Over the last several years, car insurance rates have been steadily rising due to factors like inflation, higher vehicle prices, and increased car repair costs. The average cost of car insurance these days in the U.S. is $2,014 for a full coverage policy, according to Bankrate’s most recent analysis. That’s up almost 14% from the previous year, which translates to an extra $240 leaving your wallet.
While car insurance rates are historically high, it’s still possible to save money on coverage. Whether you’re shopping for a new policy or looking to lower your current premium, there are plenty of ways to reduce your car insurance costs.
How to save money on car insurance
The cost of car insurance depends on a variety of personal factors. Your location, age, claims history, credit score, gender, driving record, and vehicle type can all impact your rate. Regardless of your situation, however, it’s possible to save money on auto insurance. Learn how to get cheap car insurance with these tips.
Look for Discounts
Most car insurance companies, including national and regional providers, offer car insurance discounts to help drivers save money on their policies. Every insurance company has different discounts, but you can often find savings for claim-free drivers, smart students, insuring a new vehicle, taking a defensive driver course, and having a vehicle with safety features, like an anti-theft device or anti-lock brakes.
Bundle Your Policies
One of the best ways to get cheap full coverage auto insurance is to bundle your insurance policies. Bundling is the practice of purchasing more than one insurance policy from the same company. Auto and home insurance is one of the most popular bundles, but many insurers offer bundling deals for auto and renters insurance and auto and condo insurance.
Raise Your Deductible
When you have a car insurance claim, you might be required to pay a deductible, which comes out of your claim payout. Collision and comprehensive insurance are two policies that typically have a deductible.
To get the cheapest full coverage car insurance, choose a high deductible. The higher your deductible is, the lower your monthly or annual premium will be. You can typically adjust your deductible at any point during your policy period and see the premium changes immediately.
Drive Safely
One of the biggest factors that impact the cost of auto insurance is your driving record. Individuals with a clean driving record, with no recent accidents, claims, or other traffic violations, generally pay the lowest rates for car insurance.
Keep in mind that different incidents can affect your premium differently. For example, depending on your insurance company, a speeding ticket will probably impact your rate less than an at-fault accident. More serious violations, like a DUI, usually have the biggest impact, and can also make it harder to get approved for coverage.
Consider a Usage-based Policy
When you apply for a car insurance policy, you might be asked to disclose how many miles you drive every year. The average number of miles driven is around 13,500, according to the U.S. Department of Transportation Federal Highway Administration (FHWA).
If you drive infrequently, you might consider getting a usage-based insurance policy. Rather than paying a fixed monthly premium, usage-based insurance policies charge a flat monthly rate plus a small fee for each mile you drive. At the end of the policy period, you only pay for the distance you drove.
Some insurance companies also have mobile apps that track the distance you drive and provide a discount if you drive less than average. Many of these apps also track your driving behavior, like braking force and speed, and provide additional savings when you demonstrate safe habits behind the wheel.
Review Your Coverage Regularly
Almost every state requires car insurance. Most states require drivers to carry personal liability insurance and/or uninsured/underinsured motorist insurance. In no-fault states, drivers must carry personal injury protection (PIP) which pays for medical expenses and lost wages after an accident.
Optional car insurance policies, like collision insurance, gap insurance, and roadside assistance can be beneficial. However, these policies will raise your premium. If you’re paying for coverages you no longer need or don’t use, dropping them could lower your rate. It’s a good idea to review your coverages at least once per year and make adjustments if your needs change.
Improve Your Credit Score
In most states, car insurance companies will check your credit as part of the application process. Generally speaking, drivers with excellent credit pay the lowest rates, whereas drivers with bad credit pay the most expensive premiums. If your state uses credit-based insurance scores, improving your credit can help you lock in a lower premium.
Get New Quotes
To find the most affordable car insurance policy for you, it’s a good idea to shop around and get new quotes once per year. You might also get new quotes after a major event, like adding a teen driver to your policy, getting into an accident, or buying a new car.
Aim to get quotes from a few different insurers to see which one can offer you the lowest rate for the type and amount of coverage you want.
Bottom Line
The cost of car insurance is increasing, and many drivers are paying more than in years past. Fortunately, there are ways to get a lower car insurance rate. Taking advantage of discounts, reviewing your coverages, bundling your policies, and raising your deductible are just a few ways to reduce your insurance costs. Getting new quotes every year will also ensure you’re getting the best deal for your current situation.
Editorial Disclosure: All articles are prepared by editorial staff and contributors. Opinions expressed therein are solely those of the editorial team and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in this article is accurate as of the date of the publish. Check the lender’s website for the most current information.
This article was originally published on SFGate.com and reviewed by Lauren Williamson, who serves as Financial and Home Services Editor for the Hearst E-Commerce team. Email her at [email protected]
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