How to Save on Car Insurance: Smart Ways to Lower Your Rate
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Car insurance costs $180 a month on average, according to NerdWallet’s rates analysis. But that doesn’t mean that you’ll pay this price.
Companies base your rate on a variety of factors from the kind of car you drive to how long you’ve been insured. By understanding what affects your auto insurance costs, you can get good coverage without breaking the bank.
» MORE: What is auto insurance?
Here are eight ways to help you save money on car insurance.
1. Shop around
Although auto insurers use similar factors like age, driving history and location to calculate your car insurance costs, they weigh these factors differently. That’s why it’s important to compare rates.
To analyze the importance of shopping around, NerdWallet compared rates for 35-year-old drivers buying full coverage insurance from the largest insurers in the nation. We found that costs vary by hundreds of dollars a year. Note: Although it’s one of the largest insurers in the country, Liberty Mutual is not included in our analysis because it does not provide rate data.
In fact, nationwide, average rates for good drivers with good credit can go from $311 to $138 a month by switching from the most to the least expensive company among the nation's largest insurers. And savings can be even bigger for drivers with a recent at-fault accident or poor credit — with average monthly rates going from $490 to $194 and from $694 to $226, respectively.
But these rates are nationwide, and only consider nine of the nation's largest insurers. Your rate will vary depending on your location. For instance, a company with the lowest rates in one state might not be the cheapest in another. And the cheapest company for a good driver with good credit might not be cheapest for someone with, say, a DUI or a recent accident.
To lower your car insurance rates, get quotes from several companies once a year. NerdWallet’s car insurance comparison tool can also help you find the best deal.
Why you can trust NerdWallet: Our writers and editors follow strict editorial guidelines to ensure fairness and accuracy in our writing and data analyses. You can trust the prices we show you because our data analysts take rigorous measures to eliminate outliers and inaccuracies in pricing data, which include rates from every locale in the country where coverage is offered and data is available. When comparing rates for different coverage amounts, ages and backgrounds, we change only one variable at a time, so you can easily see how each factor affects pricing. Read our methodology.
2. Take advantage of car insurance discounts
Every insurance company offers special ways to save on your car insurance premium. To make sure you’re getting all the discounts you’re entitled to, check out your insurer’s discounts page and ask your agent to review your possible savings.
Our car insurance discounts page gives more details on what insurers offer different discounts. But remember to compare quotes based on your own situation. Just because an insurer offers multiple discounts doesn’t mean it offers the lowest overall price.
3. Drive safely
Speeding tickets, accidents and other traffic violations drive up car insurance premiums. If you get a ticket, you may be offered the opportunity to go to traffic school to get it dismissed or reduce the number of violation points that go on your driving record.
4. Drop car insurance you don’t need
If your car is a clunker, it might be time to drop collision and comprehensive insurance, which pay for damage to your vehicle. Collision insurance pays to repair damage to your car if it crashes into another vehicle or object, or flips over. Comprehensive insurance pays if your car is stolen or damaged by storms, vandalism or by hitting an animal such as a deer.
If your car is worth less than your deductible plus the amount you pay for annual coverage, then it’s time to drop them. Collision and comprehensive never pay out more than the car is worth.
Evaluate whether it’s worth paying for coverage that may reimburse you only a small amount if anything.
But if you drop collision and comprehensive, remember to set aside the money you would have otherwise spent. Put it in a fund for car repairs or a down payment on a newer car once your clunker conks out.
5. Drive a car that’s cheap to insure
Before you buy your next car, compare car insurance rates for the models you’re considering. The vehicle you drive affects your car insurance premium, particularly if you buy collision and comprehensive coverage. Safe and moderately priced vehicles such as small SUVs tend to be cheaper to insure than flashy and expensive cars.
6. Increase the deductible
You can save money on collision and comprehensive insurance by raising the deductible, the amount the insurance company doesn’t cover when paying for repairs. For example, if you have a $500 deductible and your repair bill is $2,000, the insurer will pay out $1,500 once you’ve paid the $500.
Savings vary by company, so compare quotes with different deductible levels before you decide.
7. Improve your credit
Your credit can be a big factor when car insurance companies calculate how much to charge. It can count even more than your driving record in some cases. But this isn't the case in California, Hawaii, Massachusetts and Michigan, however, where insurers aren’t allowed to consider credit when setting rates.
To build your credit, focus on these three steps:
Make all your loan and credit card payments on time.
Keep credit card balances well below your credit limits.
Open new credit accounts only when necessary. Applying for too many credit cards can hurt your score.
8. Don’t drive a lot? Consider usage-based insurance
If you don’t mind having your driving behavior tracked, consider usage-based or pay-per-mile insurance to lower car insurance costs. To participate, you use an app or install a small device in your car that transmits data to the insurance company.
Metromile, Allstate, Nationwide and Mile Auto all offer pay-per-mile insurance in certain states. With this coverage, you typically pay a base rate plus a per-mile rate. So if you don’t drive long distances or commute daily, it could be a good option.
Several other insurers, including State Farm, Progressive, Safeco and Travelers, offer usage-based insurance programs that track behaviors like speeding and hard braking. They offer discounts or reduced rates for safe driving.
It’s possible to get a discount just for signing up for some of these programs, so they might seem like a no-brainer. However, some insurers may increase your rates if you’re deemed an unsafe driver. Make sure to check what behaviors are tracked and how your rate is affected before enrolling.
NerdWallet averaged rates based on public filings obtained by pricing analytics company Quadrant Information Services. We examined rates for men and women for all ZIP codes in all of the 50 states and Washington, D.C. Although it’s one of the largest insurers in the country, Liberty Mutual is not included in our rates analysis due to a lack of publicly available information.
In our analysis, “good drivers” had no moving violations on record; a “good driving” discount was included for this profile. Our “good” and “poor” credit rates are based on credit score approximations and do not account for proprietary scoring criteria used by insurance providers.
These are average rates, and your rate will vary based on your personal details, state and insurance provider.
Sample drivers had the following coverage limits:
$100,000 bodily injury liability coverage per person.
$300,000 bodily injury liability coverage per crash.
$50,000 property damage liability coverage per crash.
$100,000 uninsured motorist bodily injury coverage per person.
$300,000 uninsured motorist bodily injury coverage per crash.
Collision coverage with $1,000 deductible.
Comprehensive coverage with $1,000 deductible.
In states where required, minimum additional coverages were added. We used the same assumptions for all other driver profiles, with the following exceptions:
For drivers with minimum coverage, we adjusted the numbers above to reflect only the minimum coverage required by law in the state.
We changed the credit tier from “good” to “poor” as reported to the insurer to see rates for drivers with poor credit. In states where credit isn’t taken into account, we only used rates for “good credit.”
For drivers with one at-fault crash, we added a single at-fault crash costing $10,000 in property damage.
For drivers with a DUI, we added a single drunken-driving violation.
For drivers with a ticket, we added a single speeding violation for driving 16 mph over the speed limit.
We used a 2020 Toyota Camry L in all cases and assumed 12,000 annual miles driven. We analyzed rates for drivers of the following ages: 20, 30, 35, 40, 50, 60 and 70.
These are rates generated through Quadrant Information Services. Your own rates will be different.
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