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10 Tips To Lower Your Car Insurance Costs – Forbes Advisor

10 Tips To Lower Your Car Insurance Costs
Written by Publishing Team

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Nobody wants to pay too much for life necessities like gas, rent, and mobile phone service. The same is true for auto insurance. And just as you can search for deals on other purchases, you can look for ways to lower your car insurance costs.

Given that the average good driver in the United States pays $1,556 per year for car insurance, reducing your insurance bill by just 5% to 10% can put more money in your pocket. In some cases, you can lower your car insurance costs by 30% or more. Here are 10 tips to help you lower your car insurance premiums.

1. Shop around

Many of us shop for deals on electronics, clothing, and other everyday purchases. You can apply the same strategy to auto insurance.

Whether you’re getting insurance for the first time, renewing coverage or switching to a different insurance company, don’t overlook the savings you can score by comparing rates from several auto insurance companies.

Auto insurance rates for the same coverage can vary widely between insurance companies, so if you don’t shop around, you won’t know how much you can save. The Industry-backed Insurance Information Institute suggests getting quotes from at least three insurance companies in order to compare auto insurance costs and coverage.

Make sure to compare coverage and policy limits identical, so it’s an apples-to-apples price comparison

2. Review your discounts

Rebekah Nelson, a spokeswoman for USAA, recommends reviewing the deductions associated with your current coverage to see if you can raise it.

“If you haven’t done so in a while, you may find that a higher discount is more appropriate and will lower your price,” says Nelson.

The car insurance deduction is the amount that is deducted from your insurance check when you file a comprehensive or collision insurance claim. You can choose the deductible when purchasing a policy, and you can adjust the deductible later if you change your mind. A higher discount means you pay a lower premium. This is because you incur more costs if you file a claim, and you are less likely to make claims for minor damages because the repair costs will not exceed your deductible by much.

The Insurance Information Institute says raising the deductible from $200 to $500 can reduce your collision cost and comprehensive coverage by 15% to 30%. Boosting your deductible to $1,000 can save 40% or more.

The institute also points out that if you raise your deductible, you should set aside enough money in case you end up filing a car insurance claim. For example, let’s say your crash claim payout is $5,000 and your deductible is $1,000. Your insurance company will pay $4,000, so you are responsible for a petty cash of $1,000 to repair your vehicle’s damage.

3. Combined insurance policies

You’ll often see TV ads promoting the ability to combine auto and home insurance. Most insurance companies offer discounts to policyholders with auto and home insurance policies, and pooling can be applied to other coverage such as motorcycle and boat insurance.

In general, the aggregation discount (also known as the multi-policy discount) can reap savings ranging from 5% to 25%.

Not only can you earn a discount on bundling, but buying more than two policies from one carrier “also makes it easier to insure you, as with one carrier,” Nelson points out.

4. Discover car insurance discounts

Car insurance companies offer a wide range of discounts in addition to group discounts. Some of the most popular discounts include:

  • Multi-car discount. Insuring more than one vehicle with the same insurance company may result in savings ranging from 8% to 25%.
  • Vehicle safety discount. If your vehicle is equipped with the latest safety features, such as anti-lock brakes and airbags, you may qualify for a discount.
  • Discount on the new car. Do you drive a car that is less than three years old? If so, you can get a discount of 10% to 15%.
  • Good driver discount. If you go a certain amount of time without an accident or traffic violation, your car insurance company may reward you with a discount anywhere from 10% to 40%.
  • Good student discount. Good grades can pay off. Some insurance companies offer discounts of 8% to 25% to a full-time high school or college student aged 16-25 with at least a B average.

5. Let your insurance company track your driving

A number of auto insurance companies enable you to reduce your bill by subscribing to usage-based auto insurance. These programs use an app or device attached to your vehicle to track your driving behaviour. Tracked factors can include how many miles you drive, your speed and how many times you hit the brakes.

If the data shows that you are a good driver, you can qualify for a discount. For example, if a customer joins USAA’s SafePilot program, they can receive a discount of up to 30%. Other examples of usage-based auto insurance include Snapshot from Progressive, State Farm’s Drive Safe & Save, and Allstate’s Drivewise.

Know that in some cases, usage-based insurance may increase your rates, according to TransUnion’s 2022 Insurance Trends and Outlook report. Usage-based car insurance is best for drivers who travel short distances, who do not drive at night and who have very safe driving habits.

6. Take a defensive driving course

Successful completion of a defensive driving course that is approved by your insurance company can lead to savings on your car insurance. For example, a driver in Texas who graduates from a Geico-accredited online defensive driving course can receive a discount of up to 10% for three years. In New York, you can cut 10% of your prices for three years by successfully completing an approved driving safety course.

7. Park in the garage

Some insurance companies will lower your car insurance if you park your car in your garage instead of in your driveway or on the street. Data suggests that cars parked in garages are less likely to be theft or collision damage.

8. Safe driving with low repair costs

When you visit car dealerships in person or online, consider the type of vehicle you will be buying. Some cars are cheaper than others in insurance.

In addition to your age, driving history, and other variables, auto insurance companies take into account the type of vehicle you drive when pricing your coverage. They look at how likely a particular car is to be stolen, how much it will cost to repair that type of car, how safe it is, and how much claims are made for similar models.

The Insurance Institute for Highway Safety has safety ratings for thousands of vehicle models, and also shows the percentage is above or below the average number of claims made for certain classes of vehicles. The National Insurance Crime Bureau lists the most stolen cars annually.

Related: See Forbes Advisor’s rating of the most expensive and least expensive cars to insure.

9. Increase your credit if possible

Most states allow insurers to have credit-based insurance scores to help determine your car insurance rates. This result predicts the likelihood of filing a vehicle insurance claim. The lower your credit-based score, the higher the odds of making an expensive claim. If you can raise your traditional credit score, it may also raise your credit-based insurance score, paving the way for better auto insurance rates.

Forbes Advisor’s analysis of rates showed that drivers with poor credit pay an average of 76% more than those with good credit.

10. Pay your premium in full if applicable

Instead of spreading out premiums by paying monthly, consider paying your premium in one go. Many auto insurance companies will give you a small discount for doing this. Progressive, Allstate, and American Family and Farmers are among the major insurance companies that offer this discount.

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