How to Save Big on Your Car Insurance

Learn how to get your premiums as low as possible.

Like many Americans, you’ve probably watched your car insurance premiums go up hundreds of dollars over the last two years. Even as inflation has cooled, insurance prices have remained high due to more crashes, increased litigation, and higher repair costs. Nationwide, the average premium increase was nearly 18 percent, according to the Federal Bureau of Labor Statistics. But some states have felt even more pain, with rates up 88 percent in Florida and around 50 percent in Colorado, Nevada, and New York since 2018, according to FINN, a car subscription service company that analyzes market data.

How can you lower your premiums? For starters, switch insurance companies. According to CR’s 2022 national survey of 11,509 drivers, consumers who took their business to another company not only saved money on car insurance but also reported higher satisfaction levels with their new insurer. Even so, 55 percent of drivers stay with the same insurer for six years or longer, missing out on those advantages.

CR recommends shopping for better rates from competing insurers every year or so and, at the same time, reviewing your policy to see how changes in your life may affect your insurance needs. Those changes might include moving to a new town or state, getting a new job, or entering retirement.

“If you haven’t given your insurance a hard look in a while, you could be paying too much, not have enough coverage, or both,” says Chuck Bell, Consumer Reports’ programs director for advocacy.

We’ll tell you which life events might cause your insurance needs to change, as well as how you can get the lowest rates possible with the top insurers from CR’s 2022 member survey.

Increase Your Deductible

How much you can save: $400 to $500 a year

This timeless insurance advice saves you money because you’re increasing your potential out-of-pocket cost for repairs after a crash. Loretta Worters, vice president of media relations for the Insurance Information Institute, says that increasing your deductible from $500 to $1,000 can bring your annual premium down by 20 to 25 percent, on average. “Just make sure you can afford to pay cash for repairs if you need to,” Bell says. “The average motorist doesn’t file a claim more than about once every couple of decades, so your likelihood of having to shell out for crash damage is actually pretty low.”

Drop Collision and Comprehensive Insurance

How much you can save: About $1,000 a year

Collision insurance covers you for damage to your car if you’re involved in a crash (or if you’re the victim of a hit-and-run), and comprehensive covers damage caused by acts of nature—such as storm damage—vandalism, theft, fire, and more. As the years and miles pile up on your car, its value will decrease. Eventually, that lowered value may no longer justify the expense of paying for collision and comprehensive coverage. “As a general rule, when the premium is more than 10 percent of the car’s value, it’s time to consider dropping collision, and maybe comprehensive, too,” Bell says. You may want to keep comprehensive a bit longer because it includes glass coverage, which is always nice to have if a rock hits your windshield and cracks it. But if you’re scaling back to liability-only coverage, make sure you have enough to protect yourself from having to pay out of pocket for someone’s property damage and medical expenses if you’re found at fault in a crash.

Take a Defensive Driving Course

How much you can save: $200 a year

Some insurance companies will allow you to take a safe-driving course to get a discount, although you’ll have to take it again every few years to keep the discount active. In New York, for example, where insurance can cost more than $3,000 per year, motorists can receive a 10 percent discount after taking a state-approved defensive driving course. (The course costs about $25, takes 5 hours and 20 minutes to complete, and can be repeated every three years.) Many other states have similar programs, although prices vary widely. In Virginia, where the average cost of insurance is less than $1,500 per year, the course takes 8 hours and can cost as little as $25.

If You Drive Under 10,000 Miles a Year, Report Your Mileage

How much you can save: About $100 a year

“Most insurance companies include annual mileage in their pricing methodology, and lowering your miles can save you money,” Heller says. For instance, if you’re driving less because of a change in your job location, you may qualify for a lower premium, especially if you’re driving less than 10,000 miles in a year. “Some companies offer verified mileage programs where you can get even more savings by reporting your odometer reading on a regular basis.”

Bundle Your Auto Coverage With Your Homeowners Insurance

How much you can save: $300 a year

Douglas Heller, director of insurance with the Consumer Federation of America, says that some companies offer discounts on annual premiums when you purchase both your home and auto policies from them. But he points out that every person’s situation is different, and while one person might save money by bundling two types of insurance, another person might save money by buying each policy from a different company. The bottom line: Bundling is worth looking into, but it’s not a one-size-fits-all way to save on your premiums.

Pay Out of Pocket for a One-Car Fender Bender

How much you can save: $300 or more (depending on your driving record)

If you’re involved in a crash with another vehicle that results in property damage, many states require that you submit an accident report (and you must report an accident with injuries or death to the police). But for minor damage that doesn’t involve another driver—such as scraping your bumper on a support column in a parking garage—paying out of pocket and not filing a claim could prevent a potential rate increase. Keep in mind, though, that what seems like minor damage to a car equipped with safety features such as automatic emergency braking and blind spot warning could be far more expensive to repair than you think. So make sure you get a repair estimate before you decide to shoulder the financial burden on your own.

Get an Independent Insurance Agent

How much you can save: Hundreds of dollars

To make comparing coverage and premiums from several insurance companies easier, consult an independent agent. Unlike an agent who represents a single company, an independent agent represents a number of insurance companies, including some that may not be on your radar and could offer the best deal, Heller says. (Insurance brokers are also independent, but he says they’re more appropriate for businesses than for individual customers.)

Consider a Dividend Policy

How much you can save: $100 or more

Dividend policies may have higher premiums, but because policyholders own a stake in the company’s investments, they can get money back in the form of dividend payments. “Dividend policies can help reduce the overall cost of coverage, and may help you save even more when both your auto and home are covered by the same mutual insurance company,” CR’s Bell says.

