Auto insurance commercials make a lot of bold, money-saving claims. But have you ever tried to actually get those advertised rates or discounts for a new car—or a new driver? It can quickly turn car insurance shopping into a game of pin-the-tail-on-the-gecko—er, donkey. Fortunately, you can hit your target price by doing five simple things.
1. Review Your Policy and Deductible
Most states require auto insurance and a minimum level of coverage. However, you may be able to trim parts of your current policy or increase your deductible to lower overall costs. When you do this, it will help you to understand some basics about car insurance—including which types are optional.
Does your policy reimburse you for a rental while your car’s in the shop, cover mechanical systems, or include emergency roadside assistance? You may be able to get by without these types of coverage, and cutting them out of your policy will usually lower your monthly costs. Just be sure to consider your state’s insurance requirements, as well as the amount of risk you feel comfortable accepting.
Those feelings should also impact a decision to increase your deductible. Plans with higher deductibles (the amount you pay before the insurance company chips in) come with lower premiums (the amount you pay to the insurance company each month, year, etc. for coverage). Make sure you opt for the right level of protection for you and your vehicle—not necessarily the lowest costs.
2. Clean Up Your Driving Record
Insurance providers charge higher premiums for higher-risk drivers. If you’ve had an accident or a moving violation in the past, understanding and addressing your driving record can help put you back in an insurer’s good graces.
Most states charge points to drivers for speeding tickets, DUIs, and other reckless driving behavior. (You can learn about your state’s specific system with this interactive map.) The amount of time points stay on your record will depend on where you live and what type of violation it is.
Having a good driving history helps when shopping for auto insurance, but you’re not entirely out of luck if you don’t have one. Some insurance companies offer savings for taking defensive driving classes, safe driver programs, or driver’s education for younger drivers. If it’s been a long time since your last accident, you may be eligible for a discount as well.
Insurers may provide devices that plug into your on-board diagnostics port to monitor your driving. The insurer may lower your rate if they detect good driving behavior, and most, if not all, promise that this practice will never result in your rates increasing.
3. Consider the Car You’re Insuring
Upgrading to a fancier model or a bigger engine may not seem like it costs much more when you’re at the dealership. But that feeling might change once you factor insurance into your car-buying budget. More expensive vehicles equal higher insurance rates.
On the bright side, some bells and whistles can help offset those higher premiums. Ask your insurer if safety features like antilock brakes and airbags, or advanced safety systems like collision warnings and automatic emergency braking, will earn you a discount.
Saving on insurance costs is one among many good reasons to buy used cars. Due to their likely lower sales prices, these cars cost less to insure—even if they’re “like new.” If you purchase a very inexpensive used car, it might even make sense to scale back on optional collision coverage, which covers repairs up to your car’s market value, minus your deductible.
4. Drive Fewer Miles
When shopping for auto insurance, providers will ask for a bunch of information, including how many miles you drive each year. Why? Well, the less you’re on the road, the less likely you are to be in an accident. So, consider alternate options to getting around town or commuting to work.
Can you carpool with someone else? Is there reliable public transportation in your area? Can you work from home a couple days a week? These options won’t be possible for everyone but taking advantage of them—and letting your insurer know that you are—may save you money.
5. Students: How’s Your Report Card?
Statistically, young drivers are riskier to insure. According to the CDC, drivers ages 16 to 19 are more at risk of motor vehicle crashes than any other age group. Good students may hold traits that counteract traditionally risky behavior, such as being responsible or hard-working.
Most auto insurance companies offer discounts to students who are younger than 25 and have good grades. Typically, that means having at least a “B” average (3.0 GPA), being on the honor roll or dean's list, or scoring high (top 20 percent) on a test like the SAT, PSAT or ACT. You’ll need to prove this with documentation like a report card or letter from a school administrator.
Other Factors Insurance Companies Consider
Auto insurance companies conduct a great deal of demographic research to determine who presents the biggest risk on the road. If you check off some predetermined boxes, your rate may be comparatively higher, regardless of any other steps you take.
Factors like age (under 25; over 65), gender (male), or being single will automatically hike your rate. Where you live may also make a difference: If your neighborhood has lots of traffic and crime—in a city, for instance—you’ll pay more for coverage than someone with a similar risk profile who lives in the countryside.
The Bottom Line
You can easily pay less for car insurance by minimizing coverage or increasing your deductible—but don’t let optimism bias tempt you! Instead of taking on the burden of risk, research options that help you stay safe and pay the lowest possible rate. And, of course, as with everything related to car shopping, do your research, ask questions, and get multiple quotes to score the best deal.
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