Save Money On Car Insurance: A How-To Guide

One of the most significant items in your budget after housing is probably transportation, which includes car insurance. While it can be costly, finding a policy that suits both your budget and your needs is possible. Many money-saving strategies are equally accessible to drivers regardless of age, experience or location.

Let’s examine seven ways to save on your auto insurance.

Is It Possible To Save Money On Car Insurance?

Yes, you can save money on car insurance. If you’re looking to lower your car insurance premium, try raising your deductible if it fits into your budget, dropping certain features in your coverage plan, continuing to have a clean driving record, or researching discounts and deals through your insurance company.

Tips On How To Lower Car Insurance

Finding practical ways to save on car insurance does not have to be as time-consuming or difficult as you might suspect. Here are seven simple strategies for saving money on car insurance premiums.

1. Shop Around

Shopping around is helpful because insurers may offer different prices, even when you’re receiving quotes for similar auto insurance policies. You may also discover that the levels of coverage vary widely between auto insurance companies, so you might find better coverage elsewhere for the same price. Plus, you may qualify for various discounts or bundling options through certain insurers, which can lower your auto insurance premiums.

Shopping around may take some time, but it’s well worth it, especially if you can find coverage that meets your needs and can save you hundreds of dollars a year.

2. Increase The Deductible

An insurance deductible is the money you must pay out-of-pocket before your insurer pays the rest. Depending on your specific auto insurance plan, you may have different deductible amounts for various types of coverages, such as collision, comprehensive, liability, and personal injury protection.

The higher your deductible, the lower your premiums, because the insurance company will pay less for the claim. Before deciding on your deductible, make sure you can afford to pay it if you need to file a claim.

3. Improve And Maintain Your Credit

Your credit score is a number between 300 and 850 and is based on your credit history and prior financial behavior. Lenders use it to measure and assess your creditworthiness and how financially responsible you are. 

Many insurance companies use your credit score as a point of reference when assessing whether to approve you for a policy, and most will use it to help determine your auto insurance rate.

The higher your credit score, the more likely an insurer will offer you a lower rate. But if your credit score is low, you can work on improving it by consistently paying your loans and bills, minimizing your credit card balances, and holding off on applying for too many new loans in a short period.

4. Research Discounts And Deals

Most major car insurance companies offer special programs and discounts, so find out if there are any discounts available that can lower your insurance premiums. In some cases, the insurer automatically applies them, but sometimes you need to request a discount.

Common auto insurance discounts include:

Policy Discounts

• Bundling policies with the same insurance company, like auto, life, and home insurance policies
• Multi-car discounts for enrolling two or more household vehicles on the same plan

Billing And Payment Discounts

• Paying your bills in advance, either annually or every six months
• Enrolling in automatic bill payment plans

Driver Discounts

• Being a safe driver by not getting into accidents
• Avoiding moving violations like speeding tickets
• Taking a defensive driving class

Vehicle And Usage Discounts

• Having anti-theft devices and safety equipment
• Qualifying for a low-mileage discount

Driver Status

• Having an affiliation with specific organizations or employers
• Qualifying for student, military, retiree or senior discounts

5. Drop Coverage Features You Don’t Need

There’s no point in paying for car insurance features you don’t need or already have elsewhere. Review the coverage features of an auto insurance policy to make sure they are worthwhile. For example, if you already have roadside assistance from AAA, then you may not also need that coverage from your auto insurance.

Or if your vehicle is older and is worth less than a few thousand dollars, consider eliminating your collision insurance — which pays to repair damage to your car. The increase in premiums may outweigh the value you receive from the collision coverage. 

Before dropping certain types of coverage, make sure you first carefully assess factors such as your driving history, whether you lease or own your vehicle, and the value of your vehicle.

6. Review Before Renewal

Periodically examining your auto insurance coverage is crucial to make sure you have the best plan for you. It's a smart and proactive way to ensure your insurance remains in sync with your current situation and budget.

Your life circumstances can change, and so can your insurance needs. Events like buying a new car, moving to a different location, or adding a new driver to your policy can impact your auto insurance coverage needs.

Also, insurance policies and rates can evolve over time. By reviewing your auto policy, you can uncover potential cost-saving opportunities, such as discounts or adjustments to your coverage, that could reduce your premiums or even find errors. This also ensures that you maintain the right level of protection while not overpaying for coverage you no longer need.

7. Drive Safe

Insurance companies often reward drivers who have a clean driving record and no recent accidents with better insurance rates. Good driver and claim-free discounts help lower premiums, but your premiums could increase if you get a moving violation or file an auto insurance claim. 

In some cases, drivers can also take a defensive driving course to receive a discount. Contact your auto insurance company to determine how to enroll in a qualifying course.

FAQs For Saving Money On Car Insurance

The following are frequently asked questions about how to save on car insurance.

Why is auto insurance important?

Virtually all states require you to have car insurance to legally drive on public roads. Therefore, uninsured drivers are subject to various penalties, ranging from tickets and fines to license suspension or even jail time.

Also, insurance is a financial safety net that offers protection in case of accidents. Without it, you could face significant financial risks for damages and injuries.  If you have an accident, auto insurance can cover the costs of fixing or replacing your car and help pay for medical expenses if you or others are injured. Without it, you might have to pay these costs out of your own pocket, which can be very expensive.

Does my credit score affect my car insurance?

People with higher credit-based insurance scores often pay lower insurance premiums, while those with lower scores may be charged higher car insurance rates. This is because statistical data has shown a correlation between credit history and the likelihood of filing insurance claims.

But, the use of credit scores in insurance pricing can vary by state, and not all states allow or use this practice. Also, some insurance companies may place less emphasis on credit scores than others, so it's wise to shop around for insurance quotes to find the best rates for your situation.

Is there a way to get cheap auto insurance?

There are ways to find low-cost auto insurance. First, shop around and compare quotes from different insurance companies. Prices can vary significantly between insurers, so comparing options can help you find a more affordable rate.

Consider adjusting your auto insurance coverage. While it's essential to have adequate levels of protection, you can lower your insurance costs by raising your deductible or reducing coverage for older or less valuable vehicles.

Also, ask about available discounts such as safe driver discounts, bundling auto insurance with other policies, and taking defensive driving courses. Remember that maintaining a clean driving record and a good credit score can also help you secure lower rates.

How much car insurance do I actually need?

Determining how much car insurance you need depends on various factors, including your state's legal requirements, your financial situation, the value of your vehicle, and your comfort level with risk. At a minimum, you should have liability coverage to meet your state's legal mandates. Liability insurance protects you financially if you're at fault in an accident by paying for the other party's medical bills and property damage.

Beyond the legal requirements, consider additional coverage to protect your assets and provide financial security. Collision and comprehensive coverage can help repair or replace your own vehicle in case of an accident or other events like theft, vandalism, or natural disasters. Uninsured or underinsured motorist coverage is helpful if you're hit by a driver who lacks insurance or has insufficient coverage.

The Bottom Line: There Are Multiple Ways To Save Money On Car Insurance

There are several avenues to save on auto insurance. Start by shopping around and comparing quotes from different insurance providers to find the most affordable option. Explore discounts, adjust your coverage based on your needs, and maintain a good driving record to unlock potential savings. You can significantly reduce your insurance premiums with a little effort and awareness of your options.

Download the Rocket Money^SM app to help monitor your credit score, lower your bills, and track your spending habits.