7 Ways to Lower Car Insurance Premiums


Driving a car requires you to buy insurance for all your vehicles. Insurance requirements vary by state, as do the consequences for driving without proper coverage. Even though you must buy car insurance, there are ways to save money on premiums. Insurance company’s base rates on driver risk. Lowering your risk, in the eyes of your insurer, can lead to big discounts on your next policy renewal.

  1. Don’t Claim the Small Stuff

    Insurance companies tend to raise rates after an accidentYou may fare better financially paying for small mishaps out of pocket. Whether it is a fender bender or a cracked windshield, avoiding a claim can prevent rate hikes.

  2. Watch Your Credit Score

    Car insurance companies use your credit as a factor in your premium. While insurers do not typically offer discounts for good credit, they do charge more when your credit score suffers. In some cases, you can file for an exception if an event such as job loss, divorce, military deployment, the death of a family member, or medical problems triggered the poor credit.

  3. Compare Deductibles

    You can always lower the premium by raising the deductible. Increasing the deductible from $200 to $500 can reduce premiums by 15-30%. Pushing it to $1,000 you could save up to 40%.  However, a higher deductible also means you will have higher out of pocket costs in the event of an accident. If you have not had an accident in years, a higher deductible on collision may be a good decision.

  4. Liability Only Policies

    The least expensive policies only cover the liability or bodily injury. A car loan will prevent removing collision from the policy. However, reducing coverage increases your risk because the insurance company will only pay for personal injuries, not car repairs. Older vehicles will benefit the most from the reduction in coverage.

  5. Price Insurance Before Buying

    Insurers charge different amounts based on the type of vehicle you drive. Comparing rates across vehicles before buying can lower insurance rates significantly. Another way to save money when buying a car is to add safety features such as anti-theft devices, airbags, anti-lock brakes, and automatic seat belts.

  6. Choose an Insurer with A Good Reputation

    Not all insurance companies provide the same coverage. The cheapest is not always the best. Some insurers require the use of aftermarket parts, underestimate losses, or cut corners at repair shops. Review ratings from independent third parties as well as claim satisfaction when evaluating companies.

  7. Look for Other Discounts Available

    Taking a defensive driving course will reduce insurance rates for drivers of all ages. Partnerships with employers, associations, or specific occupations could lead to preferred rates. Combine policies, which might include life insurance, renter’s, or homeowner’s insurance policies with the same company.

These are a few of the ways you can lower car insurance premiums. Consider your financial ability to accept more of the risk of driving a vehicle, versus increasing coverage to lower out of pocket costs.