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How To Save Money On Car Insurance & Lower Your Rates

How To Save Money On Car Insurance & Lower Your Rates

Discovering how to save money on car insurance can be a game-changer for your finances. In this comprehensive guide, we’ll cover various tips and strategies to lower your car insurance rates and provide helpful information to help you make informed decisions. You can secure the best deals and discounts from insurance companies with the right approach.

Last Updated Feb 07, 2024
5 min read
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Our content is written by independent writers with experience in the auto insurance industry. As part of our editorial process, each piece is reviewed by the SteadyDrive team and fact-checked by a licensed insurance agent. Through this multi-layered approach, we establish that our content is trustworthy, credible, and a valuable resource for our readers.

Ways To Lower Your Rates & Save Money On Car Insurance

  1. Car insurance discounts
  2. Bundling your insurance policies
  3. Increasing your deductible
  4. Reducing unnecessary coverage
  5. Improve your credit score
  6. Downsize your vehicle
  7. Telematics / Usage-based insurance programs
  8. Defensive driving courses
  9. Pay your insurance in full
  10. Switch car insurance provider
  11. Download SteadyDrive
Couple reviewing expenses to save money

Take Advantage of Car Insurance Discounts

Car insurance discounts are incentives insurance companies offer to reward safe driving, customer loyalty, or other factors that lower the claim risk. These discounts can significantly reduce your insurance premium, leaving more money in your pocket. Our car insurance discounts page goes into more detail about what discounts may be available with your insurer.

Safe Driving Discounts

Insurance companies often reward safe drivers with discounts, as they are less likely to be involved in accidents and file claims. By maintaining a clean driving record and adopting safe driving habits, you can qualify for a safe driver discount, ultimately lowering your car insurance premiums.

Good Driving Record

A good driving record is one of the essential factors in determining your car insurance rates. If you have a history of safe driving and minimal accidents or traffic violations, you’re considered a lower-risk driver and could qualify for lower insurance premiums.

And as we discussed previously, some insurance providers offer safe driving discounts, which can lead to savings on your car insurance policy. To maintain a good driving record, always follow traffic laws and regulations, practice defensive driving techniques, and avoid distracted driving.

In addition to good driving discounts, you may also qualify for accident forgiveness programs. These programs can protect you from rate increases due to a single accident, helping you maintain affordable car insurance rates even in the event of an accident.

Behavior-Based Insurance Discounts

Behavior-Based Discount Programs or telematics car insurance are commonly offered by numerous insurance companies. These programs revolve around your safe driving habits. By closely monitoring your driving behaviors using either vehicle-installed technology or a dedicated app, your insurance provider gauges your eligibility for a discount.

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Multi-Car Discounts

Insuring multiple vehicles with the same company can lead to significant savings on your car insurance premiums. Many insurance providers offer multi-car discounts to policyholders who insure more than one vehicle under the same policy.

Bundling multiple auto insurance policies together can lower each vehicle's premiums, making it a cost-effective option for families or households with multiple drivers. 

Therefore, it could prove beneficial to inquire with your insurance provider about any multi-car discounts that may be available to you. These can lead to substantial savings on your car insurance policy.

Low Mileage Discounts

If you don’t drive your car frequently or cover minimal distances, you may be eligible for a low-mileage discount from your insurance provider. Driving fewer miles reduces the likelihood of an accident, leading insurance companies to offer more favorable rates to low-mileage drivers.

To explore this potential discount, evaluate your driving habits and consult your insurance agent to determine if your current patterns qualify you for reduced rates.

How to Get Car Insurance Discounts

To make the most of these discounts, you should talk with your insurance provider to understand what discounts are available and how to qualify for each one.

Determine Your Eligibility:

Review the requirements for each discount and ensure you meet the criteria. Some discounts may require documentation, like proof of good student status or completion of a defensive driving course. Keep these documents handy when negotiating with your insurance provider.

Comparison Shop:

Get quotes from multiple insurance companies to find the best combination of coverage and discounts. Make sure you’re comparing apples to apples—ensure each quote includes the same coverage limits, deductibles, and applicable discounts.

Periodically Review Your Policy:

Your eligibility for discounts may change over time, so review your policy at least once a year. You may qualify for new discounts, or you may no longer be eligible for specific savings. Make sure to inform your insurance provider of any changes in your situation that could impact your discounts.

Combine Discounts Strategically:

Some discounts may not be stackable, meaning you can’t combine them for additional savings. Be strategic about which discounts you prioritize to maximize your savings. For example, if a good student discount saves you more than a low-mileage discount, focus on maintaining your GPA rather than driving less.

Home with parked car

Bundle Your Insurances

Many insurance companies offer discounts to policyholders who purchase multiple insurance products from them by bundling auto and homeowners/renters insurance.

This strategy can result in lower premiums and a more streamlined insurance management process. If you’ve not considered bundled auto and homeowners insurance, now’s the time to look into it, as it could save you.

Get a Higher Deductible

Increasing your deductible can lead to lower car insurance premiums, but it’s essential to understand the trade-off involved. A deductible is the out-of-pocket amount before your insurance coverage kicks in if you need to file a claim. 

