6 Ways to Save on Car Insurance

The right moves can drive down car insurance premiums and could save you hundreds of dollars a year.

Shop around. Premiums vary by insurer and you may be able to save money by switching — or threatening to do so. To compare rates, start with the National Association of Insurance Commissioners (NAIC) and go to your state insurance department website to see its car insurance buyer’s guide. These guides generally show sample prices for all auto insurers licensed in the state. Pick a few insurers with the lowest rates for the example closest to your situation and contact them to get quotes for identical coverage. Research thoroughly, and before you switch, let your current insurer know you’ve found a better rate —  it may offer to beat the other insurer’s quote, especially if you’re a longtime customer.

Bundle coverages. You may get a discount of more than 10% for buying car and homeowners or renters’ insurance from the same company.

Ask about discounts. Make sure you get all the discounts you deserve. Some insurers offer discounts for certain professions, members of alumni associations or other groups, for completing a defensive driving course, or for signing up for paperless billing. You may also earn cash back or get a discount of 5% to 30% or more for participating in a data-tracking program, such as Progressive’s Snapshot, Allstate’s Drivewise and State Farm’s Drive Safe & Save. Specifics vary by insurer, but these programs often offer extra discounts based on low mileage, how often you drive late at night, and for minimizing practices such as hard braking and rapid acceleration.

Boost your deductibles. Raising your deductible from $200 to $500 can reduce the cost of your  comprehensive and collision coverage by 15% to 30%, while raising the deductible to $1,000 can save as much as 40% or more, according to the Insurance Information Institute. Keep the extra money in your emergency fund to cover the extra risk if you do have a claim.

Improve your credit score. Many insurers have found that people with low credit scores tend to have more car insurance claims than people with higher scores, so your credit score can affect your premiums in most states.   

Cut costs for teenage drivers. Your premiums can jump when your teenager starts driving, but a few special breaks can help. Many insurers offer a discount of up to 15% for high school or college students with a B average or better. Taking drivers’ education or participating in an insurer’s driver-safety program for teenagers can also earn discounts. Let your insurer know if your child is moving more than 100 miles away for college and not taking a car — you could get a big break on premiums but still have coverage when your child comes home for vacations and holidays. Ask your insurer what else you can do to reduce the rates for your teenager.