Let’s look at how to save money on car insurance without losing coverage. Car insurance is a must if you own a car. It protects you, your vehicle, and other road users. However, for many Americans, paying for car insurance every month can feel like a financial burden. It doesn’t have to be so.
The good news is that there are ways to save car insurance costs without giving up the protection you need. According to the Insurance Information Institute, the average American driver pays about $1,668 per year on car insurance. Another side of the coin is that many could pay much less.
In 2024, it was also reported that nearly 58% of drivers had not compared insurance quotes in over two years. That means they could be missing out on serious savings. Do you have to be one of them? Not at all. This article will walk you through easy and realistic ways to save car insurance money while keeping your coverage strong.
How to Save Money on Car Insurance
No one wants to be in an accident. Not even you, but if something does go wrong, your insurance is there to help. However, the concern is that many people overpay without realizing it. You don’t need to pay hundreds of dollars every year than you need to. Here are ways to save car insurance money and still stay fully protected:
1. Consider Raising Your Deductible to Save on Car Insurance
Have you considered raising your deductible? Your deductible is the amount you pay out of pocket before your insurance kicks in. The higher your deductible, the lower your monthly payment.
Let’s say your deductible is $500. If you raise it to $1,000, your monthly bill could drop by 15% to 30%. That being said, only do this if you have enough savings to do so. Can your savings cover the deductible in case of an accident? It’s a balance between risk and savings.
So, if you’re looking for an easy way to save car insurance money, adjust your deductible. It could be the answer, as long as you’re prepared.
2. Bundle Your Insurance Policies to Save on Car Insurance
Also, leverage bundling. It is your friend. If you have renters’ or homeowners’ insurance, consider combining it with your car insurance. Many companies give a discount when you bundle two or more policies together.
This multi-policy discount can save you anywhere from 5% to 25% on your premiums. Therefore, it makes it one of the easiest ways to reduce your overall costs.
For instance, you can decide to bundle your home and auto policies with one insurer. What do you think about this? The result could be a 20% discount on both. It’s a small move that leads to big savings. Bundling is one of the most common ways people save on car insurance costs each year.
3. Check Different Providers and Compare Prices
First things must be first. Don’t stick with the same insurer just because it’s easier. Always compare prices from at least three different companies. You can do this online in minutes. Many websites allow you to enter your details once and get several quotes.
Imagine being with the same company for five years and never considering a switch. A lot may be going on in ways that may not be favourable to you. Get curious. Find a new policy with the same coverage. What you will discover may surprise you.
What if you could get a similar policy for $35 less per month? That’s $420 saved in a year. Just like that, you can save car insurance costs simply by shopping around.
4. Ask About Discounts You May Not Know
Take time to ask your insurance company about available discounts. Many drivers miss out simply because they don’t ask. Common discounts include:
- Good driver discount
- Low mileage discount
- Defensive driving course discount
- Good student discount
- Military or veteran discount
Which of the discounts will you be asking your insurer about today? You may find out you qualify for one discount or another. This can help you save car insurance payments by a certain amount each month. You are just a phone call away.
Also Read: What Is Insurance? A Simple Guide for Beginners
5. Build Up Your Credit Score
Do you know that your credit score can affect how much you pay for car insurance? You may not know this, but that’s why you’re here. Insurers often use it to decide your rate. The higher your score, the lower your rate. This is because the better your credit scores, the fewer claims you tend to file. It makes them less risky to insure.
Even improving your credit score by just a few points can lead to noticeable savings on your monthly premiums.
So, how do you raise your credit score?
- Pay your bills on time
- Keep credit card balances low
- Don’t open too many new accounts at once.
Over time, this can help you save on car insurance costs more than you think.
6. Review and Remove Unnecessary Coverage
Sometimes, you’re paying for coverage you don’t need. If you drive an old car that is worth much less than its original cost, consider dropping comprehensive coverage.
A good rule of thumb is that if your car’s value is less than 10 times your annual premium for these coverages, it may not be worth keeping them. However, make sure you can afford to replace or repair your vehicle out of pocket before making this decision.
For instance, if you have a 15-year-old sedan worth $1,500 and realize that you’ve been paying nearly $600 a year for full coverage. You can drop some of that coverage and save $400 every year.
Of course, always think carefully before making changes. If your car’s value is low, this is one way to save on car insurance costs with minimal risk.
7. Drive Safely and Avoid Accidents
Safe driving pays off. Accidents and driving under the influence charges can significantly increase your insurance rates. On the other hand, if you have a clean driving record, your insurer may reward you with lower rates.
Many insurance companies won’t penalize you for your first minor incident if you’ve been claim-free for several years. Additionally, some insurers provide usage-based insurance programs that monitor your driving habits. It can offer significant discounts for safe driving behaviors. Smooth braking and avoiding late-night driving are examples.
Think of your driving record like a school report card. The cleaner it is, the more you can save on car insurance in the long run. Many insurers even offer a “vanishing deductible” or loyalty discount after you have spent a certain number of years of safe driving.
8. Have You Considered Usage-Based Insurance?
These days, many insurance companies offer a service called “telematics” or usage-based insurance. This is where they track your driving using a device or app. Being a safe driver can get you a discount of up to 30%.
Imagine signing up for a usage-based program. After three months of safe driving, you get a $25 monthly discount. That’s $300 a year, just for driving the way you always do.
This is a great way to save on car insurance costs, especially if you don’t mind being tracked a little. The potential savings often outweigh the privacy trade-off for most drivers.
Also Read: Is Your Home and Auto Insurance Enough? 5 Questions To Answer
9. Review Your Policy Every Year
Do you want to know another simple trick? Review your policy every 6 to 12 months. Life changes. The changes could be that you:
- Drive less now,
- Changed jobs, or
- Moved to a safer neighborhood.
These factors could help you save car insurance dollars if you update your insurer. A policy review could put money back in your pocket.
Don’t just leave your policy on autopilot. Stay active and informed about your policy. By checking in regularly, you make sure you’re not overpaying.
10. Consider Pay-Per-Mile Insurance
Finally, if you don’t drive a lot, look into pay-per-mile insurance. Instead of paying a flat monthly fee, you pay a low base rate plus a few cents for every mile you drive.
Pay-per-mile insurance could be the answer you have been looking for if you work from home or rarely use your car. Traditional auto insurance charges a flat rate, making it expensive for low-mileage drivers. You need a different experience, especially if you drive less.
If you work from home, switch to a pay-per-mile policy. Since you only drive about 300 miles per month or less, you can save on car insurance costs by almost 40%. This is perfect if you’re a remote worker, retiree, or drive less than the average driver.
Conclusion
In the end, to save car insurance costs, you don’t need to sacrifice coverage quality. You can save on car insurance costs while staying safe and protected.
Utilize shopping around, bundling policies, using discounts, or keeping a good driving record, and you’re good. Remember that you don’t just pay your insurance bill and forget it. Review it, ask questions, compare prices, and make good choices as well. These simple steps can help you save money every year.
So next time your renewal notice comes in the mail, take a moment. Think about the tips in this article and get ready to save on your car insurance costs.