The most common ways to reduce your premium
Your car insurance premium is not fixed. Most insurers will lower your rate if you bundle policies, raise your deductible, improve your driving record, or ask about discounts you may not know exist. The savings vary by company and state, but the average driver can typically find $200 to $500 per year by making one or two changes.
The key is understanding what your insurer actually charges for. Your rate depends on your age, driving history, the car you drive, how much you drive, where you live, and the coverage limits you choose. You control some of these factors directly. Others you can influence by shopping around or by changing your behavior over time.
Key Takeaways
- Bundling your home and auto policies with the same insurer typically saves 15 to 25 percent on your car insurance alone.
- Raising your deductible from $500 to $1,000 usually cuts your collision and comprehensive premiums by 15 to 30 percent, but only do this if you can afford to pay that amount out of pocket after an accident.
- A clean driving record for three to five years can lower your rate significantly, and some insurers offer accident forgiveness programs that prevent one mistake from raising your premium.
- Discounts for good grades, defensive driving courses, low mileage, and safety features can add up to 10 to 20 percent off, but you have to ask your insurer about each one.
- Comparing quotes from at least three insurers every two to three years often reveals cheaper options, since rates change and new companies may offer better prices for your profile.
Bundle your home and auto insurance
Bundling is one of the fastest ways to lower your car insurance cost. When you insure your home and car with the same company, most insurers reduce both premiums. The discount typically ranges from 15 to 25 percent on your auto policy, though the exact amount varies by insurer and state.
The catch is that bundling only saves money if the combined cost is lower than what you would pay separately. Get a quote for bundled coverage from your current home insurer, then compare it to quotes from other companies that also offer both products. Sometimes a cheaper standalone auto insurer beats the bundled price, even after the discount.
Raise your deductible
Your deductible is the amount you pay out of pocket before your insurance covers the rest of a claim. Collision and comprehensive coverage both have deductibles. Raising your deductible from $500 to $1,000 typically reduces your premium by 15 to 30 percent, depending on your insurer and location.
Only raise your deductible if you have savings set aside to cover it. If you get into an accident and cannot pay $1,000 out of pocket, you will have to delay repairs or go into debt. A deductible increase makes sense if you have a solid emergency fund and a clean driving record. If you have had multiple accidents or claims in the past three years, keep your deductible lower.
Maintain a clean driving record
A single accident or traffic violation can raise your premium by 20 to 40 percent for three to five years. Conversely, staying accident-free and ticket-free keeps your rate stable or allows it to drop as you age and build history with your insurer.
Some insurers offer accident forgiveness programs that prevent your first at-fault accident from raising your rate. These programs are often available to drivers with five or more years of clean history, and they cost nothing to add. Ask your insurer whether you may have access to. If you do have an accident, report it promptly and ask whether your company offers forgiveness — you may be able to avoid the rate increase.
Ask about discounts you may may have access to for
Insurance companies offer dozens of discounts, but most drivers never ask about them. Common discounts include good student discounts (usually 3 to 10 percent for grades B or higher), defensive driving course discounts (5 to 15 percent for completing an approved course), low-mileage discounts (5 to 15 percent if you drive under 7,500 miles per year), and safety feature discounts (5 to 10 percent for anti-theft devices, automatic braking, or lane-keeping assist).
Call your insurer or log into your online account and ask which discounts apply to you. Some discounts require proof — a transcript for good grades, a certificate for a defensive driving course, or odometer readings for low mileage. Others are automatic once you mention them. Stacking multiple small discounts can reduce your premium by 10 to 20 percent.
Shop around every two to three years
Insurance rates change constantly. A company that was cheap three years ago may be expensive now, and a new insurer may offer a better rate for your specific profile. Getting quotes from at least three different companies every two to three years often reveals savings of $300 to $600 per year.
When you shop, use the same coverage limits and deductibles across all quotes so you are comparing apples to apples. Include any discounts you know you may have access to for. If you find a cheaper option, contact your current insurer and ask whether they will match the quote or offer a retention discount. Many will, rather than lose a customer.
Pay in full or switch payment methods
Some insurers charge a fee if you pay your premium monthly instead of in full. The fee is usually $5 to $15 per month, which adds up to $60 to $180 per year. Paying in full upfront eliminates this fee and sometimes qualifies you for an additional discount.
If you cannot pay in full, ask your insurer whether they offer discounts for automatic bank payments or paperless billing. These discounts are usually small — 1 to 5 percent — but they are free to take. Some companies also offer discounts for setting up autopay, which ensures you never miss a payment and keeps your coverage active.
Consider usage-based insurance if you drive infrequently
Usage-based insurance programs track your driving habits through a mobile app or a small device plugged into your car. Insurers use this data to calculate your premium based on when, where, and how you drive. If you drive safely and infrequently, you can save 10 to 30 percent.
These programs work best for drivers who have predictable, low-risk habits: short commutes, mostly daytime driving, and few hard braking events. If you drive long distances, late at night, or in heavy traffic, the savings may be smaller or nonexistent. Ask your insurer whether they offer this option and what data they collect before you enroll.
Frequently Asked Questions
Will my rate go down if I add safety features to my car?
Some insurers offer discounts for anti-theft devices, automatic emergency braking, lane-keeping assist, and other safety features. The discount is usually 5 to 10 percent. Ask your insurer whether your car's existing features may have access to for a discount, or whether you need to install aftermarket equipment. Some discounts apply automatically; others require you to provide proof of the feature.
How long does a traffic ticket stay on my insurance record?
Most insurers keep traffic violations on your record for three to five years, though the exact timeline varies by company and state. Minor violations like speeding may fall off sooner than major ones like reckless driving. After the violation ages off your record, your rate should drop. Contact your insurer to ask when a specific ticket will stop affecting your premium.
Does switching insurers hurt my credit score?
No. Switching car insurance does not affect your credit score. Insurance companies may do a soft credit check, which does not show up on your credit report. Shopping around for quotes also does not hurt your score. The only way insurance affects credit is if you fail to pay your premium and the company sends the debt to a collection agency.
Can I lower my premium by reducing my coverage?
Reducing coverage limits will lower your premium, but it also increases your financial risk. If you cause an accident and your liability limits are too low, you could be personally responsible for damages beyond what your insurance covers. Before cutting coverage, make sure you understand your state's minimum requirements and your own financial situation. Raising your deductible is usually a safer way to lower your premium than reducing coverage.
What should I do if my rate went up for no reason?
Call your insurer and ask why your rate increased. Common reasons include rate adjustments in your area, changes to your driving record, a lapse in coverage, or a change in your car's value. If the increase is due to an error — a ticket you did not receive, an accident you did not cause, or wrong information about your car — ask the insurer to correct it. If the increase is legitimate but you disagree with it, get quotes from other companies and consider switching.