How to Save on Car Insurance: Smart Ways to Lower Your Rate - NerdWallet (2024)

Car insurance costs $179 a month on average, according to NerdWallet’s rates analysis. But that doesn’t mean that you’ll pay this price.

Companies base your rate on a variety of factors from the kind of car you drive to how long you’ve been insured. By understanding what affects your auto insurance costs, you can get good coverage without breaking the bank.

Here are eight ways to help you save money on car insurance.

1. Shop around

Although auto insurers use similar factors like age, driving history and location to calculate your car insurance costs, they weigh these factors differently. That’s why it’s important to compare rates.

To analyze the importance of shopping around, NerdWallet compared rates for 35-year-old drivers buying full coverage insurance from the largest insurers in the nation. We found that costs vary by hundreds of dollars a year. Note: Although it’s one of the largest insurers in the country, Liberty Mutual is not included in our analysis because it does not provide rate data.

In fact, nationwide, good drivers with good credit can save more than $207 a month, on average, by switching from the most to the least expensive insurer. And savings can be even bigger for drivers with a recent at-fault accident or poor credit — almost $214 and $153 a month on average, respectively.

But these rates are nationwide. Your rate will vary depending on your location. For instance, a company with the lowest rates in one state might not be the cheapest in another. And the cheapest company for a good driver with good credit might not be cheapest for someone with, say, a DUI or a recent accident.

To lower your car insurance rates, get quotes from several companies once a year. NerdWallet’s car insurance comparison tool can also help you find the best deal.

Why you can trust NerdWallet: Our writers and editors follow strict editorial guidelines to ensure fairness and accuracy in our writing and data analyses. You can trust the prices we show you because our data analysts take rigorous measures to eliminate outliers and inaccuracies in pricing data, which include rates from every locale in the country where coverage is offered and data is available. When comparing rates for different coverage amounts, ages and backgrounds, we change only one variable at a time, so you can easily see how each factor affects pricing. Read our methodology.

2. Take advantage of car insurance discounts

Every insurance company offers special ways to save on your car insurance premium. To make sure you’re getting all the discounts you’re entitled to, check out your insurer’s discounts page and ask your agent to review your possible savings.

Our car insurance discounts page gives more details on what insurers offer different discounts. But remember to compare quotes based on your own situation. Just because an insurer offers multiple discounts doesn’t mean it offers the lowest overall price.

3. Drive safely

Speeding tickets, accidents and other traffic violations drive up car insurance premiums. If you get a ticket, you may be offered the opportunity to go to traffic school to get it dismissed or reduce the number of violation points that go on your driving record. If you can keep the violation off your driving record, the time spent in class could lower your car insurance up to $546 per year on average, according to our analysis.

4. Drop car insurance you don’t need

If your car is a clunker, it might be time to drop collision and comprehensive insurance, which pay for damage to your vehicle. Collision insurance pays to repair damage to your car if it crashes into another vehicle or object, or flips over. Comprehensive insurance pays if your car is stolen or damaged by storms, vandalism or by hitting an animal such as a deer.

If your car is worth less than your deductible plus the amount you pay for annual coverage, then it’s time to drop them. Collision and comprehensive never pay out more than the car is worth.

Evaluate whether it’s worth paying for coverage that may reimburse you only a small amount if anything.

But if you drop collision and comprehensive, remember to set aside the money you would have otherwise spent. Put it in a fund for car repairs or a down payment on a newer car once your clunker conks out.

5. Drive a car that’s cheap to insure

Before you buy your next car, compare car insurance rates for the models you’re considering. The vehicle you drive affects your car insurance premium, particularly if you buy collision and comprehensive coverage. Safe and moderately priced vehicles such as small SUVs tend to be cheaper to insure than flashy and expensive cars.

6. Increase the deductible

You can save money on collision and comprehensive insurance by raising the deductible, the amount the insurance company doesn’t cover when paying for repairs. For example, if you have a $500 deductible and your repair bill is $2,000, the insurer will pay out $1,500 once you’ve paid the $500.

Savings vary by company, so compare quotes with different deductible levels before you decide.

7. Improve your credit

Your credit can be a big factor when car insurance companies calculate how much to charge. It can count even more than your driving record in some cases. But this isn't the case in California, Hawaii, Massachusetts and Michigan, however, where insurers aren’t allowed to consider credit when setting rates.

8. Don’t drive a lot? Consider usage-based insurance

If you don’t mind having your driving behavior tracked, consider usage-based or pay-per-mile insurance to lower car insurance costs. To participate, you use an app or install a small device in your car that transmits data to the insurance company.

Metromile, Allstate, Nationwide and Mile Auto all offer pay-per-mile insurance in certain states. With this coverage, you typically pay a base rate plus a per-mile rate. So if you don’t drive long distances or commute daily, it could be a good option.

Several other insurers, including State Farm, Progressive, Safeco and Travelers, offer usage-based insurance programs that track behaviors like speeding and hard braking. They offer discounts or reduced rates for safe driving.

It’s possible to get a discount just for signing up for some of these programs, so they might seem like a no-brainer. However, some insurers may increase your rates if you’re deemed an unsafe driver. Make sure to check what behaviors are tracked and how your rate is affected before enrolling.