Top 20 Ways to Save on Auto Insurance
Last Updated on March 7, 2020
Auto insurance can be expensive. Fortunately, by taking advantage of car insurance discounts, you can save hundreds – or even thousands – each year on premiums.
Today, we’re highlighting some of the best, easiest, and most effective ways to save on auto insurance.
1. Request Multiple Quotes Regularly
We’ll start with an easy one. Car insurance companies in the United States are very competitive. They also adjust pricing regularly. You might be paying $200 more than you should for car insurance.
Request multiple quotes before you choose a policy. Plus, check quotes regularly – say, just before every renewal. When GEICO tells you that you can save 15% or more on car insurance, they’re not joking: in many cases, a few minutes of searching can help you save hundreds per year on your policy.
2. Raise your Deductible
Are you confident in your driving skills? Do you avoid risks as a driver? Nobody can 100% guarantee that they won’t need to make a claim. However, raising your deductible is an easy and effective way to lower premiums. Most deductibles are set at $500 to $1,000. Raise your deductible to $1,500 or $2,000 to lower premiums. You’ll pay more for any claims, but you’ll save considerably on premiums.
Keep in mind that your comprehensive coverage deductible is different from your collision and liability coverage deductible. You pay your comprehensive coverage deductible for hail damage, vandalism, broken windshields, and similar issues, and it’s typically around $250. Your collision and liability coverage deductible, meanwhile, can be raised much higher to lower your monthly premiums.
3. Combine Multiple Insurance Policies
If you have multiple vehicles, then you can bundle insurance policies together to save money. Similarly, if you’re a homeowner and have home insurance, then you can bundle your car and home insurance policies together to save. Bundle policies with partners. Insurance companies love when you combine multiple policies into one, and they’ll reward you with a discount.
4. Improve your Credit Score
In most states, insurance companies are allowed to use your credit score to determine insurance premiums. People with a bad credit score may pay $1,000 more per year for car insurance than people with a good credit score. Credit score matters. If you want to lower car insurance premiums, try raising your credit score.
5. Ask About Accident-Free Discounts
Accident-free discounts are available to drivers who have not had an accident in 3-5 years. Some insurance companies give you a clean driving record after just two years of being accident-free. Others require you to have no claims whatsoever over the last few years.
You can’t switch insurers to avoid a bad accident history. All insurance information is collected in the CLUE database, which is shared between insurers. In most states, insurers can check data going back 5 to 7 years, although more serious convictions – like DUIs – may appear on your record for 10+ years.
Accident-free discounts can help you save 10-30% on car insurance. Drive more safely and save money.
6. Get Good Grades
If you are a high school or college student, then you may qualify for good student discounts. Today, most insurance companies offer small discounts to high school and college students who have an average of B+ or higher. Specific rules vary between insurers. However, if you have good grades, then you can save.
7. Remove Comprehensive and Collision Coverage on Older Vehicles
If your vehicle is 10+ years old, then it may not be worth it to have collision or comprehensive coverage. Liability insurance is required in all states (except New Hampshire), but collision and comprehensive coverage are not required in any states. They protect your vehicle from damage during accidents, fires, theft, and other incidents. On older vehicles, however, your vehicle may be declared a total loss after even moderate damage. Removing collision and comprehensive coverage can cut insurance premiums in half.
8. Pay for Insurance Annually or Semi-Annually
Most drivers pay for insurance monthly. However, insurers charge extra for this convenience. It’s not a significant difference, but 2.5% to 5% can add up. Consider paying for insurance annually or semi-annually to save money.
9. Install Driver Tracking Devices or Telematics Systems
Most major insurers now offer driver tracking programs. You install a device in your vehicle that tracks your driving habits. The insurer assesses your driving habits – like your speed, mileage, and time of day you drive. Then, your insurer gives you a discount of 10% to 30%. Progressive offers Snapshot and Nationwide offers SmartRide. Check with your insurer for a telematics program. If you’re a safe driver, then you can save big. Some insurers guarantee savings of 5% just for installing the driver tracking device – even if you’re a higher risk driver.
