Car insurance prices have climbed noticeably in recent years. Repair costs, the price of replacement parts and the cost of medical care have all gone up, and insurers have passed much of that on to drivers. You cannot control those trends, but you can control some of what goes into your own price. A few habits and a bit of paperwork can keep you from paying more than you need to.
Before the list, it helps to know what insurers actually look at. Your age, ZIP code, driving record, the car you drive, how far you drive each year and the coverage you choose all matter. In most states, insurers also use a credit-based insurance score, although California, Hawaii and Massachusetts restrict or ban the practice. Some of these factors are fixed, and some are not. The seven steps below focus on the ones you can influence.
1. Compare several quotes
Two insurers can price the same driver very differently, because each one weighs risk in its own way. A company that is expensive for a young driver may be cheap for a retiree, and the reverse is also true. State insurance departments and consumer groups regularly point out that shopping around is the single most reliable way to cut costs.
Try to get at least three quotes, and use the same coverage limits and deductibles on each so the comparison is fair. Repeat the exercise every year or two, and any time your life changes.
2. Ask about discounts
Insurers offer discounts for many things: a clean record, low mileage, good grades, multiple cars, a bundled home or renters policy, anti-theft devices, being a member of certain groups, or paying in full. Many are not applied automatically, so it pays to ask directly. See our guide to auto insurance discounts for ideas.
Ask too about telematics, sometimes called usage-based insurance. These programs track your driving through an app or a small device and reward smooth braking and low mileage. Results vary: some drivers save a meaningful amount, while with certain companies poor scores can raise a rate. Read the terms before you sign up.
3. Consider your deductible
The deductible is what you pay yourself on a collision or comprehensive claim. A higher deductible usually lowers your premium, because you are taking on more of the risk. Moving from $500 to $1,000 often saves a modest amount each month, not a huge one.
Only choose a level you could pay tomorrow without borrowing. The Federal Reserve’s yearly survey of household finances has repeatedly found that more than a third of American adults would struggle to cover an unexpected $400 expense with cash. A deductible you cannot afford is not a saving. It is a trap.
4. Keep your driving record clean
Accidents and tickets can affect your rates for three to five years, and sometimes longer for serious violations. A single at-fault accident can raise premiums by a significant percentage at renewal. Driving carefully protects both you and your wallet.
If you do have a minor ticket, ask whether a defensive driving course can help. Some states require insurers to give a discount to drivers who complete an approved course, and in others it can help keep points off your record. New York’s accident prevention course, for example, can reduce premiums for three years. Rules differ, so check with your state’s DMV and your insurer first.
5. Review your coverage
As your car gets older, it may stop making sense to carry full collision and comprehensive cover. A common rule of thumb is to reconsider when the yearly cost of those coverages approaches roughly 10% of the car’s market value. That is not a law, just a prompt to run the numbers.
Never drop liability cover to save money. It protects you from large claims if you injure someone or damage their property, and it is required in nearly every state. Always keep at least your state minimum, and consider whether higher liability limits are worth the small extra cost.
6. Tell your insurer about mileage changes
If you drive less than before, because of a new commute, a remote job or a second car in the household, let your insurer know. Annual mileage is a rating factor, and a drop from 12,000 miles to 6,000 can lower the price. Be honest and accurate. Understating your mileage can cause problems if a claim is investigated.
7. Look at how you pay
Some companies reward paying the whole term upfront, and most reward automatic payments or paperless billing. Monthly plans often add fees. Ask your insurer for the price under each payment method and add up the full-term total, not just the monthly figure.
A few extra habits worth building
- Check your policy a few weeks before renewal. Some insurers raise rates quietly at renewal, and the gap between your price and a new customer’s price can grow over time.
- Choose your next car with insurance in mind. The Insurance Institute for Highway Safety publishes claim data showing that some models cost far more to insure than others.
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This article is for general information only and is not insurance, legal or financial advice. Coverage, rules and prices vary by insurer and state.