how to save money on car insurance
Updated April 13, 2020

How to Save Money on Car Insurance: A Few Easy Tips

Auto Insurance

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If you want to know how to save money on car insurance, then pay close attention to the 55 tips outlined below:

Table of Contents

Shop Competitively to Find the Most Affordable Carrier

Chances are that you shop competitively for other purchases – such as electronics, clothing and houseware. You can receive comparable savings by shopping competitively for automobile insurance as well.

Good to Know: In addition to generating online quotes, call insurance agents for “offline” quotes as well to compare a variety of costs and coverages.

Combine Multiple Insurance Policies with the Same Carrier

One report claims that the average driver can save 10-20 percent on their automobile insurance simply by combining the policy with a homeowner’s or renter’s policy, according to Life Hacker.

Good to Know: The key is to combine policies provided by the same carrier to maximize your applicable discounts. Otherwise, you run the risk of paying full price for each separate policy.

Pro Tip: Find out how to pay as low as $5/month for cheap renters’ insurance

Research and Examine All Available Policy Discounts

Your insurer likely provides a vast number of policy discounts for which you may qualify – such as a decreasing deductible, accident-free discounts, good driving discounts, anti-theft alarm discounts and more.

Good to Know: It is recommended to research all available discounts thoroughly to maximize your potential savings and avoid leaving any stone unturned.

Compare Premiums and Coverages At Least Annually

Never allow comfort and complacency with your existing policy to rob you of potential savings. Search the market competitively at least 1-2 each year to explore the available coverages and corresponding premiums.

Pro Tip: Make sure that you compare the policy options to what you already have for an accurate analysis.

Do Not Hesitate to Switch Plans Mid-Term

You should not wait until your 6-month or 12-month term is nearly over to start shopping for competitive quotes from other insurers. It is recommended to search for new quotes as you approach the halfway point of your term.

Example: With a 6-month term, you should search for quotes at the 3-month mark. Calculate long-term expenses to accurately weigh the competition against your existing policy.

Pay an Annual Premium Instead of Monthly

It may seem as if you have the most affordable deal with a monthly premium. However, studies have shown that you will save the most money by paying an annual premium instead of monthly or semiannually.

Did You Know? According to Sapling, some insurers add processing fees to policies with shorter-term payments (such as monthly or semiannually). Paying annually could save you up to 15 percent on your premiums.

Pro Tip: For additional info, we have a basic guide to auto insurance for 2019 you might consider useful.

Choose a Direct Insurer, Not an Insurance Broker

If you select an insurance broker, you may not be able to get low rate car insurance simply because of the additional fees and commissions that they may add.

Pro Tip: Using a direct insurer will help you learn how to save money on car insurance by helping you to find a lower premium for your automobile coverage. You will also have more control over the options available to you.

Choose EFT or Automatic Premium Payments

Another way to save money on cheap car insurance online is to select an automatic payment method. It may seem more convenient to stick with monthly billing or even mail-in payment vouchers.

Good to Know: Studies show that you will save the most money by selecting automatic premium payments or even an electronic funds transfer (EFT).

Choose Paperless Billing and Documentation

Most insurers will offer a discount on policy premiums just by opting for paperless billing and correspondence instead of mailing printed documents.

Good to Know: According to Forbes, this also presents the bonus of enhanced security since you will not have to worry about confidential information being intercepted or misplaced by the postal service.

Sign Up for a Roadside Assistance Program

Some automobile insurance companies will offer discounts and incentives to policyholders who invest in roadside assistance programs, according to Yahoo! News.

Pro Tip: You will also be able to save money by not having to add any type of roadside rider to your insurance policy since you will already have a separate membership with a company like AAA.

Sell Any Spare Vehicles with Limited Usage

If you have a secondary vehicle (or vehicles) you do not drive, perhaps you should consider selling or donating it. Not only will you make money from the sale, but you will also save on your low rate car insurance by removing at least one of the vehicles covered.

Additional Perk: You will also save when you consider the other expenses associated with multiple vehicles that you can eliminate.

Pro Tip: Did you know that there are more than 20 other ways to make money with your car?

Consider the Concept of Ride-Sharing Services

The ride-sharing service industry continues to grow exponentially each year. Statista reports that the global net revenue of Uber and Lyft combined is over $9 billion dollars.

You can save a considerable amount of money on your automobile insurance and expenses overall by using ride sharing services more frequently. Conversely, you can make money by becoming a Lyft driver yourself to cushion the blow of your automobile insurance premiums.

