16 Ways to Lower the Cost of Your Insurance

Car insurance can be expensive. Check in with old organizations to see if your insurance provider has any affiliation discounts. Compare insurance costs to see which one offers the best deal. Learn how to lower car insurance costs by keeping a pulse on the market so that you can make well-informed decisions.

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UPDATED: Jun 2, 2022

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Written By: Laura BerryReviewed By: Joel OhmanUPDATED: Jun 2, 2022Fact Checked

Here's what you need to know...

  • Learning how to lower car insurance rates means considering a variety of different factors
  • The safer the driver, the better the insurance rate and the less you can expect to pay in car insurance
  • Maine has one of the lowest average car insurance rates in the country, roughly $456 lower than the national average

Depending on where you live and what kind of driver you are, car insurance can be costly. Are you curious to know how to lower car insurance costs? In this article, we’ll be sharing 16 secrets that can help you save money on car insurance and reduce your monthly vehicle expenses significantly.

Learning how to lower your car insurance rate can be challenging if you don’t know what prices are on the market. Enter your ZIP code and compare auto insurance rates today.

How can I lower my car insurance?

Do you want to know how to lower your car insurance rate? There are several ways available for you to lower your car insurance premium. Whether you select a discount or a vehicle with more safety features, it’s essential to understand that, with a bit of work, a new and more affordable car insurance rate can be possible.

1. Improve Your Credit Score

A majority of U.S. states will consider your credit score when calculating the cost of auto insurance. That means learning how to boost your credit score can help you on your way to lowering your car insurance rates. You can enjoy lower rates and save money on insurance costs if you have good credit. According to Equifax, a good credit score ranges between 670 and 739, a very good credit score ranges between 740 to 799. A score of 800 and up is considered an excellent credit score. 

Poor credit? No problem. A handful of states in the U.S. do not consider your credit score, which can aid you in finding cheaper auto insurance rates if you struggle with bad credit.

  • California. In the state of California, your credit score is not a factor insurance companies consider when determining your insurance rate.
  • Hawaii. While rating plans and underwriting standards do not impact credit scores in the state of Hawaii, it is a factor considered when calculating homeowners insurance rates.
  • Massachusetts. The state of Massachusetts does not consider your credit score when determining your auto insurance rate, underwriting scores, auto policy renewal, or homeowners insurance.
  • Michigan. In the state of Michigan, it is not legal for an insurance company to use your credit to determine the rate for your auto or homeowners policy, nor can they use it to make decisions regarding renewal.
  • Oregon. In Oregon, there are limits to how much information insurance companies can use for underwriting or policy rates.
  • Utah. Like Oregon, the state of Utah also has restrictions on how much information an insurance company can use and access from your credit report to make decisions.

Whether you live in a state that doesn’t consider credit or you decide to boost your credit score, both are great ways to save money on car insurance, homeowners insurance, and more.

2. Relocate

Now that you know which states do not consider your credit score when calculating car insurance rates, you should know that there are also certain states that are known for their affordable insurance rates. If you are dedicated to the mission of lowering your insurance costs, relocating to an area with an overall cheap car insurance average is an option worth exploring.

  • Maine. The average annual cost to insure a vehicle in the state of Maine is around $865, making it one of the lowest car insurance averages in the United States.
  • New Hampshire. Even though car insurance isn’t mandatory in New Hampshire, the average annual cost to insure a vehicle is around $850.
  • Ohio. The average annual cost to insure a vehicle in the state of Ohio is $886, $435 less than the national average.

3. Compare Insurance Costs

It’s never too early to start shopping around for the best deals. Knowing what’s available on the market can be leveraged to your advantage. Compare car insurance companies, quotes, and more so you can use your knowledge to make an informed decision that can save you time and money.

4. Bundle Insurance Plans

If you have more than one policy with an insurance company, bundling your insurance plans is a great way to lower your insurance rate. Some of the most well-known insurance companies offer bundled insurance savings.

  • Amica. Home, auto, condo, renters, life, or umbrella policies can be bundled, resulting in savings of up to 30% for its customers.
  • Liberty Mutual. Policyholders that bundle home and auto insurance can save up to $947.
  • State Farm. If policyholders bundle home and auto insurance, they can save up to $965.
  • Nationwide. By bundling insurance plans, policyholders can save up to 20%.
  • Progressive. Policyholders that bundle home (renters or homeowners insurance) and auto insurance can save an average of around 3% to 5%.
  • Allstate. By bundling insurance plans, policyholders can save up to 24%.
  • GEICO. By bundling auto, condo, homeowners, mobile home, or renters insurance, policyholders can save up to 18% on their car insurance.

