How to Save Money on Car Insurance
How to Save Money on Car Insurance
Car insurance accounts for only 2.4 percent of the average American's annual income, but at around $140 per month, it's understandable why most drivers look for ways to economize. Whether you live in a region with the lowest average car insurance rates or one where car insurance prices are higher than the national average, there are various strategies to cut down on this important cost.
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Finding low-cost carriers is a wonderful start, but it isn't the only way to save money on vehicle insurance costs. As complicated as auto insurance can be, there are a number of simple strategies to reduce the cost and free up funds in your budget. The insurance editorial team at Bankrate has compiled a list of tips to help you save money on vehicle insurance.
How to Save Money on Car Insurance
You can choose from a big list of car insurance providers to find the best prices, but there are other things you can do to make your car insurance more reasonable.
Shop around
While all auto insurance policies are organized similarly to provide coverage for a variety of vehicle-related mishaps and liabilities, you might be surprised at how much other personal characteristics affect your premiums. Every insurance company evaluates risk in its own way, and factors such as your ZIP code and driving record may result in varying premiums from different companies. Request quotations from different carriers for identical coverage amounts to determine which one offers you the best rate before purchasing a policy or switching providers.
Quote comparisons may also be useful when it comes time to renew your coverage. Because the insurance market is constantly changing, there's a chance your current insurer no longer offers the lowest pricing for the coverage you require. You might be able to tell if you're paying too much for vehicle insurance by shopping around.
The table below shows the top insurance firms in the United States by market share and average quoted premiums as of 2021.
| Insurance company | Average annual full coverage premium | Average monthly full coverage premium |
|---|---|---|
| State Farm | $1,457 | $121 |
| Geico | $1,405 | $117 |
| Progressive | $1,509 | $126 |
| Allstate | $1,921 | $160 |
| USAA | $1,225 | $102 |
Take advantage of discounts
Insurance companies frequently provide a variety of discounts, many of which can be combined for even greater savings.
The following are a few of the most typical vehicle insurance discounts:
- Low-mileage discount: If you drive less than a specific number of miles per year, the insurer will give you a discount.
- Discount for numerous policies: You could save money by insuring multiple insurance types with the same firm. Bundling your home and auto insurance often saves you the most money.
- If you have a clean driving record, you may be eligible for a discount. You may be eligible for a discount in addition to your driving record if you maintain safe driving habits.
- Driving a vehicle with safety features, such as anti-lock brakes and an anti-theft device, can help you save money.
- If you are a member of a specialized profession, such as a teacher, you may be eligible for a discount.
- Younger drivers can be more expensive to insure, but strong student discounts may be able to assist lower that cost. Insurers, for example, would usually provide a student discount to individuals who maintain a B average in school.
- Examine your insurance coverage again.
It is advantageous to be as financially protected as possible in the event of an accident. When buying automobile insurance, most people choose to buy both collision and comprehensive coverage, generally known as full coverage. Those with older automobiles, however, may find that this is not always the best option.
Purchasing comprehensive and collision coverage for a heavily depreciated or older car, on the other hand, may seem paradoxical because insurers often payout up to the actual cash value of your vehicle. If the amount the insurance company would pay you if your car was totaled is less than the cost of your annual premium, you may be overpaying for comprehensive and collision coverage. While liability-only insurance does not cover damage to your car, it can give financial protection against potential lawsuits and medical bills incurred by an injured party. To discover how much coverage is appropriate for you, you should consult with a certified insurance agent.
The average cost of car insurance in the U.S.
| Annual full coverage premium | Monthly full coverage premium | Annual minimum coverage premium | Monthly minimum coverage premium |
|---|---|---|---|
| $1,674 | $140 | $565 | $47 |
Boost your deductibles.
When you purchase car insurance, you must pay a deductible, which is the amount that the insurance company deducts from your payout if you file a claim. When you buy auto insurance, your insurance company will give you several alternatives for deductible amounts, so it's worth exploring greater deductibles to save money. Your premium will naturally be reduced due to the increased out-of-pocket expense. Before choosing a higher deductible, make sure you can afford it in the event of an accident.
Boost your credit score
Except in places where the use of credit to compute rates is prohibited, insurers frequently utilize a credit-based insurance score to help price premiums. Those with good credit, on the other hand, usually get cheaper vehicle insurance in most states.
Consider taking the effort to enhance your credit score if it could use some help. While big credit improvements take time, paying down debts, creating a monthly budget to keep track of bills, and making on-time payments can all help you save money on insurance.
Annual full coverage vehicle insurance prices as a function of credit score
| Poor | Good | Potential savings |
|---|---|---|
| $3,026 | $1,674 | $1,352 |
How to Find a Low-Cost Automobile Insurance Company
Car insurance comparison searching is one of the most effective methods for locating the most cost-effective coverage for your needs. Although premiums vary by state, ZIP code, and other criteria, adding some extra steps to your procedure may help.
Car insurance quotes are simple to obtain, whether you are currently insured or seeking new coverage. You can speak with a local agent, but online shopping is a quick and easy approach to evaluate your best selections without putting in a lot of effort. Because insurance costs vary greatly by the provider, knowing your desired coverages ahead of time will allow you to accurately compare numerous quotes for the same amount of financial protection.
For example, if the typical full coverage policy costs $1,674 per year, you may find rate differences of hundreds of dollars between firms. When you add roadside assistance, which could cost an extra $20 per year, you might find that one insurer provides cheaper rates. With multiple additional coverages, the disparity between providers is likely to be substantially greater, making precise comparisons even more important.
If you're on a budget, you might want to reconsider which coverages are most important to you. You might need roadside assistance, but you don't need additional optional coverages like rental reimbursement. Before requesting bids, check your intended coverages to see if there are any areas where a standard policy will suffice.
Many insurance companies now have tools on their websites that allow you to compare quotations. Some businesses compare quotes from key competitors in a side-by-side comparison. However, you should double-check these quotes on your own.
You might want to include small or local carriers in your search. Smaller insurers may offer lower rates and adapt coverage to meet local needs, despite the fact that many larger insurers have household brands. It's also a good idea to investigate the company's client satisfaction and financial stability. Given the importance of both of these factors in the insurance experience, you may discover that choosing a financially solid business saves you money in the long run by ensuring a prompt claim reimbursement. J.D. Power and AM Best, two industry-trusted companies, could be good locations to start your study.
Finally, you may benefit from considering your driving history and habits while looking for an affordable car insurance company and lowering your vehicle insurance prices. Each provider is unique, and some specialize in providing coverage for specific types of drivers. For example, USAA offers coverage to military members and veterans, including those who may need to insure a vehicle while on deployment, while The General specializes in high-risk auto insurance. Usage-based and pay-per-mile auto insurance policies are available from a variety of insurers. If you travel less than 12,000 miles per year or use safe driving tactics on a regular basis, it may be beneficial to look for firms that offer the best savings for your driving habits.
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