The average American spends about 2.6% of their annual income on car insurance, making it a hefty bill for many households. With the rise of remote work, however, many drivers’ habits have changed, and other factors may have too, like the cost of car parts and repairs, which could impact the cost of your car insurance policy. If you haven’t compared rates or evaluated your coverage recently, you may be overpaying for car insurance. While lowering your monthly payment may seem complicated, Bankrate may be able to help by offering some easy tips for reducing your premium.
How you can lower your car insurance cost
While many people first consider sticker price and the price of gas when it comes to the cost of owning a car, car insurance rates matter too. And depending on your circumstances, it might be a larger cost than you were expecting, especially as rates continue to increase. While there is a long list of car insurance providers you can choose from to save money on car insurance, you can also do other things to help make your car insurance more affordable.
1. Shop around
The average cost of car insurance is $2,014 per year for full coverage car insurance and $622 per year for minimum coverage. With car insurance premiums on the rise, it’s likely drivers will soon see even higher premiums.
But that doesn’t mean there’s nothing you can do about the high cost of car insurance. Car insurance companies each have their own methods for calculating rates, and your own individual rating factors play a significant role, so you won’t know how much car insurance may cost with other carriers unless you request a quote. Quote comparisons can be highly useful in determining which car insurance company offers the best rate for your desired coverage and could make it clear that you’re paying too much for coverage.
Switching providers might be a highly advantageous way for you to get the best rate. The table below showcases the nation’s largest insurance companies according to market share, and their average quoted premiums as of 2022 based on data from Quadrant Information Services, to illustrate how they compare against the national average:
2. Take advantage of discounts
Companies typically offer several discount opportunities to save on insurance, many of which can be combined for even more significant discounts.
Here are some of the most common car insurance discounts offered:
- Low mileage discount: You could save by driving under a certain number of miles per year, as specified by the insurer.
- Multiple policy discount: You can often save money on car insurance and home insurance by bundling with the same carrier. Looking to see what other policy types you can insure with an insurance company might give you more than just car insurance savings.
- Loyalty discount: If you’ve been insured by the same company for a number of years, you may be eligible for a loyalty discount. Even if you haven’t, holding consistent coverage over time may earn you a similar type of discount.
- Safety feature discount: You could save by driving a vehicle that has safety features, like anti-lock brakes and an anti-theft device.
- Profession-based discount: You could save if you are part of a specific profession, like a teacher.
- Good student discount: Younger drivers can be more costly to insure, but good student discounts could help to reduce that cost. For example, insurers will typically offer a student discount to those who maintain at least a B average in school.
3. Don’t pay for coverage you don’t need
When thinking about how to save on car insurance, removing coverage you don’t need can be a simple solution. For instance, you might have only had one car when you started your policy, and so you included rental car reimbursement, but now you have two. Or you might have another service that offers roadside assistance, so you won’t need it in your car insurance policy. Checking your policy to see where you might have duplicate or now unnecessary coverage could be one way to cut down costs.
Another important decision could be choosing between full coverage and liability-only insurance. For example, you might have purchased a pre-owned vehicle a few years ago, and at the time, chosen full coverage car insurance with collision and comprehensive coverage to insure it. Over time with the car’s depreciated value, your annual premium could be more than what the car insurance company would pay out if your car was totaled. More recently, many used car values have even appreciated over time, so it’s worth checking out your car’s current value when looking to update your coverage.
However, before switching to liability-only coverage, you may find it helpful to research your car’s value and average repair costs in your area to see if you could afford repairs on your own. You can also speak with a licensed insurance agent to determine how much coverage is right for you.
|Annual full coverage premium||Monthly full coverage premium||Annual minimum coverage premium||Monthly minimum coverage premium|
4. Increase your deductibles
Car insurance coverage includes a deductible or the amount the insurance company deducts from your payout if you file a claim. Because your insurance company will offer multiple options for your deductible amounts when you purchase car insurance, it may be worth considering higher deductibles to lower your premium. The higher out-of-pocket cost will naturally reduce your premium. Just be sure that you can afford the deductible if you have an accident before selecting a higher amount.
5. Improve your credit
Insurers often use a credit-based insurance score to help price premiums, except in states where the use of credit to calculate rates is banned. That said, in most states, those with excellent credit usually receive cheaper auto insurance.
If your credit could use some work, consider taking time to improve your credit score. While significant credit boosts can take time, paying off debts, setting up a monthly budget to help track bills and making on-time payments can go a long way toward reducing your insurance expenses.
Average annual full coverage car insurance rates by credit score
6. Update your policy annually
Periodically reviewing your car insurance policy can help ensure you’re saving on car insurance, but also help ensure your selected coverage meets your current needs. If you’ve had any major life changes, like getting married, moving to a new location or changing your commute, your car insurance policy could use a review to ensure it reflects your current lifestyle.
How to find a cheap car insurance company
Here’s what you need to know to do this accurately and to help determine the best car insurance company:
- Make sure your policy coverage and limits are the same. Having this baseline quote from each company will let you know which option gives you the best price for the same amount of coverage. Without this, you may be accidentally purchasing a cheaper premium with less coverage.
- Add optional coverage. If adding optional coverage is important to you, you’ll be able to see which car insurance companies offer what you want. This could include gap coverage, accident forgiveness and more.
Consider other factors, like mobile app accessibility, financial strength ratings and more. Good customer service, easy policy management tools and a quick claims payout can make for a positive experience. These factors — along with price — could help you decide which option is best suited to your preferences and needs.
Frequently asked questions
Comparing personalized quotes from several insurance companies can help you to get an idea of which car insurance company will offer you the best rate. As you gather quotes, though, be sure you are comparing comparable coverage types and limits from one company to the next in order to determine which company offers the best rates on the coverage you need. It may also be helpful to consider your unique situation when searching for cheap car insurance. You may want to tailor your search to your personal situation, whether you’re a low-mileage driver who spends less time than average on the road or are a driver with a few blemishes on your driving record.
Each driver has unique personal factors, including age, location and driving record. Because these factors in addition to others, like the make and model of the car you drive, influence the underwriting process and the final rate you pay, the best cheap car insurance provider will be different for everyone. To narrow down your list, consider which providers offer low rates on average in your area and how many discounts you would be eligible for with a particular policy.
High-risk drivers may have a difficult time finding cheap car insurance. That’s because high-risk drivers may be more likely to cause expensive accidents, and insurance companies typically balance the risk with more expensive premiums. However, whether you’re a good driver or have a few marks on your record, the same strategy applies. Shopping around, being open to different carriers and requesting quotes may give you a better idea of how much your car insurance premium will be.
While shopping around can help ensure you’re paying the lowest premium available, there may be ways to lower your rate. Simply asking your current insurance company about discount opportunities could reveal savings that haven’t been applied to your policy yet. A record of safe driving habits may also help you to earn and keep a low premium, and if you’ve changed professions or improved your credit score in the last few years, you may qualify for a lower rate, depending on a range of factors.