By choosing a higher deductible, you essentially agree to shoulder more of the financial burden in the event of an accident.

The relationship between deductibles and insurance rates is inversely proportional. As your deductible increases, your insurance premiums typically decrease since the insurer’s financial responsibility is reduced. 

However, it’s crucial to carefully consider your financial situation and risk tolerance before opting for a higher deductible. While it may result in lower premiums, you must be prepared to cover the higher out-of-pocket costs should you need to file a claim.

To make an informed decision, weigh the potential savings on premiums against the increased financial responsibility associated with a higher deductible. This evaluation can help you find a balance that suits your budget and risk preferences while ensuring adequate coverage.

Reduce Unnecessary Insurance Coverage

Assess your insurance policy and consider removing any unnecessary coverages, such as collision coverage and comprehensive coverage for older vehicles. As your car’s value depreciates significantly over time, maintaining full coverage might not provide the best return on investment.

By streamlining your insurance coverage to align with your vehicle’s current value and your unique needs, you can effectively lower your overall insurance costs. This approach ensures you balance cost savings and maintain the appropriate level of protection for your particular circumstances.

RELATED: Types of Car Insurance Coverages Explained

Improve Your Credit Score

Maintaining a good credit score can positively impact car insurance rates, as insurance providers often use credit history to determine premiums. A good credit score demonstrates that you are responsible with your finances, indicating that  you present a lower risk to insure. Generally, according to the FICO scoring model, a ‘good’ credit score falls within the range of 670 to 739.

If your credit score is below this threshold, consider implementing the following quick tips to improve your credit:

Pay Your Bills on Time:

Timely payments contribute significantly to your credit score. Set up reminders or automatic payments to ensure you never miss a due date.

Reduce Your Debt:

Pay outstanding debts, especially high-interest ones. Focus on maintaining low credit card balances and avoid taking on unnecessary debt.

Keep Credit Utilization Low:

Aim to use no more than 30% of your available credit limit. High credit utilization can negatively impact your credit score.

Review Your Credit Report:

Regularly check your credit report for errors or discrepancies. If you find any, contact the credit reporting agency and the relevant creditor to have them corrected.

Maintain a Mix of Credit Types:

Demonstrating responsible management of various types of credit, such as credit cards, auto loans, and mortgages, can positively affect your credit score.

With an improved credit score, you can potentially enjoy lower car insurance premiums and better insurance coverage options. Building and maintaining a strong credit history not only benefits your car insurance rates but can also lead to better financial opportunities in other areas of your life.

Downsize Your Vehicle

For several reasons, switching to a smaller, less expensive, or safer vehicle can lead to lower insurance costs. Vehicle size plays a role, as smaller vehicles are generally less expensive to insure. They tend to cause less damage in accidents and are more maneuverable, reducing the risk of collisions.

Vehicle With Safety Features:

Vehicles equipped with advanced safety features, such as airbags, anti-lock brakes, and electronic stability control, can lower your insurance premiums. These features reduce the likelihood of accidents and injuries, making your vehicle a lower-risk in the eyes of insurance companies.

Lower Repair Costs:

Insurance companies also consider the cost of repairs when calculating your insurance premium. Less expensive vehicles typically have lower repair costs, making them cheaper to insure. Choosing a vehicle with lower repair costs can save money on your car insurance policy.

Telematics Insurance

Telematics insurance options include pay-per-mile or behavior-based insurance that offers a flexible policy tailored to your driving habits. This type of policy charges you based on the number of miles you drive, using technology to monitor your mileage. On the other hand, behavior-based telematics monitor how well you drive and provide insurance quotes based on your driving.

How Pay-Per-Mile Insurance Works:

Tracking Device:

The insurance company provides a device or smartphone app to track your mileage.

Mileage-based Premiums:

Your insurance premium is determined by a base rate and a per-mile fee. The fewer miles you drive, the lower your overall premium will be.

Mileage Thresholds:

While there isn’t a universal mileage threshold to qualify for pay-per-mile insurance, it is typically more cost-effective for drivers who travel less than the national average (about 12,000 to 15,000 miles per year). Each insurance provider may have different criteria, so knowing their specific guidelines is essential.

For drivers with low annual mileage, pay-per-mile insurance could result in significant savings compared to traditional car insurance policies. These policies reward you for driving less, as fewer miles on the road typically equates with  a lower likelihood of being involved in an accident. 

Choosing a pay-per-mile policy can also encourage more environmentally friendly habits by incentivizing reduced vehicle use. Be sure to compare different providers and their offerings to find a pay-per-mile insurance policy that best suits your needs.

How Behavior-based Insurance Works:

Tracking Device:

The insurance company provides a device or smartphone app to monitor your driving behavior, such as speed and braking patterns.

Behavior-based Premiums:

Your insurance premium is determined by how well you drive. The safer you drive, the lower your insurance premium can be.

