Auto Insurance

10 Tips To Lower Your Car Insurance Costs

Written By: Jason Metz
Reviewed by: Mike Reyes
Last Updated November 23, 2022

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Consumers are rightfully concerned about a spike in gas prices and the steep cost of buying a new or used car. And then there’s your car insurance bill. The average good driver in the U.S. pays about $1,569 per year for car insurance, according to a Forbes Advisor analysis of car insurance rates. 

But there’s a good chance you can do better than that. That’s because the best car insurance companies combine good coverage with excellent customer service at fair prices. Here are 10 tips to lower your car insurance costs.

No. 1: Shop Around

Nearly a third (31%) of consumers think their car insurance rates are either “unfair” or “very unfair,” according to a survey by YouGov for Forbes Advisor. But you might be surprised to learn that you can often find the exact same coverage at a different car insurance company for a better price. You may even be able to save hundreds of dollars a year.

The best way to get a good price on car insurance is to compare quotes from multiple companies. You can get affordable insurance coverage online by using a website that provides multiple quotes at once. Another option is to speak with an independent insurance agent who can gather quotes on your behalf.

No. 2: Bundle Your Insurance Policies

One of the best discounts is a multi-policy discount, also known as “bundling.” For example, if you bundle your auto insurance with your home insurance, you can often snag a discount between 5% to 25%, according to a Forbes Advisor analysis of insurance discounts. 

But if you’re not a homeowner, that doesn’t mean you can’t find a good bundling opportunity. You can typically bundle car insurance with other insurance types, such as condo, renters, life, boat, motorcycle and RV insurance. 

No. 3: Pay in Full

Paying your entire policy term upfront is a good way to save, if you can afford it. You’ll typically qualify for a discount (often between 6% to 14%), but you’ll also save on paying a monthly finance or service fee that some companies charge.

No. 4: Take a Defensive Driving Course

An approved defensive driving course can be a good two-for-one solution to lower your auto insurance rates.

First, if you have points on your driving record for a moving violation (such as a speeding ticket), you may be able to reduce your points, which can result in cheaper car insurance premiums. Second, some insurance companies offer discounts if you successfully complete an approved driving safety course, especially if you’re age 55 or older. 

No. 5: Ask for Discounts

In addition to the discounts mentioned above, there are plenty of other discounts you can get. For example, a good driver discount can range between 10% to 40%. 

Other discount opportunities usually include good student discounts, vehicle safety discounts, multi-vehicle discounts and discounts for going paperless.

No. 6: Get Rewarded for Safe Driving 

Many car insurance companies offer a usage-based insurance (UBI) program. UBI uses a smartphone or device plugged into your car’s OBD-II port to track actual driving, such as speed, acceleration, hard cornering, harsh braking, miles driven, time of day and phone use while driving.

If you score well, you can get a discount that ranges between 5% to 40%, depending on your insurance company. And you’ll often get a discount just for participating in the program, usually between 5% to 10%. 

No. 7: Drive Less, Pay Less

If you don’t have a daily work commute or you’re a low mileage driver, a pay-per-mile car insurance policy might be a great fit. A typical plan charges a monthly base rate and a per-mile rate. 

For example, if you have a plan that charged $30 per month and $0.05 cents per mile, and you drive 400 miles in a month, your bill would be $50 ($30 base rate + $0.05 x 400 = $50). 

No. 8: Choose a Car That’s Cheaper to Insure

The type of vehicle you drive is a factor in determining your car insurance rates. Car insurance companies look at repair costs for similar models, theft rates and other factors. 

If you’re shopping for a new car, ask your insurance agent for quotes for the models you’re considering. That way you won’t be taken by surprise with a higher insurance bill.

No. 9: Review Your Car Insurance Deductible

A car insurance deductible is the amount of money that is taken out of your insurance check when you file a collision or comprehensive insurance claim. Common deductible choices range from $250 to $1,000 and up. 

Generally, the higher your deductible, the less you’ll pay in car insurance premiums. That’s because your insurer will pay less if you file an insurance claim. Just be sure you can cover a higher deductible amount in case you have a claim.

No. 10: Maintain Good Credit

Working to improve and maintain your credit score not only affects your borrowing power, but it can also have a significant impact on your car insurance rates. Most car insurance companies take a look at your insurance-based credit score when setting your rates. (This practice is banned only in California, Hawaii, Massachusetts and Michigan.) 

Drivers with poor credit pay an average of 76% more for car insurance compared to drivers with good credit, according to a Forbes Advisor analysis of car insurance rates.

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