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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Rachael Brennan

Rachael Brennan

Senior Editor & Licensed Auto Insurance Expert

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.

Updated|6 min read

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Car insurance is a necessity for every driver. Not only do you need it to protect yourself financially in case of an accident, but it is required by law in almost every state. However, just because you need a car insurance policy doesn’t mean you should resign yourself to paying an exorbitant amount for it.

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Here are ten of the easiest ways to save money on car insurance and find your cheapest rates.

1. Shop around and compare quotes

Car insurance can seem expensive, but prices can vary from one company to another, even for the same driver. The rates for 20 of the top insurance companies are listed below:

CompanyAverage annual premium
MAPFRE$1,040
USAA$1,048
Auto-Owners Insurance$1,070
Erie$1,139
GEICO$1,187
American Family$1,227
State Farm$1,383
Nationwide$1,463
NJ Manufacturers$1,481
COUNTRY Financial$1,543
Travelers$1,580
Amica$1,687
Progressive$1,758
National General$1,819
Farmers$1,934
The Hartford$1,939
Allstate$1,974
CSAA$2,318
MetLife$2,431
Mercury Insurance$2,554

The difference in average cost between the cheapest and most expensive companies on this list is over $1,500, which means drivers could potentially save that much just by comparing rates between companies. 

→ Learn more about how to buy car insurance

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2. Bundle your coverages

One of the best ways to save money on car insurance is to buy several types of coverage from one company, typically referred to as bundling your policies. For example, getting both car and motorcycle insurance through the same company would be considered bundling your coverages. Many insurance companies offer several types of coverage, including:

  • Auto insurance

  • Motorcycle insurance

  • Homeowners insurance 

  • Renters insurance

  • Condo or co-op insurance

  • Landlord insurance

  • Flood insurance

  • Earthquake insurance

Purchasing two or more policies through the same company often comes with a significant discount, and bundling policies may mean you can make your payments on both at the same time, or just pay one deductible when filing a claim with both policies.

→ Learn more about bundling car insurance

3. Take advantage of discounts

Beyond bundling your coverages, there are dozens of auto insurance discounts available through almost every company. Depending on your situation, there are multiple discounts that could apply to your policy, including:

  • Multi-car discount: For insuring more than one car on the same policy

  • Good student discount: For students with a high GPA

  • Military discount: For both active and retired military members

  • Employer discount: For employees of participating companies or institutions

  • Anti-theft device discount: For drivers who have anti-theft devices in their vehicles

  • Green vehicle discount: For drivers with electric or hybrid vehicles

  • Safety feature discount: For drivers whose vehicles have features like blind spot detection 

  • Auto-pay discount: For people who automate their monthly payments

  • Pay in full discount: For people who pay their entire annual balance in full

  • Defensive driver discount: For people who take a defensive driving course

Work with your agent or a Policygenius expert to find out how to get the car insurance discounts that are available to you.

→ Learn more about car insurance discounts

4. Evaluate your coverage

Insurance needs often change over time, and regularly reviewing your insurance coverage can be an excellent way to reduce your premiums. For example, if you paid off your car last month and you now own it outright, you no longer need gap coverage and you can raise your deductibles, both of which would bring down the cost of your insurance.

Drivers who have had their car for years should consider whether or not comprehensive and collision coverage are still necessary. If you can afford to replace your car out-of-pocket, carrying only liability coverage can save you a significant amount of money each year. 

It is important to do the math before dropping coverage, however, so make sure you know exactly how much you can afford and work with an agent or other insurance representative to make sure all of your needs are met.

→ Learn more about when to drop full coverage

5. Improve your credit rating

In many states, insurance companies can use your credit rating to help determine your insurance rate. Drivers with lower credit scores often pay much more for car insurance, sometimes paying over $1,000 more each year than drivers with very good or excellent credit.

Credit scoreAverage annual cost
Excellent$1,420
Very Good$1,569
Good$1,718
Fair$2,084
Poor$3,107

A handful of states don’t allow insurance companies to rate drivers based on their credit rating, including California, Hawaii, Massachusetts, and Michigan. 

Drivers in other states could improve their insurance rates with relatively minor improvements in their credit score. For example, a fair credit rating falls between 710 and 740, which means someone with a credit rating of 739 who raises their credit rating by only two points could save hundreds of dollars each year on their insurance rates.

