How to Lower Car Insurance

There are many ways how to lower car insurance, such as checking the discounts you qualify for. However some commonly used tactics, like lowering your liability coverage, can actually end up costing you more.

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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 24, 2021

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Here's what you need to know...

  • There are many ways to save money on car insurance
  • Don’t lower your limits so much that you’re not adequately protected
  • Look for discounts
  • Shop around and compare companies

There are many suggestions out there on the best ways to save money on car insurance. However, which ones actually save you money and which could end up costing you much more?

As prices for insurance continue to soar, it’s important to know the right ways to save. Today everyone is looking at ways to save money.

Everywhere you look from magazines to newspapers to articles found on the Internet, there are ways to reduce your expenses. Some are really good and others are not so good.

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Ask Questions and Save

Your local insurance agent is the best starting point to reduce car insurance costs. According to USA Today, calling your agent before your policy is due to renew could lead to an early shopper discount.

Other discounts that could lower your rates include:

  • Car safety features
  • Loyalty discounts
  • Membership discounts

When you call, ask them to lower your rate.

Ask your insurance agent if there are discounts for air bags, automatic seat belts, anti-lock brakes, and anti-theft devices or for storing your car in a garage when not in use.

They will know if there is a new policy is available that could save you money or if they can lower the rate on your current policy.

By having these devices in your car or taking extra precautions to protect your car from harm, the risk to the insurance company is reduced and they can then pass along savings to you.

Have you been with the same company for a long time? Be sure to ask your agent if they have a loyalty discount.

If you belong to an organization, such as a teachers union or professional organization, you may qualify for insurance with lower rates through that organization.

This insurance is generally only available to individuals with memberships to these organizations. Check with your organization to see if they offer this benefit to their members.

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Ways to Save


  • Less driving If you have moved, are driving fewer miles to work, or have changed your routine and no longer drive as many miles as you used to, you may qualify for a lower rate
  • Higher deductible For people who have a very low deductible, raising that deductible can save you money. Be sure to have an emergency fund that can cover the increase in your deductible if you have an accident
  • Policy adjustment Remove comprehensive and collision coverage from your car’s policy if you own your car, especially if you have a fund set up that is large enough to replace your car should you be in an accident. Kelley Blue Book is a great place to see what your car is worth

Something to keep in mind is that during these tough economic times, many drivers are running around uninsured.

If you are involved in an accident with someone who does not have insurance and has no way to pay for the damages to your car, having collision coverage may be the only way you will have to replace your car.

Before you decide to drop comprehensive coverage, it might be wise to find out exactly how much extra this extra coverage is costing you.

You might find that the coverage is as little as pennies a day. Comprehensive coverage covers the theft of your car, any electronic equipment in the car, and damage caused by severe weather.

One big mistake to avoid is lowering your liability coverage. It is very important to review what your current levels of liability are, and compare them to your current financial situation.

If your current financial worth is higher than these levels, it can be wise to increase these levels to protect all your assets but dropping these rates puts you at risk of losing all you have or may have in the future.

Shop Around

Sometimes the best way to reduce car insurance costs is to shop around. The Internet makes finding lower prices as easy as pushing a button.

Use caution, however when looking at the different deals offered. Sometimes the best deals aren’t always best in the long run.

According to the Insurance Information Institute, don’t look only at the price when looking at the different companies; also look at their customer service record.

Call your state’s insurance department to find out what they know about the company. Check online with A.M. Best, a financial rating company to find out the company’s financial stability.

Conduct an Internet search to read some blog articles to hear what others drivers just like you are saying about their experiences with the company you are considering.


Insurance companies want your business and they’re willing to offer you discounts to get as much of your business as they can.

If the company is large enough to have multiple lines of insurance, purchasing all your coverage from one place can end up saving you money.

This also saves the hassle of having several policies with several different smaller companies.

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The Car You Own

The type of car you own plays a major factor in determining the price you will pay for insurance.

If you are in the market for a new car, first check with your local agent to see which cars garner the lowest rates.

Sports cars and specialty vehicles often generate the highest prices for insurance because they cost the most to repair and are the ones most often stolen.

The greater the risk to the insurance company, the higher the cost to you.

Properly maintaining your car can affect how much you pay for insurance. A properly maintained car is less likely to be involved in an accident due to mechanical failure.

Fewer accidents equate to lower insurance costs.

Be Smart and Save Money

Many companies offer people who take a defensive driving course a discount.

The State of New Jersey Motor Vehicle Commission notes that driving courses remove two points from individual licenses at the completion of these types of courses thus reducing insurance costs.

Lower points equate to lower prices on your car insurance.

These classes also teach their students how to drive defensively, which ultimately saves the insurance company money, as these students are less likely to get into an accident.

If you have a teenager on your policy, check to see if your company offers a good student discount.

Some companies are rewarding teens for being responsible and getting good grades by lowering their car insurance rates.

Avoiding accidents is the best way to lower your cost for insurance. The next time there is a storm warning or there are road advisories, choose to stay home.

Reducing your risk of having an accident by making wise choices about when to drive can help reduce your insurance rates.

How You Pay Equals Savings

Check with your insurance company to see if they offer a lower rate to their clients who choose to pay electronically. Paying online is simple and easy.

It eliminates the mountain of paperwork for the company that saves them money, which they turn around and offer to you in savings.

How often you pay can also have a substantial impact on how much you can save. When you pay quarterly instead of monthly, you save a little bit. When you pay annually, your savings can be much higher.

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Maintaining Good Credit

Finally, one very proactive step you can take to save money on your car insurance is to ensure that you are paying all your bills on time.

According to Fox Business news, many insurance companies are considering a person’s credit score in determining how much to charge for insurance coverage.

Insurance companies are all about risk analysis. One factor in this is whether the person applying for insurance is going to act in a responsible manner.

Credit scores are considered a good indicator of personal responsibility.

Insurance companies feel that if you are responsible enough to pay your bills on time, you will be responsible in other areas of your life, like driving.

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