How To Save On Car Insurance

Have you ever wondered how to cut down on those hefty car insurance costs? Yeah, I hear you – it’s a pain seeing a big chunk of your paycheck disappear every month to premiums. But guess what? There are actionable steps you can take to slash those expenses.

First things first, understanding the exact coverage you need is key. Knowing exactly what you’re paying for can help you avoid paying for things you don’t need. Then, you move to comparison shopping.

Getting quotes from different car insurance providers and comparing rates can yield significant savings, as you spot the cheapest options with ease.

And let’s not forget about discounts! They’re everywhere. There are discounts for everything from being a safe driver to combining your home and car insurance. Plus, if you’re a student or a senior, there are often special deals just for you.

So, if you’re tired of shelling out too much and you want to know how to save on car insurance, stick around. In this article, I’ll break down the essential strategies for saving on car insurance. Prepare to take charge of your finances and maintain greater disposable income without compromising the necessary protection for your vehicle. Let’s dive in!

How to save on car insurance

First things first, change insurance providers. In 2022, Consumer Reports conducted a nationwide survey involving 11,509 drivers, and the results showed that customers who switched to a different insurance provider experienced reduced premium costs as well as increased consumer satisfaction. 

However, 55% of drivers fail to take advantage of these benefits, sticking with their current insurer for six years or more.

Every year or so, it’s advisable to compare rates from rival insurance companies and review your policy to determine how potential life changes might impact your insurance requirements. These adjustments could be relocating to a different city or state, starting a new work, or retiring.

We will explain which life events can make changes to your insurance requirements, as well as how you can get the lowest rates possible with the top insurers.

Read: How to Compare Car Insurance

1. Make your deductible higher

Raising your deductible ensures that you have lower premiums to pay every month. Getting your deductible up could see you potentially save between $400 and $500 every year.

This timeless insurance advice saves you money by increasing your potential out-of-pocket repair costs following a collision. If you raise your deductible from $500 to $1,000, your annual premium will typically drop by 20 to 25 percent, according to Loretta Worters, Vice President of Media Relations at the Insurance Information Institute.

Just make sure you raise the deductible to what you can conveniently pay out of pocket to cover any necessary car repairs. The possibility of having to pay for collision damage is actually quite low because the average driver only files a claim once every few decades.

2. Cancel comprehensive and collision plans

Only liability coverage is mandatory in almost all states. Scrapping both comprehensive and collision coverage off your policy could save you $1,000 annually.

In an event where you are the victim of a hit-and-run accident, collision insurance will pay for any damage to your vehicle, while comprehensive insurance will cover damage from theft, fire, vandalism, and other natural disasters.

But the thing is, your car’s value will decline rapidly with the number of years and miles on it. Depreciation takes a hard toll on cars from the moment they leave the parking lot.

The cost of maintaining collision and comprehensive coverage may eventually no longer be justified by the vehicle’s decreased value. Generally speaking, you should think about dropping comprehensive and collision insurance when the premium exceeds 10% of the car’s value. 

Since comprehensive insurance covers glass damage—which is always nice to have in case a rock strikes and cracks your windshield—you might want to keep it for a little while longer. 

However, if you are cutting back to liability-only insurance, be sure you have enough to shield yourself from having to personally foot the bill for someone else’s injuries and property damage if you are found to be at fault for an accident. 

3. Enroll in a course on defensive driving

You stand to save $200 annually when you hop in on a course on defensive driving.

Certain insurance providers will let you enroll in a safe driving course in order to receive a discount; however, in order to maintain the discount, you will need to take the course again every few years. 

For instance, drivers who complete a defensive driving course approved by the state are eligible for a 10% discount on insurance in New York, where premiums can exceed $3,000 annually. The course can be repeated every three years. It costs approximately $25 and takes around five hours and twenty minutes to complete. 

There are comparable programs in many other states, though costs differ significantly. The 8-hour course can be purchased for as little as $25 in Virginia, where the average annual insurance cost is less than $1,500.

4. Report annual mileage of less than 10,000

Mileage is a crucial metric insurers look at when determining your premiums. Contacting your insurance company when your yearly mileage is less than 10,000 could save you approximately $100 every year.

