How To Reduce Your Car Insurance Costs

How To Reduce Your Car Insurance Costs: Various factors affect the cost of car insurance. Insurers may charge higher premiums due to your age, location and vehicle type. However, you can reduce car insurance costs by taking advantage of discounts, lowering your coverage or taking a defensive driving course. Having a good credit score and maintaining a clean driving record can also help you get lower auto insurance quotes.

Generally, improving your driver profile and practicing other money-saving strategies can save you hundreds of dollars in premiums.

Ten Ways to Reduce Your Car Insurance Costs

There are many ways to reduce car insurance costs. You can opt to make changes to your policy, such as seeking discounts, raising your deductible and changing coverages. In addition, you can work to improve your driving record and credit score, which also impact your insurance rates. Some steps require some time to help you save money, while others can take effect immediately.

1. Shop Around and Compare Quotes

The quickest and easiest way to reduce car insurance costs is to shop around with at least three car insurance companies. This can be less time-consuming if you take advantage of online car insurance calculator tools that can estimate the costs of several providers at once.

While car insurance companies look at a number of the same factors for each driver, how they evaluate those factors varies, which could lead to lower car insurance costs for you. To ensure you receive comparable quotes, you should provide the same personalized information to each company you speak with and seek out quotes on the same day.

If you’ve wondered how often to shop for car insurance, MoneyGeek recommends comparing quotes every year.

2. Find All Available Discounts

Insurance providers offer different types of car insurance discounts. Among the most common money-saving opportunities are multi-car policy and good driving discounts. Seeking other available discounts can further lower your car insurance costs.

Bundling: Purchasing two types of insurance from the same carrier — typically home and auto.
Safe driving: Maintaining a clean driving record for a certain number of years.
Good student: For students with good academic standing.
Anti-theft: Having anti-theft devices installed in the car.
Defensive driving: Completing a state-approved course can help you get defensive driving discounts.

These are only some of the most common discounts insurers tend to offer. However, not all of the above are offered by all insurers. And some companies may offer additional discounts. So it’s best to consult your agent or insurer to determine the discounts you may be eligible for.

3. Raise Your Deductible

Another easy way to reduce car insurance costs is by raising your car insurance deductible. This refers to a set amount you’d have to pay out of pocket when filing a claim.

The following coverages may include deductibles:

Comprehensive: The deductible for comprehensive coverage is typically less than that for collision coverage.
Collision: The deductible for collision coverage is usually the highest in a policy. If another party is at fault, you may not need to pay a collision deductible.
Personal Injury Protection (PIP) and Uninsured Motorist: Some car insurance policies include deductibles for PIP and uninsured motorist insurance. Others don’t require it.

If you can afford to pay more out of pocket in the event of a claim, you may opt to have a higher deductible. This will lower your car insurance premium.

4. Change Your Coverage

Your car insurance needs may change over time, so it’s important to periodically evaluate your coverage to see if it’s still suitable for you. In some cases, changing your coverage can lead to lower premiums. For instance, your auto lender may have required you to purchase full coverage if you have a lease or loan. Once you pay off your car, you may opt out of getting full coverage insurance. But if you prefer to maintain this type of insurance, there are ways to find cheap full coverage policies.

Taking some time to review how much coverage you need can help lower car insurance rates. However, it’s best to consult with your agent or provider first before changing your coverage. This way, you can ensure that you’re getting the right protection based on your needs and circumstances.

5. Bundle Your Car and Homeowners Insurance

Getting different insurance policies from the same carrier can make you eligible for a significant discount. Many companies offer rewards for policyholders who choose them for their various insurance needs. For example, you can get lower car insurance rates by bundling your car and home insurance.

6. Take a Defensive Driving Course

Completing a defensive driving course can help lower your insurance rates. You typically must have a clean driving record (no accidents or moving violations) for at least the last three years to qualify for this discount.

Once you complete the course, make sure you submit a confirmation of completion to apply for a discount. That said, qualification requirements and rules may vary per insurer.

7. Sign Up for Driver-Monitored Savings

Many car insurance companies now offer telematics programs designed to lower your car insurance costs based on your driving habits. They monitor your daily driving through technology installed in your car or via your smartphone. Examples include State Farm’s Drive Safe and Save program and Progressive’s Snapshot program.

8. Improve Your Driving Record

Suppose you already have a speeding ticket, DUI or moving violation for distracted driving on your driving record. In that case, there’s not much you can do to change it except wait for time to render those events less relevant when evaluating your driving history. What you can do is take steps to make sure you don’t receive additional speeding tickets, DUIs or moving violations that could further negatively impact your car insurance rates.

A driving violation can stay on your record for a long time. Specific periods vary per state. For instance, a violation, conviction or point will remain on your driving record for up to four years in New York. Meanwhile, a collision or DUI conviction will stay on your driving record for up to three years in California. And in several states, a DUI can stay on your record permanently.

9. Boost Your Credit Score

Your credit history can affect the cost of your car insurance. Generally, individuals with bad credit tend to receive higher quotes than those with good credit because they are considered a higher risk to file claims. That said, there are ways to improve your credit score.

The first and simplest step you can take is to check your credit report for mistakes and errors. Although it may not happen often, you may find an error that has resulted in a lower credit score. You can also improve your credit score with the help of the following strategies:

Make on-time payments to creditors.
Pay down your debt.
Ask for higher credit card limits.
Be an authorized user for a trusted relative or friend with a good or excellent credit score.

A good credit-based insurance score can help you find lower car insurance rates. So making an effort to improve your score can benefit you.

10. Swap Out Your Car

The type of vehicle you drive also is considered by car insurance companies when determining your car insurance rates. They look at such factors as the car’s safety record, how likely it is to be stolen and the cost to repair it in the event of an accident. Vehicles like sedans or minivans usually are seen as less risky than sports cars or luxury cars. For example, a 2020 Honda CR-V is the cheapest car to insure at an average of $1,172 per year.

Conclusion

The price of auto insurance is likely to continue to rise, but there are several things you can do to reduce the sting. These 10 tips should get you driving in the right direction. Remember to compare the best car insurance companies to find the one that best fits your coverage needs and budget.