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10 ways to lower car insurance costs

Shopping around, bundling coverages, and improving your credit rating are just a few of the steps you can take to lower your car insurance costs.

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By

Rachael BrennanRachael BrennanSenior Editor & Licensed Auto Insurance ExpertRachael Brennan is a senior editor and a licensed auto insurance expert at Policygenius. Her work has also been featured in MoneyGeek, Clearsurance, Adweek, Boston Globe, The Ladders, and AutoInsurance.com.&Andrew HurstAndrew HurstSenior Editor & Licensed Auto Insurance ExpertAndrew Hurst is a senior editor and a licensed auto insurance expert at Policygenius. His work has also been featured in The New York Times, The Wall Street Journal, Forbes, USA Today, NPR, Mic, Insurance Business Magazine, ValuePenguin, and Property Casualty 360.

Edited by

Anna SwartzAnna SwartzSenior Managing Editor & Auto Insurance ExpertAnna Swartz is a senior managing editor and auto insurance expert at Policygenius, where she oversees our car insurance coverage. Previously, she was a senior staff writer at Mic.com, as well as an associate writer at The Dodo.

Updated|5 min read

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Nearly every state requires drivers to get car insurance. Even though you have to be insured before you can drive, you don’t have to pay high insurance costs. If your rates are too expensive, you can lower your insurance costs and get cheaper coverage by:

  1. Shopping around and comparing quotes

  2. Reviewing your coverage before renewing

  3. Bundling your auto and home or renters insurance

  4. Changing how and when your pay for coverage

  5. Making sure you have the right amount of insurance

  6. Having the right kind of insurance for how much you drive

  7. Showing that you’re a safe driver

  8. Improving your credit rating

  9. Reviewing your deductibles

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1. Shop around and compare quotes

The number one way to lower your car insurance rates is by comparing quotes from more than one company before you get coverage. That’s because no two companies have the same rates for every driver. 

On average, we found that the cost of insurance can vary by $253 per month or $3,035 per year from company to company. But by comparing quotes when you buy, you’ll be able to tell right away which company has the best rates for you — saving you money in the long run.

Company name

Monthly cost

Annual cost

USAA*

$87

$1,044

State Farm

$95

$1,141

GEICO

$99

$1,192

Travelers

$113

$1,351

Nationwide

$123

$1,475

American Family

$123

$1,479

Progressive

$148

$1,780

Allstate

$171

$2,055

Farmers

$174

$2,084

AAA

$178

$2,134

Collapse table

Average insurance rates from the companies with largest market shares.

2. Review your coverage before renewing

Comparing rates isn’t a one-time way to lower your car insurance costs. You should review your coverage every time your policy is up for renewal and make sure that you’re still happy with how much you’re paying.

If your rates are too high, shop around again and switch to another company that offers you lower rates. There’s no penalty for switching companies once it’s time to renew your coverage.

3. Bundle more than one policy

One of the best ways to get lower insurance rates is by combining more than one type of insurance with the same company. This is called bundling, and most companies offer significant discounts for people who bundle their auto insurance with their home, renters, condo, or other insurance policy.

Bundling discounts are one of the best ways to lower insurance costs. Plus, bundling is convenient since companies often let you manage your coverage and check your claims in one place.

4. Change how you pay for your car insurance

Sometimes the way you pay for car insurance can help you save money. For example, instead of paying for your coverage every month, pay for the whole policy at once at the start and you’ll save.

There are other discounts that are related how and when you pay for your insurance, like savings for:

  • Signing up for automatic payments

  • Switching to paperless billing

5. Make sure you have the right amount of insurance

Not everyone needs the same amount of car insurance coverage. For example, drivers with older cars that they own outright can choose whether to drop their full coverage (and lower their car insurance rates), but leased or financed cars are usually required to have full coverage, and may even need more insurance in the form of gap coverage

Remember that not every car on your policy has to have the same coverage levels, so if you have multiple vehicles, you can drop full-coverage on one car and not the other. 

You also don’t need to load up your policy with every type of coverage, or the highest liability limits. And if there’s anyone who’s still on your policy who doesn’t live with you anymore, you can save by removing them from your insurance.

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6. Have the right kind of insurance for how much you drive

If you don’t drive often, you may be able to lower your insurance rates by switching to a per-mile insurance plan instead of a standard policy.

Per-mile insurance is based mainly on how much you drive instead of other things about you, like your age, so drivers who don’t drive much can save insurance.