If your insurance company allows you to bundle your services for a lower rate, take advantage of the opportunity so you can easily save on insurance.

5. Go Paperless

Some insurance companies, such as Allstate, reward policyholders that decide to go paperless. For example, the Allstate eSmart discount offers policyholders the opportunity to sign up for the ePolicy and save up to 10% on car insurance.

6. Become a Safe Driver

The safer the driver, the better the insurance rate. While some insurance companies rely on software to determine your worthiness, other car insurance companies, such as Travelers, rely on other factors. The company defines a “safe driver” as someone who has not had any at-fault accidents, no comprehensive claims, and no points added to their driver’s license during a specific timeframe.

These qualifications can vary by state and the insurance company.

7. Choose a Higher Deductible

When selecting car insurance, you will usually have the opportunity to choose a deductible amount beforehand. A deductible is the amount that a policyholder is responsible for paying out-of-pocket before the insurance covers the rest. Generally speaking, the lower your deductible, the higher the annual rate. On the other hand, selecting a higher deductible can reduce the monthly rate on your insurance plan.

8. Drive an Insurance-Friendly Vehicle

Did you know that older cars are usually cheaper to insure? While vehicles lose value as they age, this also makes them more affordable to repair in the event of an accident. In addition to older vehicles, certain brands and models are inexpensive to insure. According to Motor Biscuit, the Honda CR-V and the Mazda CX-5 are the most affordable vehicles to insure.

9. Keep a Clean Driving Record

You can save money on car insurance by keeping your driving record squeaky clean. For example, with GEICO’s good driver discount, drivers that remain accident-free for at least five years can receive a discount of up to 22%. On the other hand, Liberty Mutual has a program called RightTrack that monitors the way you drive. If you are a safe driver, you can save up to 30%.

10. Sign Up for a Defensive Driving Course

Looking to learn how to lower your insurance premiums? A defensive driving course is a great way to earn your way to magnificent savings. While insurance companies, such as GEICO, offer up to 20% savings to encourage defensive driving course signs ups, other insurance companies like Nationwide reserve this discount for seniors age 55 and over. To be eligible, seniors must complete a prevention course and have not had an accident in a while. If they meet the criteria, they can receive a discount of up to 10%.

11. Stay Claim Free

Remaining claim-free for at least two to five years can unlock great car insurance discounts. Allstate, Farmers, and State Farm are all insurance companies that offer claim-free insurance discounts to policyholders.

12. Get Good Grades

If you meet the criteria to be labeled a good student, GEICO can discount your insurance rate up to 15%. However, many good grade discounts have age restrictions. For example, Nationwide’s good student discount is only for individuals aged 16 to 24.

13. Sign Up for Automatic Payments

Automatic EFT payments are a popular method that can be used to lighten the load on your monthly car expenses. Allstate’s automatic payment program, the Allstate Easy Pay Plan, allows policyholders to schedule payments. In exchange, they can receive a car insurance discount of up to 5%.

14. Choose Pay-As-You-Go Insurance

Pay-as-you-go insurance determines a policyholder’s auto insurance rate based on how often and how far they drive. These insurance policies are great options for drivers that do not put many miles on their vehicle to save on their insurance premium.

Allstate, Metromile, Nationwide, and The Hartford are auto insurance companies with pay-as-you-go car insurance plans.

15. Join a Club

Group discounts, or affiliation discounts, are a great way for you to save on car insurance. If you are part of a fraternity, sorority, alumni association, military program, etc., you can receive a discount with select insurance companies.

16. Be a Loyal Customer

The longer you stay with an insurance company, the greater the savings you can receive on your car insurance rate in the form of a loyalty discount. These discounts are provided to long-term customers that have remained with an insurance company for a specific period. According to Savings.com, 97% of individuals consider themselves loyal customers to at least one brand. Nationwide, Allstate, AAA, Progressive, and GEICO are just several auto insurance companies offering loyalty discounts. 

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An Overview of How to Lower Auto Insurance

Being loyal, social, savvy, and a little selective with where you live and which auto insurance company you select can go a long way. If you are a low-mileage driver, you may be overpaying for auto insurance. Choosing a better option for your lifestyle, like pay-as-you-go insurance can make a difference in how much you pay per year for insurance.

Now that you’ve discovered how to lower your auto insurance, enter your ZIP code and receive a free quote today.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.

A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Written by Laura Berry
Former Insurance Agent Laura Berry

Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP® Joel Ohman

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