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How to Lower Your Car Insurance

A piggy bank placed on car dashboard to represent savings in auto insurance

If you feel like your car insurance premium keeps going up, you’re not alone. The good news is that there are many ways to lower your car insurance and get you on the road for less money!

How the Car Insurance Company Calculates Your Premium

You may be wondering how insurance companies calculate your premium in the first place. The insurance company considers several factors, including:

The Make and Model of Your Car

More expensive and luxury cars will mean higher premiums. Certain car types such as convertibles and sports cars will also bring up your insurance premium.

Your Age and Driving Experience

Typically, older people pay less for car insurance than younger people. Driving experience also plays a role — between two 25-year-olds, the one who’s had their license longer will pay a lower car insurance premium.


Where you keep your car plays a role in your insurance premium. If you live in an area with a lot of crime or car accidents, then you will pay a higher premium.

Driving History

A driving history with fewer traffic tickets and at-fault accidents results in a lower car insurance premium. For most minor traffic violations and accidents, insurance companies typically look back three to five years. Serious violations such as DUIs and license suspensions stay on your record longer.

Club and Association Membership

Many car insurance companies provide discounts to members of particular clubs and associations such as AAA or AARP.

How Often You Use Your Car

Car insurance companies will want to know how much you drive. If you have a long commute or like to take big road trips, you’ll pay a higher premium.

Keep in mind that intentionally misleading the insurance company — for example, providing an address that’s different from where you normally live and keep your car — is fraud. If the insurance company finds out that you knowingly gave them incorrect information, they may drop your coverage. In the worst case, they may even refuse to process a claim if you’re involved in an accident!

Tips on How to Lower Your Car Insurance

Whether you’re shopping for a new policy or trying to trim costs with your existing car insurer, there are plenty of ways to lower your car insurance.

Take a Defensive Driving Course

Most car insurance companies will offer a discount on your premium if you complete an approved defensive driving course. Your state DMV will have a list of approved defensive driving course providers. It’s even possible to take a course online to fit your schedule!

Once you receive your certificate for completing the course, contact your car insurance company so they can apply the discount to your next policy renewal.

Get Group Insurance

Many companies and organizations have arrangements that allow employees and organization members to receive instant discounts with certain car insurance companies. Ask around. You’d be surprised how many employers, alumni associations, social clubs, and other organizations can get you a discount on your car insurance premium!

Keep a Clean Driving Record

If your driving record shows you haven’t had any at-fault accidents or traffic violations in the last few years, then you’re likely to get a discount for “good behavior.”

If you’re not sure what’s on your driving record, you can find out by contacting your state DMV.

Have Good Credit

Some insurance companies offer discounts if you keep a good credit score. Some ways to improve your credit score including paying your bills, credit cards, and car loans on time. And always remember to pay your car insurance premium!

Install an Anti-Theft Device

Many car insurance companies offer discounts if your car has an anti-theft device or system installed. Many newer cars already come with an anti-theft system. If you have an older car, it might be worth it to look into installing an anti-theft device. Besides saving you money, it’ll save you all the stress and anxiety that come when your car is stolen!

Stay Insured

happy couple learning how to save money con car insurance in laptop

Most insurance companies charge more when they see you’ve had gaps in your car insurance coverage, even if it was because you didn’t own a car. The longer you stay insured with no gaps, the lower your car insurance premium will be.

If you sell your car, it’s still possible to avoid a gap in coverage if you purchase a non-owner liability policy. Not only does this save you money when you need full coverage again, but it also protects you if you’re involved in an accident while driving someone’s car. In that case, the non-owner liability policy covers damages above the car owner’s insurance limits.

Become a New Customer

Occasionally, insurance companies offer special discounts to customers switching from another insurance company. Just don’t expect to get the same discount when you renew your policy!

Be a Repeat Customer

Most insurance companies offer discounts to customers who have multiple policies with them, especially auto or homeowners insurance. In many cases, having a policy within the same household counts, so your spouse or partner’s policy can still get you a discount.

Increase Your Deductible

For collision and comprehensive car insurance, you usually have some flexibility in setting your policy’s terms. If you’re looking to save some money on your premium, then you should consider increasing the deductible in your policy. If your car is damaged, the deductible is the amount of money you agree to pay before the insurance company starts covering the costs. A higher deductible means that you’re covering a larger share of the costs in case of an accident or theft. That’s why the insurer is willing to charge a lower premium when you increase the deductible.

The downside is that if there is an accident or theft, you’ll be faced with a higher surprise bill. So always make sure the deductible is an amount you’re comfortable paying at a moment’s notice to repair your car.

Decrease Your Policy Limit

Another option for collision and comprehensive car insurance is to decrease the policy limit. The policy limit is the maximum amount the insurance company will pay if your car is damaged. Since the insurance company is on the hook for less money, a lower policy limit means a lower premium.

If your car’s value is well below the policy limit, then it makes a lot of sense to lower the limit. You might consider further lowering the policy limit if you’re comfortable doing that. The downside is that you’ll get less money from the car insurance company if your car is damaged or stolen.

Pay Your Premium Up Front or Pay Online

It’s usually cheaper to pay the entire premium in advance. If you can’t afford to do that, then opt for the payment plan with as few payments as you can manage — plans with more installments usually have more added fees.

In addition, many insurance companies will offer a small discount if you choose to pay online or sign up for automatic payments by credit card or bank transfer. If you do sign up for automatic payments, just don’t forget to set a future reminder to yourself to make sure that there’s enough money to cover the payment!

Don’t Be Afraid to Shop Around

Even if you’re satisfied with your current car insurance premium, it’s always a good idea to shop around for new quotes. When your policy is up for renewal, double-check that you’re getting the best deal. Try to get at least two or three additional quotes just to make sure you’re making your decision based on enough information.

As you request and compare different car insurance quotes, it’s important to ask yourself a few questions.

Do All the Quotes Consider the Same Information?

If you’ve been involved in any at-fault accidents or traffic violations recently, then you should share this with the car insurance company so they can give you the most accurate quote.

Do All the Quotes Have the Same Policy Limits and Deductible?

Remember that policy limits and deductibles affect the car insurance premium. That’s why you should make sure you’re comparing “apples to apples” and that all the policy limits and deductibles are the same. If they’re not, contact the insurance company and ask for a revised quote with the deductible and policy limit you’re looking for.

Do I Need (or Want) All of the Coverage Options?

Just because the coverage is available doesn’t mean that it makes sense for you to pay for it. Beyond the legally required minimum liability coverage, the purpose of insurance is to help pay for expenses that you couldn’t pay yourself in an emergency.

The Sooner You Start Looking, the Sooner You’ll Have Lower Car Insurance!

When your insurance premium keeps going up each year, you may feel like you’re stuck paying more. But that doesn’t mean you can’t get a good deal somewhere else! You’d be surprised how quickly people find car insurance that’s cheaper than what they’re already paying. All it takes is a few minutes to get a quick online quote, though speaking directly to an expert online or in-person is always an option too.

Ready to Get a Quick Quote?