Research Public Transit and Invest in Monthly Passes

Metro magazine reports that the average driver can save over $9,200 each year by riding public transportation when you factor in the amount of money saved on gas and parking. When searching for ways to save money on car insurance, using public transit services more can help you to achieve this goal.

Pro Tip: You can buy a monthly pass and ride the city bus for basic errands instead of constantly relying on your own automobile.

Buy Pay-Per-Mile Insurance

Another way how to save money on car insurance is to purchase a pay-per-mile policy with a company like Metromile. This type of insurance is based on time and mileage.

With a Metromile policy, for example, you can possibly pay a low rate car insurance premium in addition to pennies per mile instead of paying a large monthly premium regardless of how much you drive your vehicle.

Investigate Insurance Options Before You Buy a Car

The worst time you can buy automobile insurance on a new car is after you have already purchased it. It is recommended that you take the time to shop competitively for an affordable policy before you commit to any vehicle purchase.

Doing so will help you narrow down the list of available options to solely focus on the vehicles that are the least expensive to insure.

Enter Your VIN When Requesting Insurance Quotes

It is true that you can get a “quick quote” without entering your vehicle identification number (VIN) when applying for insurance. However, insurance companies can quickly retrieve specific details about your vehicle from the VIN – such as the make, model, engine/transmission type and associated history. You will get a more accurate quote with the VIN than without it.

Enter Your Personal Information When Requesting Quotes

In addition to your VIN, another strategy for learning how to save money on car insurance is to use your personal information (ex: driver’s license number, Social Security number, etc.) when shopping for coverage. You can get a simple quote without this information.

Good to Know: If you want the most accurate quote upfront, it is imperative for you to provide as much applicable information about yourself and other drivers on your policy as possible.

Examine Your Credit History and Improve Your Score

One report claims that increasing your credit score by a single tier could potentially reduce your annual premium by up to 17%. On a bigger sale, changing your credit score from “Poor” to “Excellent” can save you nearly $1,300 on automobile insurance rates.

Pro Tip: Use free credit reports and a timely bill payment system to improve and/or build your credit to take advantage of these savings. Read about a quick way to pay off debt and earn financial freedom.

Add Your Educational Info to the Application

Studies show that people with higher levels of education tend to drive safer on the roads than those with just a standard grade school education. If you have a college degree, it is imperative to let your insurer know about it.

Good to Know: Disclosing that basic detail about yourself could save you a considerable amount of money on your car insurance.

Stay Away from Theft Targets When Car Shopping

When shopping for your next vehicle, exercise caution when considering vehicles with high theft rates. As you examine the overall safety record, make sure that you also calculate the likelihood of theft.

Pro Tip: Using the Insurance Institute for Highway Safety (IIHS) as a resource can help.

Select a Vehicle with Low Repair Costs

Vehicle replacements are expensive, but the same is true with vehicle repairs as well. As you shop for a vehicle, pay attention to the typical repair costs associated with that vehicle.

Pro Tip: In addition to standard maintenance (i.e. oil changes and tire rotations), research the costs associated with major work that will eventually be needed under the hood.

Click here to examine 13 price comparison tools you can use when shopping!

Avoid Rushing into Renewal, Weigh Your Updated Options

Once your term is up, do not rush into blindly renewing your existing policy without any research or competitive shopping. Weigh all options available to you – including quotes from other insurers – to ensure you are saving the most money possible on your coverage.

Ask an Agent about Available Loyalty Discounts

Loyalty means a lot to any company in a market saturated with competition – especially the insurance market. Call and speak to an agent with your current insurer to see if you qualify for any loyalty discounts just for deciding to retain your policy with them.

Speak to an Agent Instead of Rushing to an Online Quote

Convenience may lead you to an online quote – especially when you consider the idea of generating quotes with just a few keystrokes and mouse clicks. However, speaking to an actual agent may give you access to discounts, incentives and even pricing overrides that a standard online quote cannot provide.

Maintain Continuous Coverage for At Least 5 Years

Policyholders known for bouncing around from one carrier to the next will typically pay the highest premiums.

Good to Know: If an insurer can tell that you have maintained continuous insurance coverage for at least 5-6 years, you will likely be viewed as a low risk customer and receive the best rates available when requesting a quote.

Keep a Close Eye on Your Driving Record Each Year

Your driving record plays an integral role in the calculation of your automobile insurance premiums year after year. You should check this record as frequently as you check your credit report – at least once a year.

Good to Know: Check for accuracy and be ready to dispute any errors or outdated information.

