The average car insurance premium is $1,300 or about $108 a month. There are many factors that can influence the rate you pay from your credit score and coverage options to your driving habits. While some factors are outside your control — like where you live — there are many ways to reduce your premium and save anywhere from 5% to 25% on your premiums. Here are helpful tips for saving on car insurance.
Being a member of a certain organization or group may qualify you for reduced rates. Many organizations partner with insurance companies to offer incentives and better rates. For example, if you have a Costco membership, you can receive special car insurance rates with their preferred insurance company. You can also check with your auto club, credit union, alumni association, professional organization, AARP, and AAA to learn more about discounts.
Increase Your Deductible
Your deductible is the amount you need to pay for repairs when you make a claim on your insurance. Increasing your deductible from $500 to $1,000 may save you hundreds every year on insurance premiums. Just make sure you can afford to pay the deductible in an accident. It won’t help to save $20 a month if you don’t have $1,000 to get your car repaired if something happens. It can help to calculate how long it would take for the savings to pay for the deductible. If you save $20 per month, for example, it would take more than 2 years to pay for the difference when you switch from a $500 to a $1,000 deductible.
Pay in Full
On average, you can save $62 per year by paying for your annual car insurance premium in full rather than monthly installments. Even paying a 6-month premium can save money. When you decide to buy a new policy, purchase it 10 or more days before you need it to get the best rate.
Review Your Coverage
You may be paying for coverage you don’t really need. Liability insurance is the most important because it pays for injury and damage you cause in an accident and protects you against legal claims. It’s a good idea to boost your coverage well above the state minimum, which is unlikely to protect you in a serious accident.
You don’t need to pay for rental car coverage if you have another car you can drive if yours needs to be repaired after an accident. You can also skip roadside assistance if you already belong to an auto club with this coverage or it’s included in a new car warranty. You may not even need medical payments coverage if you have very good health coverage and typically don’t have passengers.
Consider the value of your car, too. If your car isn’t worth much, you probably don’t need to pay for comprehensive and collision coverage that cover damage to your car. As a general rule, consider dropping coverage if your car is worth less than the annual deductible on the coverage option.
Ask About Discounts
Vehicle insurance discounts can reduce your insurance premium by 10% to 35% or more. Every insurance company offers its own discounts, but here are some you may qualify for:
- Multi-policy discount. Almost every insurance company gives you a sizeable discount if you bundle your car insurance with other insurance like life insurance or homeowner’s insurance.
- Low mileage. If you drive between 7,000 and 12,500 miles per year, you can save an average of $84 per year.
- Homeownership. If you own your home, apartment, or condo, you can save about 6% on your insurance.
- Green vehicle. You may get a discount if you have a hybrid or electric car.
- Safe driver. If your driving record is clean, you can save up to 30%.
- Occupational and military. Military members often get a discount on car insurance. You may also earn a discount for working in a certain field as a police officer, teacher, firefighter, or a different occupation.
- Good student. Young drivers who earn good grades can get a lower rate on insurance.