How to lower your car insurance premium
Your car insurance rate depends on what you tell the insurer about yourself, your driving history, and your car — and on the coverage you choose to buy. You can lower your premium by changing any of these things: bundling policies, raising your deductible, dropping coverage you don't need, taking a defensive driving course, improving your credit score, shopping for a new quote every year or two, or asking about discounts your current insurer may not have mentioned. The savings vary widely by person and by state, but most people find at least one option that works for their situation.
The key is to understand which levers actually move your rate and which ones take time to work. Some changes, like bundling or raising your deductible, lower your premium immediately. Others, like improving your credit score or waiting for a ticket to age off your record, take months or years but compound over time.
Key Takeaways
- Bundling your car insurance with home or renters insurance often saves 15 to 25 percent on your car premium alone, but only if the combined cost beats separate quotes from different insurers.
- Raising your deductible from $500 to $1,000 typically cuts your collision and comprehensive coverage costs by 15 to 30 percent, but only if you can afford to pay that amount out of pocket.
- Dropping collision or comprehensive coverage on an older car worth less than ten times your deductible may save money if you own the car outright and can cover repairs yourself.
- A defensive driving course can lower your rate by 5 to 15 percent and may remove a minor violation from your record depending on your state, but not all insurers offer the discount.
- Shopping for quotes every one to three years often uncovers better rates than staying with your current insurer, even if you have been a customer for years.
Bundle your car insurance with home or renters coverage
Most insurers offer a discount when you buy multiple policies from them — typically car and home, or car and renters. The discount usually ranges from 15 to 25 percent on your car premium, though the exact amount varies by insurer and by state. You get the discount simply by having both policies active with the same company; you do not have to do anything else to claim it.
The catch is that bundling only saves money if the combined cost of both policies is lower than buying them separately from different insurers. Before you bundle, get quotes from at least two other companies for both your car and home or renters insurance, then compare the total cost. Sometimes a cheaper car insurer and a cheaper home insurer separately will beat a bundle from a single company. Add up the full annual cost for each scenario before you decide.
Raise your deductible on collision and comprehensive coverage
Your deductible is the amount you pay out of pocket when you file a claim. A higher deductible means the insurer pays less per claim, so they charge you a lower premium. Moving from a $500 deductible to $1,000 typically saves 15 to 30 percent on collision and comprehensive coverage, though the exact savings depend on your insurer and your location.
Raising your deductible only makes sense if you can actually afford to pay it when you need to. If you have $1,000 in savings and you raise your deductible to $1,000, a fender-bender will wipe out your emergency fund. A good rule is to raise your deductible only to an amount you could pay within a month or two without borrowing money or going without other necessities.
Drop collision or comprehensive coverage on an older car
Collision coverage pays for damage to your car from a crash with another vehicle or object. Comprehensive coverage pays for theft, weather, vandalism, and hitting an animal. Neither is legally required, though your lender will require both if you have a car loan or lease. If you own your car outright, you can drop either or both.
The math is simple: if your car is worth $8,000 and your collision deductible is $1,000, the most collision will ever pay you is $7,000. If your collision premium is $600 a year, you are paying $600 annually to protect $7,000 in value — a break-even point at about 12 years. Most people drop collision when their car is worth less than ten times the deductible. For comprehensive, the same logic applies, though comprehensive premiums are usually lower than collision premiums.
Before you drop coverage, check whether you could afford to replace or repair your car if something happened. If your car is your only transportation and you cannot afford a $5,000 repair, keeping the coverage is worth the premium cost. This is a personal decision based on your savings and your risk tolerance, not a one-size-fits-all rule.
Take a defensive driving course
A defensive driving course teaches accident prevention and can lower your rate by 5 to 15 percent, depending on your insurer and state. Some states also allow the course to remove a minor traffic violation from your record, which can lower your rate even more. The course is usually four to eight hours long and costs $20 to $100.
Not all insurers offer the discount, and not all states allow the violation removal, so check with your insurer before you enroll. Some insurers offer the discount only if you have had a recent accident or ticket. If you do take the course, ask your insurer in writing to apply the discount and to remove any violation if your state allows it — do not assume they will do it automatically.
Improve your credit score
Most insurers use your credit score to set your rate, even though credit score and driving safety are not the same thing. A higher credit score typically lowers your premium by 10 to 50 percent depending on your insurer and state, though some states limit how much insurers can use credit in their rates. You cannot change your credit score overnight, but if you are working on it for other reasons, you will see insurance savings as it improves.
The main ways to improve your credit score are paying bills on time, paying down credit card balances, and not opening new credit accounts unless you need to. These changes take months to show up in your score, but they are the most reliable path to a higher score and lower insurance rates. If your credit is already good, this lever will not help you, but it is worth knowing about if you are rebuilding.
Shop for a new quote every one to three years
Insurance companies compete for customers, and rates change constantly based on claims data, competition, and changes to your driving record or car. Staying with the same insurer for years often means you are paying more than a new customer would pay for the same coverage. Getting quotes from at least three other insurers every one to three years usually uncovers a better rate somewhere.
When you shop, use the same coverage limits and deductibles across all quotes so you are comparing the same thing. If you find a better rate, switch — most insurers have no penalty for leaving, and the process takes less than an hour. Some insurers offer a loyalty discount after a few years, so ask your current insurer if they can match a lower quote before you switch. You may be surprised how often they will.
Ask about discounts you may not know about
Beyond bundling and defensive driving, insurers offer discounts for things like low mileage, paying your premium in full instead of monthly, automatic payments, having safety features on your car, being a good student, completing a telematics program that tracks your driving, or being a member of certain organizations. These discounts vary widely by insurer and state, and many customers never ask about them.
Call your insurer or log into your account and ask what discounts you are currently receiving and what other discounts you might be may be able to access for. Write down the ones that apply to you, then ask your insurer to add them to your policy. Even small discounts add up — a 5 percent discount here and a 10 percent discount there can lower your total premium by 20 to 30 percent.
Frequently Asked Questions
Will lowering my coverage limits save money?
Yes, but it is risky. Lowering your liability limits from 100/300/100 to 25/50/25 will cut your premium, but if you cause a serious accident, you could be personally liable for costs above your limit. Most states require a minimum liability limit, and most lenders require higher limits than the state minimum. Check your state requirement and your loan agreement before you lower limits.
Does switching insurers hurt my credit score?
No. Shopping for insurance quotes is a soft inquiry and does not affect your credit score. Switching insurers also does not hurt your score. Your credit score may improve or worsen based on your payment history with the new insurer, but the switch itself has no impact.
Can I get a discount for paying my premium upfront instead of monthly?
Most insurers offer a small discount, usually 2 to 5 percent, for paying your full premium upfront rather than in monthly installments. Some also offer a discount for setting up automatic payments. Ask your insurer what discounts apply to your payment method.
What if I have a bad driving record?
Accidents and tickets stay on your record for three to five years depending on your state, and they raise your rate during that time. You cannot remove them early, but once they age off, your rate will drop. In the meantime, a defensive driving course and shopping for insurers who specialize in higher-risk drivers may help lower your premium.
Does my car's safety rating affect my insurance rate?
Yes. Cars with high safety ratings and built-in safety features like automatic emergency braking or lane-keeping assist often may have access to for discounts. If you are buying a new car, choosing one with a high safety rating can lower your insurance cost over the life of the vehicle.