Invest in Safety Accessories and Add-Ons for Your Vehicle

If you want low rate car insurance, you can install various safety and tracking devices within your vehicle. Make sure that you consult with your insurance agent to determine which devices will generate premium savings for your policy.

Pro Tip: Not all devices are approved, which is why you should do the necessary research first before making any final purchases.

Purchase and Install a Dashcam

It is true that you may not save money on your automobile insurance policy premiums just by installing a dash cam. However, the footage that your dash camera captures can save you time and money during the aftermath of an automobile accident.

It will also help to prove whether you were at-fault for the accident – especially if the case is reviewed in court.

Reduce Aftermarket Modifications that Raise Rates

Quite a few drivers have spent thousands of dollars to modify their vehicles with aftermarket parts and accessories – such as spoilers, wings, neon lights, etc.

Warning: Unfortunately, an excessive amount of these modifications can have an adverse reaction on your policy premium. Consult with your agent to determine which modifications should be reduced to save money on your low rate car insurance.

Buy Winter Tires and Let Your Insurance Carrier Know

Winter tires are designed for the snow and icy road conditions that you may encounter at least once each year. Winter tires are designed with deep grooves that keep each tire in direct contact with the road regardless of the inclement weather.

Good to Know: You may have to pay a little more money for the actual tires, mounting and installation. However, you will boost your savings by letting your insurer know that your vehicle is fully equipped and prepared for the winter roads.

Buy Insurance Calculated by Your Driving Performance

If you want to find cheap car insurance online, you should look for options that accommodate drivers based on their performance. For instance, with Root Insurance Co, you will receive a fair rate that is primarily based on your driving habits and behind-the-wheel behavior.

Good to Know: Your smartphone is used as a monitoring device to assess your driving. The better you drive, the more money you will save.

Pay Attention to Where You Park to Maximize Savings

Did you know that some insurers offer a “preferred parking” discount? That is one of the reasons why most automobile insurance companies want to know where your vehicle is parked most of the year.

Pro Tip: If you are taking the extra steps necessary to park your car carefully and cautiously out of harm’s way, you will likely be able to find a low rate car insurance that accommodates you for that.

Research Discounts and Incentives Available for Green Vehicles

Have you made the big change over to a green vehicle or electric car? It would be in your best interest to research available incentives, discounts and rewards from your insurance company.

Good to Know: Green vehicles are designed to do wonders for the environment, your car and your wallet. Make sure that you check your insurance company for any discounts that will apply to your eco-friendly automobile.

Use a Pluggable Device to Monitor Your Safe Driving

Using a pluggable device that monitors your driving habits and overall vehicle performance can save you a lot of money on your low rate car insurance. According to MarketWatch, the National Association of Insurance Commissioners (NAIC) expects more than 20% of U.S. vehicle insurance carriers to provide policyholders with this type of telematics within the next five years.

Enroll in and Pass a Defensive Driving Course

Court-appointed driving courses will not render any savings for your insurance policy. However, electing to take this type of course without a court mandate can add several points to your driving record and lower your premiums for the next 3-year period up to 10%.

Take Advantage of Other Incentives for Driver’s Education

There may be other incentives and discounts offered by your insurance company or an insurer you are considering for taking additional driver’s education classes. In addition to the defensive driving course, make sure that you ask about any other education-related incentives for which your policy qualifies.

Disclose School Grades and GPAs for Young Drivers

Quite a few insurers offer discounts for young drivers and students who maintain good GPAs and grades at school.

Pro Tip: While searching and shopping for cheap auto insurance, make sure you disclose this information to your agent. You never know how much money it could save you and your household in the long run.

Teach Your Child Safe Driving Practices

Consumer Reports claims that adding a teenager to your automobile insurance policy can increase your premium 50-100%. It is imperative that you make sure your child knows, understands and applies safe driving practices on the road. Remind them that driving is a privilege that can easily be taken away if abused.

Go to Court to Negotiate Speeding and Traffic Tickets

Instead of quickly prepaying your speeding tickets to avoid court, you should consider attending your court appointment to try to negotiate the charges. You may find that a little lenience from the judge assigned to your case will go a long way with your insurance company.

Check Your Club Memberships for Discounts and Incentives

Study the benefits and rewards of your various club memberships and customer reward programs – such as Costco or AAA.There may be incentives, discounts or even a special pricing for low rate car insurance available to you just by having a membership.

Increase Your Deductible to Decrease Your Premiums

You can save a substantial amount of money on your car insurance policy just by adjusting your deductible.

Did You Know? According to the Insurance Information Institute, you can lower your premium costs by increasing your deductible. Just make sure you boost your budget to match your new deductible in case you must file a claim.

