More than half of all car owners list “price” as their main concern when buying auto insurance, according to a Reviews.com survey of more than 1,300 drivers. Odds are you count yourself among those ranks. To help you get the most bang for your buck next time you shop for car insurance, we’ve compiled a list of the best ways to cut down on car insurance costs, complete with insights and tips from industry experts.
If you’re looking to save on cost and time, we’ve summarized the main points below; otherwise, continue reading to learn the ins and outs of finding cheap car insurance.
8 Tips for Cheap Car Insurance
While you’re shopping around, keep in mind that price isn’t all that matters when it comes to car insurance. It’s important to find a provider that offers the coverage you need (including unique options like lease payoff or rideshare coverage) and a strong service and claims record to back it up.
In addition, most states only require drivers to carry liability insurance — which protects others on the road, but won’t cover your own damages or medical bills if an accident occurs. We always recommend going beyond your state’s minimums and paying a little more for a policy that’ll pull its weight in a worst-case scenario.
Work with an insurance agent or online calculator to determine your insurance needs before checking prices. Once you’ve pinned down the coverage you need and found a few companies that fit the bill, use the following steps to make sure you’re getting the best rates.
1. Compare lots of quotes
The golden rule of cheap car insurance is “compare, compare, compare.” You’ll find that your premium can differ by hundreds of dollars from one provider to another, even though you’re using the exact same information and coverage levels. This is because each company judges the risk of insuring you by its own standards, taking into consideration factors like age, location, driving history, and vehicle type.
There’s no way to tell who will deem you “least risky” (and therefore cheapest to insure) ahead of time, so you’ll have to go through the quote process with multiple companies to find the cheapest policy.
2. Price out bundling discounts
Many companies offer multi-policy or “bundling” discounts for customers who open up more than one line of insurance. These tend to be some of the heftiest discounts in the industry. For example, Allstate offers up to 10% off auto and 25% off home insurance if you pair the two, and State Farm claims that you could save up to 17% by bundling auto with homeowners, renters, condo, or life insurance. If you already carry a homeowners or life insurance policy, ask your current provider how much you’d save by bundling and factor that into your price comparison.
3. Ask about specialty discounts
Your quote will automatically factor in most standard discounts. Online quote tools typically account for things like safe driving, early sign-up, being claims-free, having car safety devices, paying in full, and having multiple policies. However, a few discount options are harder to find. If you’re a veteran, public or federal employee, teacher, or senior citizen, for example, it’s worth checking with companies to see if you’re eligible for discounts that aren’t typically listed.
For a full rundown of the discounts you should be looking for (and who offers them), see find a provider.
4. Drive safely and stay claim-free
This may seem like a no-brainer, but: The better your driving record, the cheaper your car insurance. By respecting the rules of the road and staying claims-free, you prove to your insurer that you’re a low-risk driver. You’ll get substantially cheaper insurance because it’s less likely that they’ll have to pay out on your policy down the road.
To illustrate this, we requested quotes from seven different insurers, checking prices for low-, medium-, and high-risk drivers. While your own prices depend on your vehicle and profile, our sample set represents a universal truth: High-risk drivers will pay a lot more for equal coverage.
If you currently have an accident or ticket on record, be patient. Many companies offer accident-forgiveness programs that reduce rates each year you go without an accident. In addition, be sure to compare rates when your current policy expires. Having gone a year claims-free might mean that you can find a better deal elsewhere next time you shop.
5. Consider usage-based insurance
These days, more and more insurers are using tech to incentivize safer driving and help customers save on car insurance. By placing a monitoring device in your car, these companies can gauge how many miles you drive, whether you follow speed limits, how abruptly you brake, and so on. The more responsible your driving habits, the lower your premium. A few of our favorite car insurance companies offer usage-based programs, including Progressive, Allstate, State Farm, Travelers, Nationwide, and Liberty Mutual.
6. Re-evaluate coverage on older cars
Collision and comprehensive coverage helps repair or replace your car in any number of scenarios, from a straight-up car crash to a big hailstorm or a break-in. These options are especially valuable on newer cars with high replacement costs — which is why many lenders require them if you’ve taken out a loan or lease on your vehicle. That said, if you have a low-value “clunker” car, it may not be worth paying higher premiums for collision and comprehensive coverage.
Bill Hebert, Regional Director at Mercury Insurance, puts it this way: “If the shopper has an older vehicle that isn’t worth more than the deductible on a comprehensive policy, they should determine if that is something worth the additional premium.” Deductibles are generally $500 or $1,000. If your car’s overall value falls below that marker, then you may be better off saving yourself the out-of-pocket after an accident and investing in a new (used) vehicle instead.
Pro tip: Not sure how much your car is worth? Use Kelley Blue Book to determine its value; this company is the industry standard in vehicle pricing.
7. Maintain a good credit score
Credit scores have a bigger impact on insurance cost than many people realize. “Compared to someone with an excellent credit score, a person with poor credit may see an increase of 130% for the same coverage,” says Michael Newcomer, Principal and Founder at Novel Insurance. Paying bills on time and keeping credit cards in check will go a long way toward cheaper insurance rates.
8. Review rates annually
It’s an unfortunate reality that some insurers hike up rates year after year, even if you haven’t filed a claim or changed your policy. That’s why you should check quotes each time the policy is up for renewal. This will show you whether your current provider has remained competitive or inflated costs. Plus, changes in your coverage needs, driving record, address, familial status, or any number of other factors could mean the provider that was cheapest for you six to 12 months ago is no longer your best bet.
Some car insurance companies even offer an “early quote” or “early signing discount” if you start shopping around before your current policy is up. Savings generally depend on how early you start looking and can range from 3% to 10% off your premium. We’ve seen early bird discounts from some of our favorite providers, including Travelers, Esurance, Progressive, Allstate, American Family, and Auto-Owners Insurance.
The Bottom Line
It’s not worth paying for car insurance that won’t protect you (or your wallet) in the event of a serious accident, so your first step in purchasing car insurance should be figuring out how much coverage you really need. When you’re ready to compare providers, take these steps to get the cheapest car insurance possible:
- Compare quotes from at least three companies
- Check options to bundle with home or life insurance
- Drive safely and stay claim-free
- Review rates every time your policy is up
- Re-evaluate coverage on older cars
- Maintain a good credit score
- Look for specialty discounts
- Consider usage-based insurance
For more on cheap car insurance, check out some of our other pieces: