7 Ways to Lower Your Car Insurance Rates

December 29, 2014

Car insurance is one of those necessary evils in life. No one wants to pay for it, but then no one wants to be without it either. And no matter what you think about it, it’s required by state law so you must have it. But just because you have to have it doesn’t mean you can’t make it as inexpensive as possible.

Like most other types of insurance this recurring cost pops up on a regular basis so cutting its costs means you’ll be saving money every time your policy is renewed.  We’ve talked in the past about a few different ways you can save on car insurance, some are easier than others.  Here’s another look at some strategies you can use to lower your car insurance rates, and  it’s generally without increasing your liability in the process.

1.Ask About Discounts

Most of us know about common discounts, like good student driver discounts or discounts for driving certain types of cars that are deemed to be especially safe. But there are all kinds discounts available, and they can even vary from one auto insurance company to another.

For example, there can be discounts for having certain types of safety equipment on your car, and these can be extremely specific. There may also be discounts for employment in certain occupations. You can also get discounts for paying your premium in full, rather than in installments.

Ask your insurance company for a list of all of the potential discounts that they provide, and see if you qualify for any. It is highly likely that the company did not inform you of all the discounts they have at the time when you applied.

2. Bundle With Other Insurance Policies

This is a standard recommendation, so we won’t spend too much time on it. But you can often get discounts – sometimes substantial ones – by bundling your auto insurance with other policies that you have. Homeowners insurance is a common one, but it’s also possible that you can get a discount if you combine your auto insurance with a business insurance policy that you have.

You don’t want to go too far with this, since not all insurance companies offer every type of coverage you may need. You also don’t want to accept inferior coverage in another area just so that you can save money on your auto insurance.

3. Raise Your Deductible

This is another standard recommendation to lower your insurance premium, but it’s also a good one. Just by raising your deductible from $500 to $1,000 you can save a significant amount of money on your premium.

One way to raise your deductible without increasing your risk, is to simply have an amount equal to your deductible sitting in your emergency fund. As long as you have the money available, you’ll be covered in the event of an accident. And if you never have one, the savings will be yours to keep.

4. Watch Your Driving Habits

If the major reason why your auto insurance premiums are as high as they are is because you have a history of traffic violations and accidents, it’s time to clean up your act. Drive more carefully, obey traffic laws to the letter, and always watch out for the other guy – especially pedestrians.

Driving is never an area of life where you should throw caution to wind. If you tend to speed and disregard traffic signals because you’re perpetually late, get in the habit of leaving a little early so that you won’t feel the need to break traffic laws.

If you can keep your driving record clean for at least three years you should start to see your insurance premiums fall, at least in most states.

5. Take a Defensive Driving Course

Most of us only think about defensive driving courses when we’re getting our licenses. Auto insurance companies offer discounts if you complete such a course. You can actually take a defensive driving course at any point in your life, and it is strongly recommended if you’ve recently been in an accident that was your fault, or if you’ve been given a traffic citation.

Insurance companies will often waive surcharges if you complete a defensive driving course. The courses however are not free, so you’ll have to weigh the cost of the course versus the savings that will result in your insurance premiums.

6. Ask What You Can Cut That Would Have the Least Impact

I’ve actually done this very recently myself. My wife had a minor accident, judged to be her fault, and our premiums increased. I simply contacted my insurance company, and asked the agent “What would you do to lower the premium if it were you?” The agent quickly asked me if we have medical insurance – which of course we do. She then suggested that we can cut some of the medical insurance benefit on the car insurance, since it essentially represented duplicate coverage.

Reducing the coverage brought our premium back down to where they were originally, but it only increased our medical liability by $1,000 – and then only under the assumption that we were to cancel our medical insurance.

Anytime you’re unhappy with your insurance premium, or if you’re suddenly increased as a result of an accident of violation, try contacting your insurance company and asking that question. You may be pleasantly surprised what you find out.

7. Buy a Less Expensive Car

People often buy the best car they can afford, and with little regard to the impact that it will have on their car insurance. But it is a fact that a more expensive car, or certain models – particularly sports cars – result in higher auto insurance premiums, often much higher.

You certainly don’t want to sell your car if it’s one of the reasons why your car insurance premium is so high. But it is certainly something to keep in mind when the time comes to buy a new car. As a general rule, the less expensive and more conservative the car is, the lower your auto insurance premium will be.


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Kevin Mercadante is professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry. He lives in Atlanta with his wife and two teenage kids and can be followed on Twitter at @OutOfYourRut.

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