mean the insurance will be cheap.

When you’re picking out a car, keep in mind that repair costs play a big part in determining insurance rates. So, things like fancy features, advanced audio systems, and extra tech upgrades can bump up your insurance costs.

Some cars are known for having lower insurance rates. These include:

– Subaru Outback
– Jeep Wrangler
– Honda CR-V
– Subaru Forester
– Ford Escape
– Ford F-150

12. Look into ways you can save with teen drivers

Adding a teenage driver to your insurance usually makes your premiums go up. But there are ways to lessen the impact.

Some insurance companies, like Liberty Mutual, offer discounts for teen drivers who get good grades, live away from home for school, or choose a higher deductible.

FAQs

Are car insurance premiums going up in 2024?

Based on data from the Bureau of Labor Statistics, car insurance premiums went up by an average of 20.6% from February 2023 to February 2024, according to the Consumer Price Index.

Why is car insurance so expensive right now?

One reason car insurance premiums are going up, as the Insurance Information Institute points out, is because there are more severe accidents happening. Also, the prices of new cars are rising because of problems in the supply chain and the addition of more advanced technology in vehicles. This increase in new car prices is putting pressure on insurance premiums, according to the Congressional Research Service.

How much is car insurance?

According to Bankrate’s data in March 2024, the average yearly cost for full coverage car insurance is around $2,545, which comes to about $212 per month. If you’re looking at minimum coverage, the average yearly cost is about $741, or roughly $62 per month.

Bottom line

Even though car insurance costs are going up, there are ways to soften the blow. You can bundle your insurance policies, take advantage of discounts, and make smart choices to help keep your premiums manageable.

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