Saving Money

7 Easy Ways to Save Money on Car Insurance

Car Insurance
Written by Madison Mazer

If you think you’re paying too much for car insurance, you’re probably right. According to ValuePenguin, Americans are overpaying an average of $330 for auto insurance.[1

There are several programs and discounts out there that many are not aware of, or simply not taking advantage of. Car insurance is a necessity in the face of accidents—so if you have to pay for it anyway, you might as well save as much as you can. 

Here’s how to save money on car insurance with seven often overlooked tips…

1. Ask your insurance provider about its discounts

When signing up for auto insurance—whether it’s on a lease, new car, or used car—it never hurts to ask if you qualify for a discount. 

Many companies provide several discount opportunities based on a range of factors, and some allow you to combine those offers to save even more. Some common deductions include: low mileage discount, safety feature discount, military service, senior citizen discount, profession-based discount (specific professions could help you save, i.e. teacher or nurse).

A popular option that offers significant savings is the safe driver discount. To qualify, companies will check your driving record and evaluate how good of a driver you are. The more accidents you’ve been in, the more expensive you are to cover. Fortunately, if you’ve got a relatively clean driving history, or previous accidents that crossed the time threshold your insurer cares about, your rate can drop.

For younger drivers, ask about good student discounts and driver education courses that will lower your rates. Although companies might charge more for a younger student’s policy, if you are a good student, then you might be able to receive a discount. Various agencies reduce costs to those in school who maintain a certain grade point average (GPA) or keep a B average throughout the school year. Driver education courses can also help you save. By showing proof of taking defensive driving courses, you can receive a monthly discount and save at least $100 every year.

Sometimes companies give clients package deals, like the multiple car policy discounts. But just because your provider offers you a car insurance bundle discount, doesn’t mean you’re getting the best deal. If you are looking to cover other assets, consider combining your policy type under the same insurance company. For example, you could group your car insurance with renters or homeowner’s insurance to save. Progressive, Allstate, and Geico are just three of many to offer multiple types of insurance and bundle discounts.

2. Check in as you age, and if and when you get married

On average, single drivers under the age of 25 face higher premiums. Car insurance companies believe younger, less experienced adults are more accident-prone than their older counterparts. Once you hit 25, your insurance will likely drop. Nearly a decade of driving does have its advantages!

There’s also a discount for those who are married. To insurance companies, stability is everything. If you have a legal partner, this proves to many insurance providers that you’re responsible—at least on paper.

3. Consider shopping online for insurance

You aren’t tied down to your current insurance plan, although sometimes it may feel that way. Rather than trying to find discounts on an existing plan, it may work out cheaper to switch plans or providers entirely. 

To find a new plan, start by browsing online. Many companies will allow you to get a free quote on their website before you follow through and make a purchase. Shopping online for auto insurance has also never been more convenient thanks to comparison services. 

Websites like Gabi offer a more streamlined way to compare the rates of well-known providers based on your needs and financial interests. Ultimately, by searching for new insurance online, you’re more likely to find a suitable and cost-effective plan—with just the right amount of help.

4. Try a pay-as-you-drive program

PAYD programs can only lower your rate, not increase it. 

“You use an app or telematics device in your vehicle that tracks your driving behaviors and the mileage you travel. If you don’t drive many miles and use safe driving habits (like obeying the speed limit), usage-based discount programs could potentially save you as much as 30% on your car insurance premium,” says insurance writer Andrew Hurst. 

When you sign up for this plan, you get a telemac, or other tracking device, that plugs into your car’s diagnostic port.[2] Different companies track different things, but you can bet they want to know…

  • The distance you drive (does your car have lots of miles?)
  • How fast you drive (do you obey the speed limit?)
  • How safely you drive (do you frequently brake hard?)

Some may also want to know if you drive late at night.

This kind of data gives them a better sense of your risk as a driver, and in general, the risk of other drivers on the road. These devices also likely help insurers settle disputes about fault. So no matter the situation, if you’re a safer driver than they assumed, you’ll save money.

5. Consider a different car make and model

Aside from paying for the car itself, some vehicles cost much more to insure than others. According to WalletHub’s analysis of 26 popular vehicles, a Subaru Forester is the cheapest car to insure at an annual premium of approximately $1,774.[3

But is it really one of the best cars for the money? U.S. News & World Report measured quality and value to make that determination, and the 2021 Subaru placed in the top third of their compact SUV rankings.[4] For quality, value, and insurance, it could be the right fit for you and your family.

In the top cheapest cars to insure:

  1. Subaru Forester
  2. Dodge Grand Caravan 
  3. Honda Odyssey
  4. Ford Escape
  5. Toyota Sienna
  6. Toyota Highlander
  7. Toyota Tacoma
  8. Jeep Grand Cherokee
  9. Chevrolet Tahoe
  10. Nissan Versa

Among the cars, the top three cheapest by make are Nissan, Honda, and Toyota. These companies are not only cost-effective, but are also top rated for safety. Each brand has received distinctions for vehicle safety and were featured in the Insurance Institute for Highway Safety (IIHS)’s Top Safety Picks for 2019. 

Remember, if you’re in the market for a new car, talk to your agent about which cars are less expensive to insure. If you’re buying a used car, see the history of the vehicle before buying.

6. Stay in contact with your agent

You’d think that doing nothing would keep your auto insurance rate consistent, but you’d be wrong. Even if you haven’t been in an accident, haven’t added a teen driver, haven’t seen your credit score plummet—or experience a change in any of the factors that influence your riskiness to your insurer—you still could see your insurance bill hiked.

The reason is that many insurance companies are using sophisticated data mining software to enact something called “Price Optimization.” These insurers analyze reams of data to figure out which customers will shop around after a price hike, and which ones won’t. If a computer algorithm predicts that you aren’t likely to be a savvy shopper, your premiums could go up.

According to J. Robert Hunter of the Consumer Federation, with just a couple of phone calls or visits to a few websites, one hour of insurance shopping can cut as much as $125 per car off your bill. An even easier approach might be to make as little as one phone call to your agent. Ask why your rate has gone up and what you can do to lower it. Also, review your coverage to make sure you’re not paying for unwanted extras.

7. Just stop driving

OK this one’s extreme, but if car insurance is really killing your budget, it may not be worth keeping the car for now.

According to the Wall Street Journal, driving is down for young millennials and Generation Zers. A study done by J.D. Power reports that in 2017, approximately 80% of 20- to 24-year-olds had their driver’s license. While these numbers are not shocking, they are low compared to the 92% of young adults who had their license in 1983.[5]

To really save money in an urban environment, ditch the car altogether. That will save you a car insurance payment, maintenance, and gas. Bus, train, or carpooling with a friend are all much more cost-effective ways to get around. In a pinch, you can also try ride-sharing. Apps like Uber and Lyft are becoming cheaper and more popular alternatives to taxis and car rentals. In 2020 alone, 93 million people used Uber—and these numbers are projected to increase post-pandemic—according to BusinessofApps.[6]

Kristen Grau contributed to this report.

Source:
[1] https://www.insurancebusinessmag.com/us/news/breaking-news/americans-overpaying-for-auto-insurance-by-nearly-37-billion–study-193807.aspx [2] http://www.obdii.com/connector.htmlhttp://www.obdii.com/connector.html
[3] https://wallethub.com/edu/ci/cheapest-cars-to-insure/65580
[4] https://cars.usnews.com/cars-trucks/subaru/forester
[5] https://www.wsj.com/articles/driving-the-kids-are-so-over-it-11555732810
[6] https://www.businessofapps.com/data/uber-statistics/

About the author

Madison Mazer