Allstate, Nationwide, and Liberty Mutual are the best known companies that have per-mile insurance. But even companies that don’t offer per-mile insurance usually have low mileage discounts, so drivers who drive less than average can still save money. 

7. Show that you’re a safe driver

You can lower your auto insurance rates by avoiding accidents, claims, tickets, and other driving violations. Any red flags on your driving record will make your car insurance more expensive (and make it harder to find lower rates in the future), while safe driving can earn you lower rates.

Most companies offer safe driver discounts for going at least two or three years without any accidents or claims. You can also save money by taking a qualified defensive driving class.

Another way to take advantage of a safe driving record is by signing up for your company’s usage-based insurance program. Usage-based insurance (or UBI) usually means your insurance company monitors your driving and then adjusts your rate if you show a safe-driving habit.

You can sometimes earn a discount just for signing up for usage-based insurance. Some popular usage-based insurance programs include:

  • GEICO: DriveEasy

  • American Family: KnowYourDrive

  • Progressive: Snapshot

  • Travelers: IntelliDrive

  • USAA: SafePilot

  • Erie: YourTurn

  • State Farm: Drive Safe & Save

  • Nationwide: SmartRide

8. Improve your credit score

In many states, your insurance credit score plays a part in determining your insurance rates. The better your credit score, the easier it will be to find lower car insurance rates.

If you have a below-average credit rating, even small improvements to your credit could lower your insurance costs. By just going from a “poor” to “fair” credit, you could save more than $1,000 per year.

Credit

Average monthly cost

Average annual cost

Excellent

$117

$1,400

Very Good

$129

$1,550

Good

$142

$1,703

Fair

$173

$2,073

Poor

$260

$3,117

9. Review your deductibles

A full-coverage policy included comprehensive and collision coverage, which both require a deductible. A deductible is the amount you’re willing to pay out-of-pocket in the event of a claim, and it can play a small part in your insurance costs.

Companies often let you choose a deductible between $250 and $1,000, though it can be an even wider range. Choosing a higher deductible means lower rates, but it also means you’re agreeing to pay that amount out of pocket, so don’t set your deductible higher than you can afford.

Compare rates and shop affordable car insurance today

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Frequently asked questions

What is the best way to save on car insurance?

The most effective way to save on your car insurance costs is by comparing quotes before you buy. That way, it’s easy to see which company has the cheapest rates for you.

Who has the lowest auto insurance costs?

Drivers can find the lowest average car insurance costs at GEICO. On average, insurance from GEICO costs less than $100 per month for full-coverage and around $30 per month for minimum coverage.

How can you lower your insurance costs after an accident?

After an accident, your insurance costs will get closer to average as long as you avoid any more accidents. Each year it will be easier to get cheaper insurance as long as you don’t make any other claims or receive any tickets for a roadway violation.

Can I ask my insurance company to lower my rates?

Although you can’t ask your insurance company to lower your rates, you can always compare quotes if you think you’re paying too much and switch to a company that has cheaper insurance costs.

Methodology

Policygenius found the cost of car insurance from the companies with the lowest insurance rates and by credit tier using rates provided by Quadrant Information Services for every ZIP code in all 50 states, plus Washington, D.C.

We used the following coverage limits in our costs analysis:

  • Bodily injury liability: $50,000 per person/$100,000 per accident

  • Property damage liability: $50,000

  • Uninsured/underinsured motorist: $50,000 per person/$100,000 per accident

  • Comprehensive: $500 deductible

  • Collision: $500 deductible

Our sample drivers were aged 30, 35, and 45 years old and drove a 2017 Toyota Camry LE for 10,000 miles per year. Some carriers may be represented by affiliates or subsidiaries. Rates provided are a sample of insurance costs. Your actual quotes may differ.

Authors

Rachael Brennan is a senior editor and a licensed auto insurance expert at Policygenius. Her work has also been featured in MoneyGeek, Clearsurance, Adweek, Boston Globe, The Ladders, and AutoInsurance.com.

Andrew Hurst is a senior editor and a licensed auto insurance expert at Policygenius. His work has also been featured in The New York Times, The Wall Street Journal, Forbes, USA Today, NPR, Mic, Insurance Business Magazine, ValuePenguin, and Property Casualty 360.

Editor

Anna Swartz is a senior managing editor and auto insurance expert at Policygenius, where she oversees our car insurance coverage. Previously, she was a senior staff writer at Mic.com, as well as an associate writer at The Dodo.

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