Nearly every state requires that drivers get car insurance, meaning insurance is just a necessary part of the cost of owning a vehicle. But if you’re paying too much for car insurance, there are steps you can take to lower your rates.
You can get cheap auto insurance by:
Compare insurance quotes from different companies
The best way to get cheaper car insurance is by comparing rates from multiple companies before buying a policy. This way you can see which companies offer the most affordable options and avoid paying more than you have to for insurance.
Comparison shopping can lead to significant savings. On average, Policygenius has saved shoppers an average of $435 per year. While all drivers should shop around for car insurance, it’s especially important for drivers who might find it harder to get cheap insurance, like:
Newly-licensed and teenage drivers
Drivers with an accident or DUI on their record
Drivers in states where insurance is more expensive than average
People who have poor credit
Bundle your auto and home insurance
Most car insurance companies — and all of the largest insurance carriers — sell other types of insurance besides auto, and offer discounts for getting more than one policy. That means there are a lot of carriers where you can get cheaper auto insurance if you bundle your auto insurance with your home, renters, condo, or even your motorcycle policy.
We found the average amount that drivers can save at some of the best-known companies when they bundle home and auto insurance together. The company with the best savings for bundling home and auto is State Farm.
Average savings for bundling
Policygenius analysis of home and auto insurance bundles.
Take advantage of available car insurance discounts
Most car insurance companies offer a range of discounts besides savings for bundling. It’s not difficult to get cheaper car insurance with discounts, since most companies usually offer at least a few discounts that are easy to qualify for.
Some common car insurance discounts include:
Paid-in-full discount: Drivers who pay their annual premium at the start of the policy can qualify for cheaper insurance rates.
Automatic payments: Policyholders who sign up for electronic payments that are automatically deducted each month can get slightly lower insurance rates.
Defensive driving course discount: Completing a qualifying defensive driving course can save you money on car insurance.
Homeowner discount: Drivers can save if they own their own home, even if they get their home insurance somewhere else.
Early sign up discount: Some companies offer cheaper car insurance to drivers who switch carriers and sign up for coverage before their existing policy’s end date.
Many companies also offer discounts for different types of drivers (including seniors, people in the military, and good students) and discounts for your vehicle if it comes with certain safety features.
Get the right amount of car insurance
When you choose your insurance coverage, you not only pick the types of coverage you want, you also set limits for certain types of coverage.
The higher you set your coverage limits, the more protection you’ll get — and the more expensive your rates will be. But since not everyone needs the same amount of coverage, you can get cheaper car insurance by making sure that you don’t get more insurance than you need.
We recommend that every driver gets as much liability coverage as they can afford — not just the lowest amount required in your state. That’s because liability coverage is relatively cheap and it protects you from having to pay for someone else’s expensive medical bills and property damage after an accident.
But you may not need every type of coverage available, , and you don’t even have to get full-coverage if you own an older car that you aren’t worried about replacing after an accident.
Get rewarded for your good driving
Drivers without any recent accidents, tickets, or violations may qualify for safe-driver or accident-free discounts and see much lower rates than their higher-risk counterparts.
Good drivers can also save by opting into a usage-based program, which rewards safe driving habits. They work like this: you sign up for your insurance company’s usage-based program and agree to have your driving tracked through a smartphone app or other device. Then after this trial period, you may earn cheaper insurance rates based on how well you drove.
This could be a good way for drivers who are confident in their driving to get more affordable car insurance, but they do have to sacrifice some of their privacy first.
Work on improving your credit score
It’s much harder for drivers with lower credit scores to find cheap car insurance. Sometimes, it’s more expensive to have poor credit than a past accident. We found that the cost of car insurance for drivers who have poor credit is $1,403 greater per year than the average cost for most drivers.
Improving your credit score isn’t a quick fix, but over time you can get cheaper car insurance if you:
Paying down your existing debt, like your mortgage, credit card, and loans
Making bill payments on time, including any fees and taxes
Having lower balances on your credit cards
Keeping your oldest accounts open to show a longer credit history
Not applying for new credit cards and loans all the time
Even though it takes a while to raise your credit score, small increases can go a long way to helping you get cheaper car insurance. Drivers who improve their score from poor to fair can lower their insurance costs by an average of $894 per year.
But credit score doesn’t always affect your auto insurance rates — in California, Hawaii, Massachusetts, Michigan, and Washington, insurance companies aren’t allowed to consider your credit.
Choose the right car
The type of car that you drive can also have an effect on your insurance rates. If you want to get cheaper insurance, consider insurance costs before shopping for a new vehicle.
One of the main reasons that the cost of insurance depends on what kind of car you own is that some cars are harder (and more expensive) to repair than others. A luxury vehicle with a lot of high-tech features would need more specialized parts than a daily-driver would.
For example, you might have a harder time getting cheap insurance if you drive a high-end electric car, like a Tesla, than you would if you had a sedan or a midsize SUV.
Average monthly cost
Average annual cost
Tesla Model Y
Tesla Model 3
Chevrolet Bolt EV
Jeep Grand Cherokee
Costs for a full-coverage policy.
Shop for car insurance before you renew
While it’s convenient to stick with the same car insurance company, you should re-shop every 6-months or every year when it’s time to renew your coverage. That way you can switch your insurance if you find that another company has much lower rates.
You can even switch insurance companies in the middle of your policy if you think there’s a better deal somewhere else. Some companies will require a small cancellation fee, but depending on the new policy, you could make up the cost with cheaper rates.
It’s also a good idea to re-shop for car insurance and consider switching companies after a big change in your life, since your current company may no longer offer you the best deal. It’s a good idea to shop around if:
You got a new vehicle
You moved to a new place
A teenage driver in your house got their license
Your credit score improved
You got married or had a child
Average savings of $425/year on auto insurance: Savings are determined by calculating the average difference between the lowest and second lowest auto insurance policy estimates provided to shoppers with two or more estimates between 06/01/2020 and 05/18/2021. Potential savings are based on a composite of multiple different contracts and insurers. Not all policies in this calculation are available in all states, and availability may be based on eligibility. Savings may vary by policy amount and location.