10 expert tips for saving on car insurance

My friend Lynn works for a major U.S. insurance company. I recently asked her for tips to help people save money on auto insurance. I expected maybe a few quick ideas, but she went above-and-beyond with the following detailed list. If you own a car, you should read these tips. For readability's sake, I haven't blockquoted this, but it's all Lynn.

Note that every insurance company is different — not all of these ideas work everywhere. The first thing you can do to save money on auto insurance is to self-insure as much as you can afford. Do this in the following ways:

  • High deductibles. Everyone preaches this, yes, but it's usually the easiest way to cut costs. Usually. (If your car is over ten years old, the savings may be minimal.)
  • Remove towing. Good maintenance and planning can save you money. Don't run out of gas. Don't lock your keys in your car. Make sure you have a spare and know how to change it. Sometimes your car will break down, but if your car is well-maintained, it won't happen often. You pay $10 – $30 a year over the life of your policy and one tow costs $100. Note that in the event of an accident, towing is almost always covered under collision.
  • Remove car rental. Small economy cars cost about $20 – $25 per day to rent. Car rental is $20 – $40 per year. Play the odds. If you rent a car on vacation, your insurance will cover you while driving that car. Don't pay for the extra coverage. The only things it offers are:
    1. Zero deductibles. You go all year long with your deductibles, why change now? Also, if you pay for the car with a credit card, they may pay for any out of pocket in the even of an accident.
    2. Downtime coverage. Downtime means that while the rental car you wrecked is in the shop being repaired, it can't be rented out to other customers and they can ding you for the daily fee. This may be an issue if they can show that all other cars were rented out and they lost money because of you — Hawaii is notorious for charging this. But, again, it's a risk you might decide to self insure rather than pay $21 a day for the insurance.

Aside from self-insuring, there are other steps you can take to save on car insurance.

  • Shop ahead. Before you buy your next car, check on insurance. Many people assume that SUVs are expensive and Neons are cheap. This is not necessarily true. Some companies will increase your liability based on the cost of damages your type of vehicle may inflict — big trucks cause big damage. However, they also rate the autos based on how likely they are to be damaged in an accident, how often they are stolen, and how badly driver/passengers are injured. That Neon (or Jetta or Honda) is going to be a lot more expensive than you think. Many companies will have websites that will give you lists of safe and lower priced cars. (Saturn is a low insurance car because it has dent-resistant doors.)
  • Think twice about after-market gizmos. If your vehicle is totaled or stolen, the insurance company will determine a fair market or actual cash value. They will look at your vehicle as a “whole package.” Even if you paid for $3,000 in after market items (wheels, spoilers, stereos, exhaust, etc.) they may only add $1,000 in value to your vehicle. It's not dollar for dollar.
  • Have all of your insurance in one place. Often, the more types of policies you have, the more you save in discounts.
  • Find out if your insurance company offers any low-mileage breaks that you qualify for.
  • Can you take a safety-driving course? Some companies offer a discount for this.
  • Do NOT pay monthly. Your carrier will charge anywhere from $3 to $5 per month for this type of billing. Pay every six months if possible. If you must pay monthly, do an auto pay — the charges are less because they only send a bill if the amount changes.
  • This might not be a money saving tip, but insurance companies are state regulated. They must file their rates with the state and be able to justify any increases these are public record as are any types of complaints or fines. For example, if you're in Oregon, you can check out your company and/or agent at http://insurance.oregon.gov/.
  • Most companies now use aspects of your credit to determine your rate. It is illegal for them to do this mid-term — as long as your policy is continuous without any lapses, they can't use external info to change your rate. They can only use claim and ticket info. However, all newly added vehicles can be affected by credit. If you have good credit, this may be to your advantage. You are allowed to request that they re-check your score once per year. However, whatever the score is, you're stuck with it. If it comes back bad and it raises your rate: too bad. But, if you have a policy that was written when your credit wasn't so great, request that they check it again after things look better.

Save Money on Your Auto Insurance

These are fantastic tips, full of great ways to save money on auto insurance. Thanks to Lynn for the advice!

More about...Transportation, Insurance

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Allie
Allie
14 years ago

I disagree with removing the towing. My towing costs me about $6 a year. The rest of my insurance costs me about $460 a year (I have a 15-year safe driving record and have only used one insurance company in my lifetime) for full coverage. I would say review your policy and each cost carefully before cutting things.