10. Exclude Drivers in your Household
If you have a high-risk roommate, partner, or teenager in your house, then that person could cause insurance rates to rise. Insurers allow you to exclude certain individuals from your policy. Excluded drivers cannot drive your vehicle for any reason. If your partner has multiple DUIs, or if your teenage child has an at-fault collision, then you may want to exclude these drivers to save thousands on premiums.
11. Take a Defensive Driving Course
Most insurers give discounts to drivers who have taken a defensive driving course or other driver safety training program. These courses teach you how to be a safe driver, and statistics show these drivers are less risky to insure. Some defensive driving courses can be completed in one weekend, and you can save as much as 10% on car insurance.
12. Consider your Vehicle’s Insurance Costs Before You Buy
Millions of Americans make this mistake every year. They buy a new car. They get excited about the new car. Then, they compare car insurance quotes and realize their insurance premiums have doubled. Your vehicle make and model has a significant impact on insurance premiums.
Big, boxy SUVs and trucks cause more damage in accidents, which means higher costs for insurers. Cars with bad safety ratings, meanwhile, can raise medical costs for insurers, because they need to pay for any injuries or deaths in the accident. Before you buy a new vehicle, check insurance premiums.
13. Consider your ZIP Code
Your ZIP code also has a significant impact on insurance premiums. Some ZIP codes have high rates of crime, break-ins, vandalism, and theft, for example, which means higher risks for insurers. Other ZIP codes have higher accident rates. Generally, big cities have higher accident rates than small, rural towns. It’s not easy to change your ZIP code, but it’s something to consider when shopping for car insurance.
14. Ask About Profession-Based Discounts
Many insurers offer discounts to people in certain professions. Doctors, nurses, police officers, first responders, military personnel, teachers, and others may all qualify for profession-based discounts. Military personnel can get insurance through USAA, for example, which offers some of the best rates in America. Many insurers offer discounts to specific professions, so contact your insurer and ask about profession-based discounts.
15. Remove Unnecessary Coverage
Check your policy for any unnecessary coverage options. You may be surprised by what’s included. Some policies have rental car coverage and roadside assistance coverage that you’re not using, for example. Others have unnecessarily high policy limits that you could never reach. If you’re cutting costs, start by checking your policy for any unnecessary expenses.
16. Ask About Usage-Based Insurance
Usage-based insurance, or UBI, lets you pay for the exact insurance you need. It’s similar to telematics programs and driver tracking systems. If you drive fewer miles per year than the average American (say, less than 8,000 miles per year), then you may qualify for usage-based insurance discounts. Ask your insurer about usage-based insurance. If you’re a low-risk driver, then you could save 25% or more on car insurance.
17. Install Anti-Theft Devices
Certain cars have a higher risk of being stolen than others. Consider installing an anti-theft device to lower the risk of your vehicle being stolen. Some insurers offer a discount for anti-theft devices. Something as simple as engraving your VIN can also substantially reduce the chance of your vehicle being stolen.
18. Park in a Locked Garage
There’s a significant difference in risk between parking in a locked garage and parking on the street every night. Insurers may take this risk into account when calculating insurance premiums. Consider parking your car in a locked garage every night. Then, tell your insurer. It can reduce your risk and lower premiums – especially if you live in a crime-prone ZIP code.
19. Ask About Alumni or Professional Association Discounts
Up above, we mentioned that certain professions qualify for insurance discounts. You may also qualify for discounts through your alumni association or professional association. GEICO, for example, offers discounts to a significant number of alumni groups for colleges across the United States. Many other insurers offer discounts to certain unions or professional associations.
20. Avoid Insurance Lapses or Missed Payments
Insurers don’t like it when you miss a payment. Most insurers have a grace period, and they will extend coverage for 10-14 days after you miss a payment. However, if you frequently miss payments, then your insurer could ultimately cancel your policy.
Or, if you fail to renew or pay your policy, then your insurance could lapse, which means you temporarily don’t have insurance. Drivers who frequently allow their insurance to lapse are considered high-risk drivers, and your premiums could rise significantly.
Car insurance discounts can help you save thousands on insurance every year. Many of these discounts are out there – yet people fail to take advantage of them. Insurers may not offer these discounts to you upfront, which is why it’s crucial to ask about the auto insurance discounts above.