The average American spends about 2.6% of their annual income on auto insurance, or about $148 per month, so it makes sense to find ways to save on these costs. In fact, you may even be overpaying for car insurance if you haven’t taken some of the steps below to help lower the cost of your policy. Lowering your auto insurance rate may seem complicated, but bankrate can show you just how easy it can be to lower your auto insurance premium.
how you can lower the cost of your auto insurance
While many people consider the price tag and the price of gas first when it comes to the cost of owning a car, auto insurance rates are also important. And depending on your circumstances, it could be a higher cost than you expected, especially as rates continue to rise. While there’s a long list of car insurance providers you can choose from to save money, there are other things you can do to help make your car insurance more affordable.
Reading: How to reduce auto insurance cost
1. compare prices
The average cost of auto insurance is $1,771 per year for full coverage auto insurance and $545 per year for minimum coverage. With auto insurance premiums on the rise, drivers are likely to see even higher premiums soon.
But that doesn’t mean there’s nothing you can do about the high cost of auto insurance. Each auto insurance company has its own methods for calculating rates, and their own individual rating factors play a role, so you won’t know how much auto insurance may cost with other companies unless you apply for one. quotation. Quote comparisons can be very helpful in determining which auto insurance company offers the best rate for the coverage you want, and could make it clear that you’re paying too much for coverage.
Changing carriers can be a great way to get the best rate. The following table shows the largest insurance companies in the country based on their market share and their average quoted premiums as of 2022 based on Quadrant Information Services data, to illustrate how they compare to the national average:
2. take advantage of the discounts
Companies often offer several discount opportunities to save on insurance, many of which can be combined for even more significant discounts.
These are some of the most common auto insurance discounts offered:
- Low mileage discount: You could save by driving less than a certain number of miles per year, as specified by your insurer.
- multi-policy discount: You can often save money on auto insurance and home insurance by combining them with the same company. Looking to see what other types of policies you can insure with an insurance company could give you more than just savings on auto insurance.
- Safe Driving Discount: You could save if you have a clean driving record. In addition to your driving record, if you maintain safe driving habits, you can get an additional discount.
- Safety Feature Discount: You could save by driving a vehicle that has safety features like anti-lock brakes and an anti-theft device.
- profession-based discount: you could save if you are part of a specific profession, like a teacher.
- Good student discount: Younger drivers can be more expensive to insure, but good student discounts could help lower that cost. For example, insurers will typically offer a student discount to those who maintain at least a B average in school.
- make sure your policy coverage and limits are the same. having this reference quote from each company will let you know which option offers you the best price for the same amount of coverage. Without this, you may be accidentally buying a cheaper premium with less coverage.
- add optional coverage. If adding optional coverage is important to you, you’ll be able to see which auto insurance companies offer what you want. this could include gap coverage, accident forgiveness, and more.
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3. don’t pay for coverage you don’t need
When thinking about how to save on auto insurance, eliminating coverage you don’t need can be a simple solution. For example, you may have only had one car when your policy started, so you included the rental car reimbursement, but now you have two. or you may have another service that offers roadside assistance, so you won’t need it on your car insurance policy. Checking your policy to see where you might have duplicate or now unnecessary coverage could be one way to cut costs.
Another important decision could be choosing between full coverage and liability only insurance. For example, you may have purchased a used vehicle a few years ago, and at that time chose full coverage auto insurance with collision and comprehensive coverage to insure it. Over time, with the depreciated value of the car, your annual premium could be more than what the car insurance company would pay if your car was totaled. More recently, many used car values have even appreciated over time, so it’s worth checking your car’s current value when looking to upgrade your coverage.
However, before you switch to liability-only coverage, you may find it helpful to research your car’s value and average repair costs in your area to see if you can afford repairs out of pocket. You can also talk to a licensed insurance agent to determine how much coverage is right for you.
4. increase your deductibles
Auto insurance coverage includes a deductible, or the amount the insurance company deducts from your payment if you file a claim. Because your insurance company will offer multiple options for your deductible amounts when you shop for auto insurance, it may be worth considering higher deductibles to lower your premium. the higher out-of-pocket cost will naturally lower your premium. just make sure you can afford the deductible if you have an accident before selecting a higher amount.
5. improve your credit
Insurers often use a credit-based insurance score to help price premiums, except in states where the use of credit to calculate rates is prohibited. That said, in most states, people with excellent credit tend to get cheaper auto insurance.
If your credit needs some work, consider taking some time to improve your credit score. While significant credit increases can take time, paying down debt, setting a monthly budget to help control bills, and making payments on time can go a long way toward lowering your insurance costs.
Average Annual Full Coverage Auto Insurance Rates by Credit Score
6. update your policy annually
Regularly reviewing your auto insurance policy can help ensure you’re saving on auto insurance, but it can also help ensure the coverage you select meets your current needs. If you’ve had major life changes, like getting married, moving to a new location, or changing your commute, your auto insurance policy might need a review to make sure it reflects your current lifestyle.
how to find a cheap car insurance company
Here’s what you need to know to do this accurately and help determine the best auto insurance company:
Consider other factors, such as mobile app accessibility, financial strength ratings, and more. Good customer service, easy policy administration tools, and fast claims payout can make for a positive experience. these factors, along with the price, could help you decide which option best suits your preferences and needs.