Ways to Save Money on Car Insurance

The average American family spends about $3,500 annually on all types of insurance.  Studies show that if you just spend a little time comparing rates you can save about $1000 per year on auto and homeowner's insurance. Visit the major insurance companies -- Progressive, State Farm, Farmers, Geico, The Hartford, Allstate -- and compare rates.  The price you will pay for auto insurance changes as you move through life; therefore, you should comparison shop at least twice a year.  Ask your insurance agent to provide you with a list of all the discounts they have available.  For example, the following factors can influence what you pay for car insurance:

  • If you pay down debt, your credit score goes up, and your auto insurance rates should go down. 
  • If you get married, your rate should go down;
  • If you buy a house, your rate will go down
  • If you move into a new age bracket, e.g., turn 50, you might get a discount

Compare rates.  You can get insurance quotes at numerous websites, but two of the best and most well-known are insurance.com and insweb.com.  You can find an independent agent at iiaba.net or contact major insurance companies directly at geico.com, progressive.com, statefarm.com or allstate.com.  Research has shown that only about 15 percent of people who compare rates will get a lower rate from another insurer, but you should try anyway because your savings could be big. Before you sign up with a particular insurance company, check out their record for how they handle complaints at NAIC.org.

Lower your auto insurance premiums.   There are other steps you can take to lower your car insurance premiums even more: 

(1) raise your deductible so that your premiums will be lower, often as much as 20 percent lower --  but before you do this, make sure you have enough in an emergency fund to pay the higher deductible should you need to file an insurance claim if you are in an accident.  You should only do this if you are a very safe driver;

(2) cancel your collision insurance if your car is very old (worth less than $1,000).  A good rule of thumb is to cancel your collision insurance when your car is ten years old and worth little more than your deductible or when the premium is equal to or exceeds 10 percent of the car’s book value;

(3) Get rid of unnecessary add-ons, such as towing insurance and car rental insurance.  These typically cost $50 or more per year.  Why pay $50 a year for three years for towing insurance when you will probably only have your car towed once every four or five years?

(4) Take a driver's safety course approved by your insurance company to qualify for a discount anywhere from 5% to 10%;
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(5) Combine your homeowner's insurance with your auto insurance and your insurer will likely give you a 10% discount.  One major insurance company claims that it gives a forty percent discount if a person insurances both their house and cars with them.

(6) Take advantage of special discounts given to certain classes of consumers.  For example, those over 50 years old can get discounted insurance by joining AARP (visit www.aarp.com for more information) -- if you're a teacher, you can get a discounted rate (visit www.horacemann.com for more information) --  those who are currently in or retired from the military can get a discounted rate through Geico -- as much as 15% (visit www.geico.com for more info). 

(7) Take advantage of discounts that many car insurers offer for things such as insuring more than one automobile; good driving discount, renewal discount, academic achievement discount, and having certain safety equipment (side airbags, antilock brakes), and anti-theft devices.  Many insurers also give big discounts to long-time customers and to people who don’t drive their cars that often.

More ways to save money on car insurance  >>