Auto insurance is a necessity, but that doesn’t mean you should overpay. Many drivers unknowingly spend hundreds of extra dollars each year on coverage they don’t need—or miss out on easy discounts.
The good news? Comparing auto insurance rates and adjusting your policy can save you $500 or more per year. In this guide, we’ll break down five proven strategies to lower your premiums without sacrificing coverage.
1. Shop Around & Compare Rates Annually
Why It Works
Insurance companies use different formulas to calculate premiums, meaning the same driver could pay $1,200/year with one insurer and $700/year with another. Loyalty doesn’t always pay—sticking with the same provider for years often leads to rate creep.
How to Do It
- Use comparison tools (NerdWallet, The Zebra, or insurers’ own websites).
- Check rates at least once a year, especially after life changes (moving, buying a new car, or improving credit).
- Consider regional insurers—they sometimes offer better deals than big names.
Potential Savings: $200–$500/year
2. Raise Your Deductible (If You Can Afford It)
Why It Works
A higher deductible = lower monthly premiums. If you rarely file claims, this can be a smart trade-off.
How to Do It
- Standard deductibles: $500–$1,000 (raising it to $1,000–$2,000 can cut premiums by 10–25%).
- Only choose a deductible you can comfortably pay out of pocket in case of an accident.
Potential Savings: $100–$300/year
3. Take Advantage of Discounts
Why It Works
Most insurers offer hidden discounts that agents won’t mention unless you ask.
Top Discounts to Ask For:
✔ Multi-policy (bundling): Save 10–25% by combining auto + home/renters insurance.
✔ Safe driver: No accidents/tickets for 3+ years? You could save 10–20%.
✔ Good student: Teens with a B average or higher often qualify.
✔ Low mileage: Drive less than 7,500 miles/year? Ask for a discount.
✔ Pay-in-full: Avoid installment fees by paying upfront for 6–12 months.
Potential Savings: $150–$400/year
4. Improve Your Credit Score
Why It Works
In most states (except CA, HI, and MA), insurers use credit-based insurance scores to set rates. A poor credit score can double your premiums.
How to Improve It Fast:
- Pay bills on time (biggest factor).
- Keep credit card balances below 30% of limits.
- Avoid opening/closing accounts frequently.
Potential Savings: $200–$500/year (for a 50+ point increase)
5. Drop Unnecessary Coverage
Why It Works
Older cars may not need full coverage (collision + comprehensive). If your car’s value is less than 10x the annual premium, consider switching to liability-only.
When to Drop Full Coverage:
- Car is 10+ years old.
- Worth less than $5,000 (check Kelley Blue Book).
- You have enough savings to replace it if totaled.
Potential Savings: $300–$800/year
Final Tip: Ask for a Re-Evaluation
If you’ve made positive changes (better credit, added safety features, reduced mileage), call your insurer and ask for a policy review. Many will adjust your rate without switching.
