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Tips and Ideas for Cutting Car Insurance Costs

Car insurance is necessary to protect you financially when behind the wheel. Whether you just have basic liability insurance or you have full auto coverage, it’s important to ensure that you’re getting the best deal possible. Wondering how to lower car insurance? Here are 15 strategies for saving on car insurance costs.

KEY TAKEAWAYS

  • One of the ways to lower car insurance is through a discount bulk rate for insuring several vehicles and drivers at once.
  • Lower car insurance rates may also be available if you have other insurance policies with the same company.
  • Maintaining a safe driving record is key to getting lower car insurance rates.

How Much Does Car Insurance Cost?

Car insurance costs are different for every driver, depending on the state they live in, their choice of insurance company and the type of coverage they have. But when trying to save money on car insurance, it helps to know what the typical driver pays.

On average, the typical person spent $1,190 on car insurance in 2018, based on the latest figures available from the National Association of Insurance Commissioners (NAIC)1. According to the NAIC data, car insurance premiums rose 30% between 2014 and 2018, despite the number of insured vehicles only rising by 7%1.

Data from AAA put the average cost of car insurance for new vehicles in 2020 slightly higher, at $1,202 annually2. The numbers are fairly close together, suggesting that as you budget for a new car purchase you may need to include $100 or so per month for auto insurance.

Note

While some things that affect car insurance rates–such as your driving history–are within your control others, costs may also be affected by things like state regulations and state accident rates.

How to Save on Car Insurance Costs

There are a number of strategies you may use to save on car insurance. Once you know how much is car insurance for you, you can put some or all of these tactics t work.

1. Take Advantage of Multi-Car Discounts

If you obtain a quote from an auto insurance company to insure a single vehicle, you might end up with a higher quote per vehicle than if you inquired about insuring several drivers or vehicles with that company. Insurance companies will offer what amounts to a bulk rate because they want your business. Under some circumstances they are willing to give you a deal if it means you’ll bring in more of it.

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Ask your insurance agent to see if you qualify. Generally speaking, multiple drivers must live at the same residence and be related by blood or by marriage. Two unrelated people may also be able to obtain a discount; however, they usually must jointly own the vehicle.

If one of your drivers is a teen, you can expect to pay more to insure them. However, if your child’s grades are a B average or above or if they rank in the top 20% of the class, you may be able to get a good student discount on the coverage, which generally lasts until your child turns 25. These discounts can range from as little as 1% to as much as 39%, so be sure to show proof to your insurance agent that your teen is a good student.

Incidentally, some companies may also provide an auto insurance discount if you maintain other policies with the firm, such as homeowners insurance. Allstate, for example, offers a 10% car insurance discount and a 25% homeowners insurance discount when you bundle them together, so check to see if such discounts are available and applicable.3

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2. Pay Attention on the Road

In other words, be a safe driver. This should go without saying, but in today’s age of increasing in-car distractions, this bears mentioning as much as possible.

The more mindful you are, the more accidents or moving violations you’ll be able to avoid—events that raise your insurance rates. Travellers offer safe driver discounts of between 10% and 23%, depending on your driving record.

For those unaware, points are typically assessed to a driver for moving violations, and more points can lead to higher insurance premiums (all else being equal).

3. Take a Defensive Driving Course

Sometimes insurance companies will provide a discount for those who complete an approved defensive driving course. Drivers may also be able to reduce the number of points they have on their licenses by taking a defensive driving, accident prevention, or other courses.

Make sure to ask your agent/insurance company about this discount before you sign up for a class. After all, it’s important that the effort being expended and the cost of the course translates into a big enough insurance savings.

It’s also important that the driver sign up for an accredited course. Every state has its own rules about accredited defensive driving courses, and GEICO allows you to check what they are by the state on its website.

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4. Shop Around for Better Car Insurance Rates

If your policy is about to renew and the annual premium has gone up markedly, consider shopping around and obtaining quotes from competing companies. Also, every year or two it probably makes sense to obtain quotes from other companies, just in case there is a lower rate out there.

Remember, cheap doesn’t always mean good, and going with the lower-priced company isn’t always the wisest decision. That’s because the insurer’s creditworthiness should also be considered. After all, what good is a policy if the company doesn’t have the wherewithal to pay an insurance claim?

To run a check on a particular insurer, consider checking out a site that rates the financial strength of insurance companies. The financial strength of your insurance company is important, but what your contract covers is also important, so make sure you understand it. Insure.com’s site bases its insurance company ratings on data assembled by Standard and Poor’s.6

In general, the fewer miles you drive your car per year, the lower your insurance rate is likely to be, so always ask about a company’s mileage thresholds.

5. Downsize Your Vehicle

Buying a huge SUV may sound exciting, but insuring a 5,000-pound, top-of-the-line vehicle can be more expensive than insuring a small (but safe) lower-cost commuter car. Some insurers will offer a discount if you buy a hybrid or an alternative fuel vehicle. Farmers, for example, offers a 5% discount.7

You can feel good about protecting the environment and save money on insurance at the same time. Find out the exact rates to insure the different vehicles you’re considering before making a purchase. 

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