Car Insurance Advice - Financial Writer, Financial Journalist, Financial Speaker - Financial Expert Kimberly "Ask Kim" Lankford

8 Ways to Save on Car Insurance

Your car insurance premiums may be some of your largest regular expenses, especially when you’re just starting out. But there are some easy ways to save money on car insurance while still having valuable coverage – which could save you hundreds of dollars every year.

  1. Increase your deductible. Increasing the deductibles on your collision and comprehensive coverage from $500 to $1,000 can cut your premiums by up to 20% and prevent you from filing small claims that could get you dropped by your insurer or cause your rate to rise. Use some of your premium savings to build up your emergency fund, so you’ll have money to cover the deductible if you end up having a claim.
  2. Get credit for discounts. You’ll receive some discounts automatically, such as for your car’s safety features. But you won’t receive others unless you let your insurer know that you qualify – for example, if you work in certain professions (some insurers offer discounts for teachers or law enforcement professionals), are retired, carpool regularly, keep low mileage, if you belong to certain professional or alumni associations, or if your kids get good grades. Ask your insurer for a list of discounts and make sure you get credit for all of the breaks you deserve.
  3. Reshop your insurance after life changes. Compare rates from several insurers if you move, get a new car, if your teenager starts driving, or if you get married. The company with the lowest rate in your old situation may no longer offer the best deal for you. It’s also a good idea to reshop your insurance every few years even if nothing has changed because some companies raise rates at a faster pace than others. Most state insurance departments provide lists of insurers doing business in the state; see links at www.naic.org/map. An independent insurance agent can help you compare rates from several companies; see www.trustedchoice.com for links to agents in your area. 
  4. Check insurance rates before you buy a car. Find out whether the car you’re considering tends to have high or low insurance costs. Specifics vary by insurer, but you can see one company’s analysis with State Farm’s Vehicle Rating Tool. The Insurance Institute for Highway Safety shows insurance losses by make and model; cars with high losses generally have higher premiums. 
  5. Get good grades in high school or college. Your premiums could drop by as much as 25% if your young driver has a B average or better in high school or college. Insurers generally offer the break to full-time students under age 25. 
  6. Find out about discounts for special classes. Your teenager may get a break for taking a drivers education course, and some insurers offer special programs for young drivers. Drivers under age 25 who have no at-fault accidents can get a discount for completing State Farm’s app-based Steer Clear program. Some insurers offer discounts for drivers age 60 or older who take an accident-prevention class.
  7. Sign up for a data-tracking program. If you have low mileage and safe driving habits, you can save money on car insurance by signing up for a data-tracking program. With these programs, such as State Farm’s Drive Safe & Save, Progressive’s Snapshot or Allstate’s Drivewise, you use a smartphone app or plug a device into your car that tracks your mileage, when you drive, and whether you brake hard or accelerate rapidly. You may get a discount just for signing up, and your rates may drop by 10% to as much as 50% if you have good habits and low mileage. Find out whether your insurer will increase your rates if you have risky behaviors (you can usually check your status online before the policy renews).
  8.  Boost your credit score. Several studies have found that people with low credit scores tend to have more insurance claims. Insurers in most states can use your credit score when setting your premiums, and raising your credit score could save you money. Check your credit reports for errors that may be hurting your score (you can check your report from each of the three credit bureaus for free every 12 months at www.annualcreditreport.com), pay your bills on time and keep your balances low compared to your credit limits, even if you don’t plan to apply for a loan soon. See “How and Why to Improve Your Credit Score” for more information about improving your score.

Kim Lankford


Leave a Comment