The majority of insurance providers factor annual mileage into their pricing structure, and cutting your mileage can result in cost savings. For example, you might be eligible for a lower premium if your job location has changed and you drive less, particularly if your annual mileage is under 10,000. 

Certain companies provide verified mileage programs, wherein you can receive additional savings if you consistently report your odometer reading.

Related: How to Calculate Car Insurance

5. Combine your homeowners’ insurance with your auto coverage

Doing this alone can shave off $300 from your insurance costs annually.

When you buy your home and auto insurance from the same provider, some companies give you a discount on your yearly premiums.

Some people choose to get their homeowners and car insurance policies from separate companies while others use the same insurance company for both. Insurers usually reward the loyalty of the latter group with a nice discount for both policies. 

6. Paying for fender bender accidents out of pocket

Taking care of fender bender expenses without filing a claim can save you up to $300 annually, depending on your driving history.

Many states mandate that you file an accident report if you are in an automobile collision with another person that causes property damage. You also have to notify the police of any accidents involving fatalities or serious injuries. 

The thing with this is that filing claims over every minor accident can raise your insurance premiums considerably.

Paying for small damages out of pocket and choosing not to file a claim, however, could stop a possible rate increase for minor accidents that do not involve other drivers, like scraping your bumper on a support column in a parking garage. 

7. Get the opinion of an insurance agent when comparing quotes

Speaking with an independent agent to simplify your comparison shopping between coverage and rates from various insurance providers can cut costs in the long run. 

You’ll be able to tap from an insider’s knowledge and avoid unnecessary payments.

8. Enroll in the Driver Monitoring Program

If you let your insurance company track your driving patterns using a smartphone app or a gadget that connects to the diagnostic port in your car, you could have a discount that saves you up to $800 annually.

Some insurance companies offer such discounts if you let them track your driving that way.

Although there is a chance for significant savings, you will have to give up some privacy as your insurer will be able to follow you around much like they do when you use certain smartphone apps. 

If your insurance provider offers driver monitoring and it is available in your state, we advise gathering information before determining if it is the best option for you. First, find out from your insurer what information it will use to determine a discount, whether any driving offenses could potentially raise your premium, and how all of the information gathered can and will be used. 

Ask your insurer if they will sell or share your data with other companies before you agree to one of these programs. Additionally, be sure you will not be penalized if you frequently drive at night for any reason, such as work.

What level of liability coverage is sufficient?

Trimming down your car insurance policies to only liability insurance is a surefire way to cut down on costs. Liability insurance is mandatory in almost all states and it comes with minimum coverage requirements. 

You might want to use the bare minimum coverage, but it’s usually not enough to cover the costs of the other driver’s car repairs and bodily damages in an accident. So,  just how much liability coverage is sufficient? How low can you go with your liability coverage while still being able to offset costs in car accidents you caused?

Liability insurance is so crucial since it covers expenses for injuries or fatalities to other drivers’ passengers as well as any harm done to other cars’ property and vehicles in the event that you are found to be at fault in an accident, but professionals claim that the majority of state minimum coverage laws are dreadfully deficient.

For instance, Virginia’s minimum insurance requirements are $30,000 per person, $60,000 per incident for multiple injuries, and $20,000 for property damage. This is usually stated on an insurance policy as 30/60/20. 

Insurance expert, Douglas Heller, gives the example of a driver who only has minimum coverage in Virginia causing a collision that results in three people with medical bills totaling $50,000 each for injuries. 

Each injured person’s medical bills would be paid for by the driver’s insurance up to a maximum of $20,000; and any remaining bills, in this case $90,000, would be the driver’s personal responsibility to be paid out of pocket.

So, what level of coverage is sufficient? A liability coverage of 100/300/100 is advised by the Insurance Information Institute. That is $100,000 for bodily injuries per person, $300,000 for bodily injuries per accident and for multiple casualties, and $100,000 for property damages.

In addition to higher-limit liability coverage, experts advise getting an umbrella insurance policy for additional protection. When an umbrella policy is added to a car insurance policy, it can cover any gaps left by auto policies, extending liability coverage protection up to $1 million or more, depending on the insurance provider.

Typically, only businesses from whom you have previously purchased insurance are eligible to sell you an umbrella policy. Depending on the kinds of coverage you currently have such as auto, home, boat, or business, the prices may vary.  

Read: How Much Car Insurance Do I Need?