Reduce Your Coverage Amount to Increase Your Savings

Perhaps you have a little too much automobile insurance coverage right now. For instance, you might have a “standard” amount of coverage that is 3-4 times more than you would ever need.

Take the time to do the math and determine if you can decrease your coverage amount to save money on your policy.

Pay Your Bill on Time, Do Not Abuse the Grace Period

Whether you realize it or not, late payments and abusing the grace period for your insurance policy could offer more harm than help towards your savings potential.

Pro Tip: Use autopay to ensure your premiums are paid on time to improve your chances of saving money at renewal.

Earn Cash with Mobile Apps to Pay Insurance Premiums

Another way how you can save money on car insurance is to supplement your income with cash from a mobile app.

Good to Know: For instance, you can earn cash and cryptocurrency by using a popular mobile app like Long Game. You can either direct the money you make from Long Game towards your insurance premiums or other financial obligations.

Remove Comprehensive Coverage from Your Plan

Comprehensive coverage typically covers you for non-collision accidents.

For instance, if you run into a deer on the road, this incident is typically categorized under a comprehensive event. However, if you have an older vehicle, then you may end up paying more for the coverage than the car is worth. If that is the case, you may save a lot of money on your car insurance by dropping the comprehensive coverage.

Remove Collision Coverage on Older Vehicles

Chances are that if your collision coverage exceeds the value of your older vehicle, then you should eliminate that from your insurance policy as well.

Good to Know: Doing so will help you see how to save money on your car insurance while still making sure that your automobile is covered by a cheap liability car insurance policy.

Choose a Liability-Only Plan for Older Vehicles

A simple approach to insuring older vehicles with low values is to select a liability plan that does not come with any other coverages – such as comprehensive, collision or roadside assistance. A cheap liability car insurance will insure you as the driver but allow you to save a lot of money by not fully covering your vehicle.

Calculate the Cost Before Filing Claims for Any Accident

After you are in an accident, your insurance company may be your very first phone call. However, you should take the time to get an estimate and do the math related to the body work needed – especially if there was only minor damage.

Keep In Mind: If the damage is less than your insurance deductible, it would be in your best interest to not file a claim with your insurer at all.

More Tactics You Could Use

See if You Qualify for “Welcome” Discounts

  • When signing up for a new policy, make sure that you ask about any applicable “welcome” or “new policy” discounts.
  • You may already be getting a good deal just with the standard price quoted, but perhaps it could be even better with that added discount.

Walk More, Lose Weight and Save Money on Car Insurance

  • Reducing the usage of your car is another way you can learn how to save money on car insurance.
  • Studies show that choosing to walk more and drive less can help you to save money, lose weight and improve your health.
  • You could even turn your indirect weight loss journey into a goldmine with a little help from companies like

Search for Low Mileage Discounts to Boost Savings

  • The US Department of Transportation reports that 13,476 miles are driven on average by each driver annually. Perhaps your personal mileage does not come anywhere close to that number.
  • If that is the case, you can probably save money on car insurance by qualifying for low mileage discounts. Check with your insurer to determine if your policy can benefit from this discount.

Check with Your Employer for an Available Group Plan

  • Your employee benefits may include access to an employer-paid group plan for automobile insurance coverage that can save you a lot of money as well.
  • Check with your Human Resources department to determine if this provision is offered at your workplace.

Determine if Seasonal Insurance Will Meet Your Needs

  • Perhaps you only need insurance coverage for your vehicle a few months out of the year.
  • You may need to insure a commercial vehicle during a peak season for your business.
  • Seasonal insurance premiums typically cost a fraction of what you would pay for standard, year-round insurance.

Notify the Insurer of Upcoming Retirement Plans

  • The average cost of automobile insurance in the U.S. is already statistically lower for drivers in the 50-74 age group.
  • Insurers seem to take it easy when calculating premiums for senior citizens – especially those who have retired.
  • If you plan to retire soon, make sure that your insurer knows.

This tidbit of information could potentially save you a lot of money on your cheap car insurance when that time comes.

Educate Yourself on the Ins and Outs of Automobile Insurance

Familiarize yourself with how automobile insurance works from the inside out.

From premium calculations and exclusions to coverage options and claim filing procedures, acquiring this type of knowledge will help you to maximize your available savings and help you to find the cheapest car insurance to protect your vehicle.

Logan Allec, CPA

Logan is a practicing CPA, Certified Student Loan Professional, and founder of Money Done Right, which he launched in July 2017. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.

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