→ Learn more about car insurance and credit score

6. Reduce your annual mileage

Insurance companies often charge higher rates for people who put more mileage on their car because the more time you spend on the road, the more likely you are to be in an accident or file a claim. This means you could save money on your insurance by driving less. If you have the opportunity to work from home or take public transit part of the time, this could save you money on your car insurance.

Each company has their own definitions for low annual mileage, so check the details of your policy to find out how low your mileage needs to go before you will see your rates change.

→ Learn more about average mileages 

7. Choose your vehicle wisely

What type of car you drive has a big impact on how much you pay for car insurance. Some cars are more likely to be stolen than others, which means comprehensive insurance will be more expensive for those cars. Other cars cost more to repair after an accident, which means collision coverage will be more expensive for those models.

The chart below shows some of the most popular cars in the U.S. and their average annual premiums.

VehicleAverage annual premium
Ford F-150$1,665
Honda CR-V$1,673
Toyota Tacoma$1,714
Ford Escape$1,735
Subaru Outback$1,744
GMC Sierra$1,748
Chevrolet Equinox$1,755
Jeep Wrangler$1,771
Jeep Grand Cherokee$1,797
Subaru Forester$1,805
Nissan Rogue$1,814
Toyota Highlander$1,818
Ford Explorer$1,822
Chevrolet Silverado$1,826
Toyota RAV4$1,865
Honda Civic$1,925
Toyota Corolla$1,945
Ram 1500$1,947
Toyota Camry$1,949
Nissan Leaf$1,955
Honda Accord$1,990
Chevrolet Bolt EV$2,015
Tesla Model 3$2,855
Tesla Model Y$2,884

→ Learn more about how your car’s make and model affects insurance

8. Research before relocating

Insurance rates are based on a number of factors and your location has a significant impact on how much you pay for car insurance. Drivers in Michigan pay an average of $2,377 while drivers in neighboring Wisconsin pay a much lower average rate of $1,062 per year.

It isn’t just which state you live in that impacts your rates; moving from one ZIP code to another can potentially change your rates by hundreds of dollars each year. The population density of an area, the number of accidents reported, and the types of parking available can all have an effect on your insurance costs.

Whether you are moving a few blocks over or 1,000 miles away, getting a quote from your agent can give you the information you need before you move to a new address.

→ Learn more about car insurance rates by state

9. Review your deductibles

If you’re policy includes comprehensive and collision coverage, often referred to as full coverage insurance when paired with liability, you will be responsible for a deductible if you file a claim. The more you are willing to pay out-of-pocket toward repairing or replacing your vehicle in the event of an accident, the less you will pay for your annual premiums.

Car insurance deductibles are usually set at $500 or $1,000. Choosing the higher options can save you money on your car insurance.

→ Learn more about setting your car insurance deductible

10. Consider pay-as-you-go insurance

Insurance companies have traditionally used statistical information to set rates for their customers, but new technology allows them to set prices based on behavior behind the wheel. 

Companies can use phone apps or devices installed in your car to track your annual mileage, your speed, when and where you drive, and other factors that can help them more accurately determine how much you should pay for car insurance.

Pay-as-you-go insurance companies like Root or Metromile often charge less than traditional insurers, which can save you hundreds of dollars each year as long as you’re a safe and careful driver. If you don’t mind your insurance company tracking you while you drive, pay-as-you-go insurance could possibly save you hundreds of dollars each year on your car insurance. 

→ Learn more about pay-as-you-go car insurance

Methodology

Policygenius has analyzed car insurance rates provided by Quadrant Information Services for every ZIP code in all 50 states, plus Washington, D.C. 

For full coverage policies, the following coverage limits were used:

  • Bodily injury liability: 50/100

  • Property damage liability: $50,000

  • Uninsured/underinsured motorist: 50/100

  • Comprehensive: $500 deductible

  • Collision: $500 deductible

In some cases, additional coverages were added where required by the state or insurer.

Rates for overall average rate, rates by ZIP code, and cheapest companies determined using averages for single drivers age 30, 35, and 45. Our sample vehicle was a 2017 Toyota Camry LE driven 10,000 miles per year.

Rates for driving violations and “poor” credit were determined using average rates for a single male 30-year-old driver with a credit score under 578.

Some carriers may be represented by affiliates or subsidiaries. Rates provided are a sample of insurance costs. Your actual quotes may differ.

Author

Senior Editor & Licensed Auto Insurance Expert

Rachael Brennan

Senior Editor & Licensed Auto Insurance Expert

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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.

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