Ava
Ava
6 years ago
Reply to  Allie

I will say this if you don’t ask them for the discounts THEY WILL NOT TELL YOU THEY ARE THERE FOR YOU. Many of you have probably never asked and assumed you automatically got them. The answer to that is NO. If you have been with a auto insurance company for 3 years accident and ticket free you should get a discount but again if you don’t ask you wont get it. If they don’t give it to you, shop around (i found $25/month at Insurance Panda). If you are not working and don’t drive you vehicle like normal make… Read more »

LTR
LTR
12 years ago

One of the best ways to lower your auto insurance is to shop your rates around. Most people stay with the same insurance company their entire life. This can be costly unless your insurer gives big customer loyalty discounts. To save money, you should shop your rates around occasionally. Doing so can help you lower your premiums.

Ryan
Ryan
12 years ago

I wish I had $220 insurance. I am a 25 yer old male (24 last time I renewed my coverage) living in New Orleans (a city whose potholes are notorious for DESTROYING cars) with an accident on my record (I was 19). I’ve shopped and shopped and shopped. I pay every 6 months. I’ve managed to get my bill down to… $400 a month. yup. I am jeaslous of all of you.

Mark
Mark
7 years ago
Reply to  Ryan

I switched to A.A.A. I didn’t even realize they sold Auto Insurance…THEY DO! I thought they only sold Roadside Assistance..It saved me a lot of money per year..Check em’ out.
Mark

Kat
Kat
7 years ago
Reply to  Ryan

try 763 a month 🙁 I’m slowly dying

asciib
asciib
10 years ago

In a nutshell, notify the insurance company that you use your car for leisure and not for commute, this makes a lot of difference. You ask for good drivers discount, have a multi discount, ask for low-mileage breaks and a safety driving course will certainly help. If our credit improves, check with your insurance and also with good record, some local insurance companies do sell cheap without compromising customer care.

Sarah Lin
Sarah Lin
10 years ago

The worst thing about driving is the cost; there’s gas, oil, the all-important CD player, and something that takes a really big bite out of your wallet – insurance. Everyone in the state of Washington is required to have basic liability insurance. Since you have to have it, here are some basic tips on how to get the best deal and save yourself (or your parents) some money.

Randy Palmer
Randy Palmer
10 years ago

I would agree with the above psoters. You have to work and get quotes every six months.. That is what works for me. Here in Michigan, rates seem to fluctuate quite a bit, and you can save by checking every renewal that you.

Taylor @ AutoFoundry.com
Taylor @ AutoFoundry.com
7 years ago

Wow, I knew that insurers could use your credit score to help them set your rates, but I didn’t realize you could ask them to recheck your score once per year. For drivers with good credit – or those who have been steadily building or rebuilding their credit – this could result in some easy and unexpected savings. Surely worth the temporary dip in score from the credit inquiry itself, I’d think.

Chime @ InsuranceSavingsTips
Chime @ InsuranceSavingsTips
7 years ago

Great article! That said; there are many other subtle steps you can take to reduce your auto insurance rates by a huge margin. Consider the following…

1. Opt for storage insurance if you are NOT driving all year round.

2. Double check your VIN. A mistake in your VIN could make you pay much more. While it may be through no fault of yours, it could still make you pay a lot more.

3. Opt for a “green vehicle”. With the awareness on global warming, note that many insurers have been compelled to give discounts to environmentally friendly vehicles.

Shane
Shane
6 years ago

I agree with the previous comment. A lot of times, changing something isn’t worth the risk. Changing my deductible from $500 to $1000 nets me a savings of less that $75 a year. Which means that it would take me more than 10 years at that cost to equal one deductible payment.

George
George
6 years ago
Reply to  Shane

Shane. Your math is flawed. You have to consider the differences together. You are raising your deductible by $500, not $1000

sarvajeet bodas
sarvajeet bodas
6 years ago

Hi,
Very nice article on saving premium on car insurance. However, would like to add that No Claim Bonus (NCB)will also reduce car premium

Auto Insurance Morehead City NC
Auto Insurance Morehead City NC
5 years ago

You can also choose six month policy. It helps, when you don’t have all of the money for a complete year’s premium.

claire
claire
5 years ago

buy a car from a reputable used car person around your area- buy it cash – car payments are totally unnecessary- a decent car will go 200-300 thousand miles – if you are concerned about what others think, ask yourself, are they paying your bills?

and of course take public transportation whenever possible, bike and walk.

Millie Hue
Millie Hue
2 years ago

It really helped when you said that paying every six months will cost less. I guess will choose this mode of payment when I buy a car insurance for my teen’s first car. We are just tight on budget right now since we shelled out a lot for the repair of our roof, but we still plan to give my son a car as his birthday gift.

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