The average American pays over $1,700 annually for car insurance, but many people overpay by hundreds of dollars. These strategies can help you reduce your premium without sacrificing coverage.
Shop Around Regularly
This is the single most effective way to save. Insurance companies adjust their pricing constantly, and the cheapest option today might not be the cheapest next year. Get quotes from at least 5 companies every 12-18 months. Use comparison sites, but also get quotes directly from companies like GEICO, State Farm, and regional insurers.
The best time to shop is 2-3 weeks before your renewal date. This gives you time to compare without pressure and ensures new quotes reflect current rates.
Raise Your Deductible
Increasing your deductible from $500 to $1,000 can reduce your premium by 15-30%. Just make sure you can afford the higher out-of-pocket cost if you need to file a claim. Keep that amount set aside in an emergency fund.
Bundle Policies
Most insurers offer 10-25% discounts when you bundle auto with home or renters insurance. Even if you don't own a home, adding a cheap renters policy can sometimes result in net savings on your auto insurance.
Ask About Discounts
Insurance companies offer dozens of discounts that aren't automatically applied. Ask specifically about:
- Safe driver discount: For clean driving records (no accidents or tickets in 3-5 years)
- Low mileage discount: If you drive less than 7,500-10,000 miles annually
- Good student discount: For students with B average or better
- Defensive driving course: Can save 5-10% for completing an approved course
- Professional/alumni discounts: Some insurers offer discounts for certain professions or college alumni
- Paperless billing: Small discount for electronic statements and autopay
- Vehicle safety features: Anti-theft devices, airbags, anti-lock brakes
Reconsider Coverage on Older Cars
If your car is worth less than $4,000, the cost of comprehensive and collision coverage may exceed potential payouts. Consider dropping these and putting the savings toward your emergency fund. Keep liability coverage—that's not optional.
Improve Your Credit Score
In most states, insurers use credit-based insurance scores to set rates. A better credit score can significantly reduce your premium. Check your credit report for errors and follow credit-building strategies to improve your score over time.
Drive Less
Many insurers offer usage-based programs (like Progressive Snapshot or Allstate Drivewise) that track your driving and can reduce rates by 10-30% for safe, low-mileage driving. If you work from home or don't commute far, these programs can provide substantial savings.
Maintain Continuous Coverage
Gaps in insurance coverage lead to higher rates. If you're between cars, consider keeping a minimal policy rather than letting coverage lapse. The premium for maintaining coverage is often less than the rate increase you'd face after a gap.
Key Takeaways
- Shop and compare quotes from 5+ insurers every 12-18 months
- Raise your deductible if you can afford higher out-of-pocket costs
- Bundle auto with home or renters insurance for 10-25% savings
- Ask about every possible discount—many aren't applied automatically
- Consider dropping collision/comprehensive on older, low-value vehicles