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How to Lower your Auto Insurance Bill

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Auto insurance is one of those necessary expenses in life that many people don’t pay much attention to. Once you purchase your auto insurance policy inertia sets in and it is easier to simply renew your policy every 6-12 months than it is to shop for better insurance rates. But you may be able to save 30% or more on your annual bill by shopping for cheaper car insurance rates, making it well worth the effort.

How to shop for affordable auto insurance

The first thing you need to do is grab a copy of your current car insurance policy and write down your coverage and rates. Next, get car insurance rate quotes from other automobile insurance companies. You can call or visit an independent insurance agent, visit individual websites, and check online comparison sites for multiple auto insurance quotes. Be sure to check the major companies as well as some of the smaller companies – you never know which company will have the best rates until you get a quote. It’s also a good idea to read customer reviews to make sure you are going with a reputable company – the cheapest car insurance doesn’t do you any good if you can’t file a claim.

Be sure to double check your current insurance policy when making comparisons between auto insurance companies to ensure you are comparing apples to apples because a small difference in the language of the policy can have a big influence on the price.

Get multiple auto insurance quotes

Ideally you want to compare 3-5 car insurance quotes before deciding to switch companies. The following list is a good place to start. Some of these websites in this list are insurance companies and a few are insurance aggregators that will give you multiple quotes from various auto insurance companies. There may be some overlap if you get quotes from more than one aggregator, but you will need multiple quotes to do a car insurance comparison anyway.

Get new quotes for major life events. Your insurance rates may drop when you turn age 25, get married, move to another city or state, have a shorter commute, change jobs (certain occupations may qualify for discounts), or for other major life events. It is always a good idea to get a new car insurance quote for any of these events.

How to lower your auto insurance premiums

Mitigate your risk profile

Your insurance rates are often based on the perceived risk you pose. Factors such as your age, marital status, how many miles you drive, where you live, your credit score, driving record, claims history, auto insurance coverage history, occupation, and other factors can affect your auto insurance rates.

Increase your deductible and drop unnecessary coverage.

Raising your deductible can save you up to 30% on your auto insurance premiums. Increase your deductible to $500 or $1,000 if you can afford that much for repairs. With an older car, drop collision and comprehensive coverage when the car is worth less than 10 times what you pay for the insurance (check Kelly Blue Book for used vehicle values). You can also consider dropping comprehensive coverage if you have fully paid any outstanding loans or if you can afford repairs if you are at fault.

Maintain a good driving record.

One ticket or accident may not increase your auto insurance payment, but then again, it may. Your best bet is not to find out! Drive defensively and observe traffic laws to avoid traffic tickets and possible increases to your insurance premiums. Defensive driving is not only safer, but you will probably save money on gas and maintenance costs as well. Win-win situation.

Pay your premium up front.

Many companies offer a discount on your auto insurance premiums if you are willing to pay your entire premium in advance instead of paying each month. Be sure to ask your company if they offer this type of auto insurance discount – you could save up to 10% or more.

Get good grades.

Many auto insurance companies offer discounts of 10-15% for students who maintain good grades. These discounts are often available for high school and college students. Check with your insurance agency for more details.

Join an association or club.

Many large associations and clubs are able to negotiate group discounts for auto insurance. Examples include AARP, Costco, AAA, military organizations, trade groups, unions, and more.

The type of vehicle affects insurance rates.

Vehicles with higher safety ratings, lower maintenance costs, or lower purchase prices may be cheaper to insure than expensive vehicles or those with low safety ratings. Ask about discounts for day time running lights, multiple airbags, anti-lock breaks, and other safety features. It’s a good idea to get an auto insurance quote when shopping for new cars so you have an idea of how much it will cost to insure your new vehicle.

Combine insurance policies under one roof

Some insurance companies will give you a multi-line discount when you have multiple insurance policies through their company. This can include a multiple car discount, but also for combining other insurance policies such as your homeowner’s insurance policy, renter’s insurance, etc.

Other discounts to ask about:

Defensive driving discounts, low annual mileage discounts, no accidents or moving violations, policy renewal discounts, etc.

Car insurance is required; don’t pay too much

You now have the information you need to search for lower auto insurance rates. Take the time to run some quotes and you may save yourself a couple hundred dollars per year – money that can certainly be put to better use.


Published or updated March 30, 2011.
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{ 5 comments… read them below or add one }

1 Katie

I have a policy with Geico, and as a grad student I was getting the good student discount. Once I got married though, the good student discount no longer applies. But still, those who are in grad school should also try to get the good student discount, as long as they’re single.

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2 Craig

I have Geico and would like to lower my rates. I actually was able to slightly lower my rates a different way. By getting renters insurance I was able to slightly lower my auto insurance rates. A different method than the ones above, but helps out either way.

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3 Financial Samurai

Here is the best secret to saving money on car insurance………….. for all you folks who still live close to your parents, have a policy under then!

I know 35 year old guys who pay like $300 every six month on their $50,000 cars b/c they are under their parents policy.

If you have no shame in mooching off Bank of Mom & Dad, that’s the way to go!

FS

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4 Kristen

Another way you can reduce auto insurance rates is by taking traffic school online or defensive driving online. I just took one at TakeTrafficSchoolOnline and my points dropped by two.

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5 Sarah Lin

Insurance is must for everything, but now a days insurance premium rates are so high. Here is the best ways to reduce our insurance premium costs, thanks for the great article.

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