4 Ways to Lower Your Auto Insurance Rates

Lower your auto insurance rates by taking advantage of discounts, fixing your credit profile, taking on more risk, and shopping around. One of the easiest ways to shop around is to use our free tool below.

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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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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®

UPDATED: Jan 26, 2021

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Here's what you need to know...

  • Insurance companies offer incentives and discounts for a variety of reasons
  • Credit scores and insurance premiums go hand-in-hand
  • If you want to lower your insurance cost, you may choose to increase your deductible
  • Shopping around is the best way to ensure you get the most affordable quote

Although buying car insurance is a necessary step in owning a car, you don’t have to pay more than you should for insurance premiums. Most people simply forget about their insurance premiums and just pay them without thinking twice.

If money is tight and you could use some cash in other areas, figuring out how to save money on your auto insurance premiums should be a priority. Here are four of the best tips to keep in mind when you want to get the lowest car insurance rates available in the market.

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1. Get All the Discounts

When it comes to shopping for auto insurance, you may notice that there are a number of discounts that you could qualify for.

Some insurance agents and insurance companies will not volunteer this information because they want to charge you as much as they can get away with. If you are proactive and ask about these potential discounts, you can save quite a bit of money overall.

For example, if you are a student, you may be able to get a student discount on your auto insurance.

If you have taken a driver’s education course, you could qualify for a different discount. Some insurance companies will give you a discount just for having some other kind of policy with them. Other insurance companies give discounts if you make your payments on time.

You might even get a discount if you agree to allow the insurance company to deduct your payment from your bank account directly.

Ask the insurance agent or the company that you’re working with about any possible discounts.

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2. Fix Your Credit Profile

Although you may not think that your credit history and your insurance rates should be related to one another, the insurance companies would beg to differ.

Insurance companies know that there is a correlation between people who have bad credit scores and people who file a lot of insurance claims. Because of this, they charge people with bad credit scores more for insurance premiums.

This means that if you are in the market for auto insurance, you should first check out your credit report.

If there are some glaring problems with your credit report, do everything that you can to fix them before shopping for insurance. In some cases, credit bureaus can report information incorrectly on credit reports.

If you see something on your credit report that is not accurate, you can contact the credit bureaus and get the information fixed.

If you see that your credit score is suffering because you have too much debt in relation to the amount of credit that is available, paying down your debt can make a big difference.

Another important factor to keep in mind is that your payment history has a drastic impact on your credit score.

This means that you should always make your payments on time so that your creditors will report this information to the credit bureaus.

Once you build up your credit, you should qualify for lower insurance rates. Not all car insurance companies check their customers’ credit scores, but it is always wise to check your credit score before purchasing a new car insurance policy.

3. Take on More Risk

Car insurance is all about transferring risk. When you buy car insurance, you transfer the financial risks of driving a car over to your insurance company. In exchange for transferring this risk, you have to pay insurance premiums.

If you want to transfer more risk, you have to pay more money to the insurance company.

If you’re interested in saving more money, you could choose to take on more of the risk alone.

For example, if you decide to raise your insurance deductible, you are taking on more of the financial risk that comes with driving. If you have a wreck that is your fault, you’ll have to pay more to get your car fixed.

Since you are taking on more of the risk, the insurance company will not charge you as much in premiums.

There are more reasons to increase your auto insurance deductible.

Besides raising your deductible, you can also change some other aspects of your policy to save money on premiums.

If you change the liability insurance limits on your policy, it can also affect your premiums. If you take off comprehensive coverage or collision coverage, you can also lower your premiums.

All of these steps will transfer more risk over to you, but they will also help you save money on your premiums.

4. Take the Time to Shop Around


As with almost anything in life, taking the time to shop around can help you save quite a bit of money.

If you don’t take the time to shop around, you can’t be sure whether you are getting the best deal on auto insurance. There are many different auto insurance providers out there in the market, and all of them have different prices.

While they can be very competitive, sometimes you end up paying much more than you should because you get complacent.

Shopping around in a thorough manner can take some work. You can start by talking to an insurance agent in your area or by calling them on the phone and getting quotes. You can also visit the websites of prominent insurance companies to get quotes quickly.

One of the easiest ways to shop around is to use insurance comparison websites. With these sites, you simply enter some personal information, and they come back with multiple insurance quotes at the same time.

Once you do a little bit of shopping around, you should be able to find the best deal and save a little bit of money.

Saving money on auto insurance is not difficult if you’re willing to be proactive. Those who sit idly by are the ones who end up paying more money than they should.

Enter your ZIP code below to compare multiple car insurance quotes for FREE!

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Enter your ZIP code below to view companies that have cheap car insurance rates.

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