6 proven ways to lower your car insurance premiums

Want lower car insurance premiums? Here’s how to do it. (iStock)

Car insurance is a necessary cost for any car owner. Not only is it required by law in most states, but it also protects you from liability and expensive damages if you’re ever in an accident.

But having a good car insurance policy doesn’t have to mean paying sky-high premiums. In fact, many car owners are actually overpaying for their insurance and don’t even know it.

What can you do to lower your car insurance premiums?

Fortunately, insurance premiums are based on a number of factors, and it’s actually quite easy to lower yours and reduce overall expenses. Think you may be paying too much for your car insurance? Here are six strategies that might help.

  1. Shop and compare insurance companies often
  2. Don’t pay for insurance you don’t need
  3. Bundle your insurance plans
  4. Increase your credit score
  5. Raise your deductible
  6. Be a good driver

1. Shop and compare insurance companies often

Auto insurance isn’t something you should set and forget. When your situation changes — even slightly — you’ll want to shop around and be sure you’re still getting the best deal.

"Rates can differ by a few dollars to a few hundred," said P.J. Miller, an independent insurance agent at Wallace & Turner Insurance. If you have several cars and higher-risk drivers, the difference could be in the thousands, he said.

If you haven’t checked how your current policy measures up to other options lately, use Credible to shop around now. Comparing your options regularly, especially when your credit score changes or you could be eligible for a new discount, is critical if you want the best rate.

2. Don’t pay for insurance you don’t need

You’ll, of course, need the minimum insurance required by your state and auto loan company, but beyond that, be choosy about the coverages you add on. Though things like underinsured motorist coverage, towing and rental car assistance can be nice, they’ll also make a marked difference on your premium.

"Eliminate coverage when you don’t need it," Miller said. "Older cars might not need collision coverage. If you haven’t already removed the physical damage coverage — comprehensive and collision — to reduce your cost, it can be a consideration."

Start with the coverages you really need, and then weigh your other options carefully. For example, if you don’t drive the vehicle much, you probably don’t need roadside assistance. If your car’s on the older side, collision coverage — which will replace your car if it’s totaled — likely isn’t necessary either.

Credible can help connect you with an insurance broker, which can compare insurance rates instantly.


3. Bundle your insurance plans

Most insurers offer discounts if you have several policies with them. So if you own a home or a motorcycle, or you just need life insurance, consider using the same company for all your policies.

"Combine your coverage," Miller explained. "Bundle your auto coverage with your home or renters' insurance policy. Showing your loyalty to one insurer could help you land a discount, especially if you have multiple policies."

If you’re looking to compare premiums and discounts, get started on Credible. The rate shopping marketplace allows you to get several quotes at once using one single form.

4. Increase your credit score

"Most carriers use credit as a portion of the rate-setting process, where permitted by law," Miller said. "While it is supposed to be a portion of the rate calculation, most believe it plays a significant role in determining the price."

Put simply? Maintain a good credit score if you want a low premium.

To do this, pay your bills on time, every time, and work on whittling down your balances. You should also pull your credit report and let the credit bureau know of any errors, and make sure to settle any collections or overdue accounts, too.


5. Raise your deductible

An easy way to reduce any insurance premium (car, home, rental, etc.) is to increase your deductible — or the amount you pay per claim before your insurance kicks in their portion.

Generally speaking, the higher your deductible — meaning the more you pay out of pocket — the lower your premium will go.

If you go this route, say changing your deductible from $500 to $1,000, be sure you stow away a little extra cash in the bank just in case. If you do have to file a claim, that’s an extra $500 you’ll need to contribute before your insurance will assist with the damage.

6. Be a good driver

There are two reasons being a good driver helps your premiums. First, it can qualify you for a discount. Many insurers offer premium reductions for claim-free periods — sometimes significant ones, too. According to Miller, "being a safe driver can lower your car insurance by approximately 5%."

Because claims and tickets send premiums rising, smart driving habits also protect the rate you already have.

"Slow down," Miller cautioned. "Speeding tickets can dramatically impact your rates."

The bottom line

Car insurance rates vary based on a number of factors, including your credit, driving habits and the insurance company. Use a tool like Credible to shop around and lower your car insurance premium today.