Some things that affect the price of auto insurance you can’t do anything about — like your age — and some you might not want to change, like where you live. But by comparing rates, you may be able to figure out how to get cheaper car insurance.
Here are some other considerations.
How to Get Cheaper Car Insurance
Wondering how to lower car insurance costs?
There’s no downside to looking for a lower premium than you’re currently paying on car insurance. If you find out you have a better deal than you thought, you can stick with the company, and the premium, you have.
But if you’ve had the same coverage and carrier for years (or even a year), you may benefit from making some changes.
Key Points
• Bundling insurance policies with one provider can lead to significant savings.
• Selecting a higher deductible reduces monthly premiums, increasing overall savings.
• Comparing quotes from multiple providers ensures the best rates.
• Discounts are available for good driving records, vehicle safety features, and low annual mileage.
• Adjusting coverage for older vehicles can reduce unnecessary expenses.
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Shop Around and Get Some Quotes
Rates for the exact same coverage can vary from one insurance company to the next — and from one customer to another. Using an online comparison site to shop for a policy and premium based on your specific needs can be a good way to start your search for savings.
The Insurance Information Institute recommends getting at least three price quotes when you’re shopping for a better rate.
You’ll likely see plenty of company names you know when you use a comparison site, but you also may run into some that are less familiar. If you’re intrigued by a company’s rates and coverage options but want more information, you can read consumer reviews online.
You also can check out a company’s financial health with a rating service like AM Best or Standard & Poor’s. And you can contact your state insurance department to ask about any complaints related to a particular insurer.
Once you’ve done some research, you also may want to contact your current insurance provider to see what savings options it might offer to keep you as a customer.
Recommended: How Much Auto Insurance Do I Really Need?
Look for Discounts
When you’re shopping, it’s smart not to overlook the opportunity to save money on your auto insurance premiums with discounts.
Many insurers offer price breaks based on things that make a driver statistically safer to insure, like a good driving record or a vehicle with extra safety or anti-theft features. Drivers of all ages may qualify for a discount after taking a defensive driving course. And carpoolers and those who work from home may benefit from low-mileage discounts.
You also might be able to get discounts for behaviors that cut costs for the insurer—by going paperless, for example, using automated payments, or paying premiums annually instead of two or more times a year.
All discounts are not created equal: Some provide a larger price cut than others, so it can help to look at the bottom line. The amount you can save also may vary by company and location. The options can also change from year to year, which is another reason why you should check car insurance rates regularly.
Explore Bundling
Another way to get a price break can be to “bundle” your insurance coverage with one insurer. That might mean purchasing your renters (or homeowners) insurance and car insurance from one company, or using one company for both your car and boat insurance.
You also might get a reduction if you are insuring more than one vehicle.
Bundling can result in a substantial discount. Still, you may wish to get separate policy quotes as well, just to be sure you’re really saving money and getting exactly what you want.
Consider a Higher Deductible
Choosing a higher deductible can significantly reduce your premium. (Your deductible is the amount you’ll pay out of pocket before your insurance company pays the rest of a claim.)
According to the Insurance Information Institute, increasing your deductible from $200 to $500 could cut the cost of collision and comprehensive coverage by 15% to 30%. And going even higher, to $1,000, could save you 40% or more, the insurance industry association says.
Of course, there’s a catch: If you have an accident, you may end up having to fork over a larger chunk of money than you’re comfortable with before the insurance company kicks in its share on a claim.
Before you go for the savings, you may want to be sure you can afford an unexpected repair bill.
Review Coverage Needs
If you have a car that’s getting older, it might be time to reevaluate the coverage you’re carrying on it.
For example, you may decide to drop your comprehensive coverage — the portion that helps pay to replace or repair your vehicle if it’s stolen or damaged in an incident that’s not a collision — or collision coverage. Or you may decide to lower the amount of those coverages.
Keep in mind, though, that if you do give up this coverage, you may have to pay to repair or replace your vehicle if it’s damaged. So it’s important to balance today’s savings with tomorrow’s what-ifs.
As you make your decisions, you’ll have to keep any coverage that’s required by the laws in your state and by your lender (if you’re still paying for the car) or a lease agreement.
Before Buying a Car, Consider Insurance Costs
Some cars cost more to insure than others, so before you save up for a car, you may want to check out how buying a used or new car might affect your premiums.
Insurance companies base their prices, in part, on a car’s sticker price, its safety record, what it might cost to repair it, its engine size, and the chance that the car will be stolen.
You may have heard that color is also a factor and that a red car can cost more to insure. But according to the Insurance Information Institute, that is a myth. You can, however, expect a powerful sports car to kick up your costs.
Improve Your Driving Record, If Needed
This one’s pretty basic: A person with a bad driving history — think multiple accidents, insurance claims, and/or traffic violations — can expect to pay more for car insurance than someone with a good record.
If you aren’t sure where you stand, or you think there might be an error on your record, you can get a copy of your motor vehicle report through your state’s department of motor vehicles or the agency that handles driver’s licenses.
Improve Your Credit, If Necessary
You probably already knew that maintaining a good credit record can save you money in many ways, and you can include lower car insurance premiums on that list.
Just how much a solid credit score can save you may depend on the insurance company and the state you live in. But you can expect your credit data to play some part in your provider’s underwriting decisions.
The good news is, there are steps you can take to build credit fast, including disputing any errors on your credit reports and paying your bills on time.
Recommended: Pros & Cons of Car Refinancing
Ask About Group Insurance
Some companies and other organizations offer group plans with lower rates for their employees or members. Your human resources department can fill you in on what’s available through your employer.
If you’re a member of a large organization, you may receive insurance offers in the mail or by email, or you can inquire with the main office.
The Takeaway
Wondering how to lower your car insurance? A good starting point on the road to cheaper car insurance can be to compare your current policy to offers from other insurance companies.
Try an apples-to-apples comparison of your existing policy to others to find the best deal, and if you like your quote, buy the policy right then and there.
When you’re ready to shop for auto insurance, SoFi can help. Our online auto insurance comparison tool lets you see quotes from a network of top insurance providers within minutes, saving you time and hassle.
Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
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