The average American spends just about 2.6% of their annual income on car insurance, but at $148 per month, it makes sense why most drivers look to save where they can. Whether you live in a region with the lowest average car insurance rates or one where car insurance tops the national average, there are several ways to reduce this necessary expense. Car insurance can be complex, but Bankrate’s insurance editorial team has developed a list of easy ways to help reduce your car insurance cost.
How you can lower your car insurance
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
While all car insurance policies are structured in similar ways to provide coverage for various vehicle-related incidents and liability, you may be surprised how much of an impact other individual factors have on your rates. Every insurance company uniquely assesses risk, and things like your ZIP code and driving record could result in different rates from different insurers. Before purchasing a policy or switching providers, request quotes from several providers for identical coverage amounts to see which one offers you the best rate.
Quote comparisons could also be helpful around policy renewal. Because the market changes regularly, there is always a chance that your current insurer no longer provides the best rate for the coverage you need. Shopping around could give you a sense of whether you are paying too much for car insurance.
The average cost of car insurance is $1,771 per year for full coverage car insurance. 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 see how they compare against the national average:
|Insurance company||Average annual full coverage premium||Average monthly full coverage premium|
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.
- Safe driving discount: You could save by having a clean driving record. In addition to your driving record, if you maintain safe driving habits, you may earn an additional 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.
|Average cost of car insurance in the U.S.|
|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 a 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
The cost of auto insurance makes an impact on your budget, so it makes sense to save where you can. Car insurance comparison shopping is one of the best ways to find the cheapest car insurance for your needs. By obtaining car insurance quotes from more than one company, you can easily compare the estimated premium. To do this accurately, make sure that you first compare each insurance carrier with the same policy limits and coverage types that you want. After you get a baseline understanding of each carrier, then you can start to add optional coverage to see which might give you the best balance of price and financial protection.
When researching your options on how to achieve lower car insurance, keep in mind that there are other elements as important as price. You’ll want to ensure you can still get help whenever you need it, so good customer service may still be key. Additionally, strong financial strength ratings could be an indicator that you’ll receive a timely claims payout. You may also prioritize a mobile app for easy policy management and claims filing. When choosing the best car insurance company, these factors — along with price — could help you decide which is most suited to your preferences and needs.