Sign Up for Driver Monitoring

How much you can save: $800

Some insurance companies offer a discount if you allow them to monitor your driving habits with a smartphone app or a device that plugs into your car’s diagnostic port. There’s a potential for huge savings, but you have to be okay with giving up a certain amount of privacy, allowing your insurer to track your every move in much the same way that you do when using certain smartphone apps. If driver monitoring is available in your state and offered by your insurance company, Bell suggests doing some fact-finding before deciding whether it’s right for you. Start by asking your insurer what data it will use to calculate a discount, whether any negative driving behavior has the potential to actually increase your rate, and how all the data collected can and will be used. “Ask your insurer if they will sell or share your data with other companies before you agree to one of these programs,” he says. “And if you tend to drive more at night because of work or some other reason, make sure you won’t get dinged for it.”

How Much Liability Coverage Is Enough?

Insurance companies can offer several types of coverage to protect you financially when you’re involved in a crash. But the most important is liability coverage, which pays for costs related to the injury or death of passengers in another car as well as any damage to other vehicles and property if it’s determined that you were at fault in a crash. (Liability coverage also covers passengers in your car.)

Almost every state requires liability coverage. In Virginia, for example, the minimum coverage required by law is $30,000 per person and $60,000 per incident for bodily injury or death of two or more people, and $20,000 for property damage. (This is usually stated on an insurance policy as $30,000/$60,000/$20,000 or simply 30/60/20.) Experts say most state minimum coverage requirements are woefully inadequate. Douglas Heller, an insurance expert, cites as an example a driver covered only by Virginia’s minimum requirement who causes a crash in which three people have $50,000 in medical bills per person. The driver’s insurer would cover $20,000 of each injured person’s medical bills, leaving the driver responsible for any outstanding bills—in this example, $90,000.

How much coverage is enough? Loretta Worters of the Insurance Information Institute recommends a minimum liability coverage of $100,000/$300,000 /$100,000. For more protection, experts recommend purchasing an umbrella insurance policy on top of higher-limit liability coverage. An umbrella policy added to a homeowners policy extends liability protection to $1 million or more, and depending on the insurer, fills whatever gaps may have been left by auto and homeowner policies.

You can usually buy an umbrella policy only from a company that you’ve already purchased insurance from. Prices vary depending on what types of coverage you already have—car, home, boat, business, etc. You also need to know how high your basic liability insurance needs to be, and if your insurer requires bundling all of your policies to get the umbrella policy. Worters says a $1 million umbrella policy typically adds $250 to $300 to your annual premiums.

There’s also coverage that pays for damage caused by uninsured and underinsured motorists, as well as personal injury protection or medical payment coverage, which covers your own injuries if the other driver has inadequate coverage or none at all. Worters says these are always good to have.

Life Events That Can Affect Your Car Insurance Rates

Getting Married or Divorced
Adding a driver to a policy can increase premiums, but if that person has a clean driving record, your rates shouldn’t change much. Adding someone with a history of filing claims or with moving violations on their record, on the other hand, can increase your rate, whereas removing that person can result in significant savings.

Changing Jobs
You could pay a lower premium if your new commuting distance is shorter or if you’re now working from home. You can generally save $100 on premiums if you drive less than 10,000 miles per year.

Moving to a New Area
Insurance rates are highly dependent upon where you live. According to quotes from USAA, a move from suburban Scottsdale, Ariz., to urban Phoenix would raise your annual premiums by about $240. Your premium could drop if you move from a city to a more sparsely populated area. And if you move to an area with a high probability of severe weather events (hurricanes or floods), you’re likely to see your premiums rise.

Adding a Teen Driver
Drivers between the ages of 16 and 17 are more likely to be involved in a crash than any other group. Adding a teen driver to your insurance policy can increase it a staggering $1,000 to $2,000 a year or more.

If You’re Over 70, Read This

Car insurance premiums tend to decrease as you age. But that can change once you reach your 70s, which is when crash rates begin to slowly tick up, according to the Insurance Institute for Highway Safety (IIHS). Based on average annual insurance costs from Bankrate, a consumer financial services company, premiums for 70-year-old drivers are about 8 percent higher than for drivers who are 60 years old.

“If you’re an older driver who hasn’t been in a crash and your rates go up sharply, consider changing insurers,” says Chuck Bell, CR’s programs director for advocacy. “You can ask your existing company to provide a more competitive quote, but be prepared to vote with your feet if you don’t like its answer.”

Bell says that some insurers, including Geico and The Hartford, offer preferential rates for older drivers. “Just like drivers in other age groups, aging motorists can save money on insurance by reassessing their needs and switching carriers if they can get a better deal,” he says.

Upgrade to a car with advanced safety systems. Cars with active safety equipment like automatic emergency braking (AEB) and strong crash-test ratings are good for everyone, but especially for older drivers. That’s because those drivers are more likely than other motorists to suffer from serious injuries if they’re in a crash, the National Highway Traffic Safety Administration says. And according to two IIHS studies, they tend to drive older vehicles that lack lifesaving features such as blind spot monitoring, side or curtain airbags, forward collision warning, or automatic emergency braking.

Take a driver education course. Classes for mature drivers could reduce your risk of an accident or injury and related expenses. Groups like AAA offer programs to help older motorists with declining hearing, eyesight, flexibility, and other issues that can impair driving ability adapt their habits and sharpen their skills. AARP, for example, offers a discount on these courses to members.

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