Monitored Driving Behaviors:

Some of the driving behaviors that can be monitored include, but are not limited to:

  • Accelerating or braking quickly
  • Driving at high speeds
  • Using your phone while driving
  • Driving at night, on the weekends, or during bad weather

RELATED: Telematics Insurance: What Is It & Is it Right For You?

Take A Defensive Driving Course

Defensive driving courses are designed to teach drivers how to anticipate and react to potential hazards on the road, making them safer and more responsible drivers. These courses typically cover traffic laws, road signs, accident prevention techniques, and strategies for dealing with aggressive or impaired drivers.

There are many multi-layered benefits of taking a defensive driving course, as it relates to saving money on car insurance, including:

Insurance Discounts:

Many insurance companies offer discounts to drivers who complete a defensive driving course, as it demonstrates your commitment to safe driving. The discount amount may vary between insurance providers, so it’s essential to ask your insurance agent or provider about the specific discount and eligibility requirements.

Improved Driving Skills:

Defensive driving courses teach valuable skills and techniques that can help you avoid accidents and stay safe on the road. These skills include scanning the road ahead for potential hazards, maintaining a safe following distance, and understanding how to react in emergencies.

Clean Driving Record:

By learning and applying defensive driving techniques, you are setting yourself up to be less likely to be involved in accidents or receive traffic violations, which ought to help you maintain a clean driving record. A clean driving record is essential for lower insurance premiums, as insurance providers often reward safe drivers with lower rates.

License Points Reduction:

In some states, completing a defensive driving course can also help you reduce points on your driver’s license, resulting in lower insurance premiums and helping you avoid license suspension.

Enhanced Confidence:

Completing a defensive driving course can give you more confidence on the road, as you’ll be better equipped to handle challenging driving situations and make safer decisions.

Various organizations, including private driving schools, community colleges, and online providers, offer defensive driving courses. Consider accreditation, course format, duration, and cost when selecting a defensive driving course.

Pay Your Insurance Bill in Full

Paying your insurance premium in full rather than installments can lower overall costs. Many insurance companies offer discounts for policyholders who pay their premiums in a single lump sum, as it reduces administrative costs and ensures timely payment. By paying your insurance bill in full, you can enjoy both convenience and savings.

Switch Your Car Insurance Company

Shopping around for new insurance coverage can help you find the best deals. Comparing car insurance quotes from multiple insurance providers can reveal opportunities for savings and improved coverage. 

Another way to keep costs lower when switching car insurance companies is to change BEFORE your current policy expires, avoiding any lapses.

Leverage SteadyDrive to Secure Lower Insurance Rates

Utilizing SteadyDrive can play a significant role in helping you save money on car insurance. Our mobile app uses your smartphone’s technology to analyze your driving habits and offers exclusive car insurance discounts to good drivers. 

SteadyDrive helps demonstrate your low-risk driving behavior to insurance providers. Here’s how SteadyDrive can save you money:

Monitoring Driving Habits:

SteadyDrive monitors and analyzes your driving habits over a few weeks. This data can tell a few things, including whether you are speeding, using your phone while driving, or hard braking. These kinds of events contribute to your driving score, with fewer risky events leading to a higher driving score.

Offering Better Rates:

Traditional insurance pricing is based on factors like age and credit score, which may not accurately reflect your driving ability. SteadyDrive scores your driving over a test drive period. If you qualify based on your good driving, a leading insurer will offer a quote that considers how YOU drive. As a good driver, you may save hundreds of dollars a year.

Insurance Companies:

SteadyDrive works with leading insurance providers to help you find the best rates based on your driving performance.

Using SteadyDrive, you can demonstrate to insurance providers that you’re a safe motorist, that could make you eligible for lower insurance rates. In addition to potential savings, using SteadyDrive can help you develop safer driving habits, which can reduce your risk of accidents and claims.

RELATED: How SteadyDrive Works

Conclusion

Saving money on car insurance is achievable with the right strategies and knowledge. By taking advantage of discounts, adjusting your coverage, and making informed decisions about your insurance policy, you can enjoy lower premiums and better protection.

Remember, researching various insurance providers and understanding the discounts and savings available is the key to finding the best rates. By following these tips, including exploring options like SteadyDrive, you can save money on car insurance and enjoy lower premiums in the long run.

Additional Readings:

Disclaimer:

SteadyDrive is not an insurer or an insurance agent or broker. SteadyDrive does not provide you with an insurance policy, so make sure that you have insurance coverage while you drive. Please contact your insurer or an insurance agent or broker (if applicable) directly regarding questions you may have pertaining to auto insurance coverage. For more details, see SteadyDrive’s Terms of Service.

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Good drivers can save hundreds per year on auto insurance.

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Whether you’re looking to purchase car insurance for yourself or your child, you may have already found that insurance premiums can be surprisingly expensive. But you may not have realized there’s a whole world of discounts that might be available to you. Here’s a guide to possible savings on car insurance rates.
Driving safely should always be your top concern when you're behind the wheel of a car - whether alone or with passengers. With so many potential hazards on the road, staying alert and taking precautions to prevent accidents is essential.

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