12 ways to save money on car insurance

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Car insurance rates have climbed steadily in recent years, driven by higher repair costs, more expensive vehicles and an increase in accident claims. The good news is that you’re not stuck with the first rate you’re quoted. From adjusting your coverage to fine-tuning your driving habits, there are plenty of ways to lower your premium — without cutting the protection you need.

Below are some of the most effective strategies to help you keep more money in your pocket while staying fully insured.

Shop around and compare quotes

Insurance companies don’t all price risk the same way. Your driving record, ZIP code, credit score, and even your car’s safety features are weighed differently by each insurer, which is why quotes can vary by hundreds of dollars. Comparing multiple quotes — at least three — gives you a clearer picture of what’s fair and competitive.

Don’t just look at price alone. Review each quote for coverage limits, deductibles, and any extras included, like accident forgiveness or roadside assistance. Online comparison tools can simplify the process, and switching insurers is easier than most drivers think.

Raise your deductible

Your deductible is what you pay out of pocket when you file a claim, and choosing a higher one can reduce your premium by 10% to 30%. For example, raising your collision deductible from $500 to $1,000 can yield meaningful savings each year.

Before increasing it, make sure you have enough in an emergency fund to comfortably cover the new amount. The goal is to strike a balance between affordability and savings — you don’t want a deductible so high that an accident becomes a financial setback.

Bundle policies

Combining your auto insurance with homeowners insurance can lead to major discounts. Insurers often reward customers who bring multiple policies under one roof with savings up to 25%.

Beyond the discount, bundling offers added convenience. You’ll deal with a single company for billing, customer service, and renewals — and you may qualify for loyalty perks over time. Always confirm that each policy still provides the best value individually, though. Sometimes, mixing insurers still results in a better overall price.

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Take advantage of discounts

Auto insurers offer dozens of discounts, but many go unused simply because policyholders don’t know they exist. Common ones include good driver, good student, defensive driving, low-mileage, paperless billing, and automatic payment discounts.

It’s worth calling your insurer annually to review which discounts you already have and which you might qualify for. Many companies also offer loyalty or multi-vehicle savings, so if you have more than one car in your household, make sure they’re insured under the same policy to maximize savings.

Maintain good credit

In most states, your credit score plays a surprisingly large role in determining your car insurance rate. Insurers use credit-based insurance scores to help predict the likelihood of future claims, and statistically, drivers with higher credit scores tend to file fewer claims.

However, a handful of states — including California, Hawaii, Massachusetts, and Michigan — prohibit insurers from using credit information to set rates. If you live elsewhere, maintaining good credit can still make a measurable difference. If your score has improved since you bought your policy, ask your insurer to re-run your rate. Paying bills on time, keeping credit utilization low, and minimizing new credit applications can all help you qualify for lower premiums over time.

Drive safely and stay claim-free

Your driving record has a direct impact on your premium. Avoiding accidents, speeding tickets, and traffic violations keeps your record clean and your rates low. Many insurers also offer safe driver discounts for those with multiple claim-free years.

If you’ve recently had a violation or accident, rates typically drop again after three to five years of clean driving. Some insurers also offer usage-based programs that monitor your driving habits — such as braking, speed, and mileage — and can reward you with lower rates for safe, consistent behavior.

Reevaluate your coverage

The coverage that made sense when your car was new may no longer be necessary after several years. If your vehicle’s value has dropped substantially, collision and comprehensive coverage might not be worth the cost. For older vehicles worth less than your deductible plus your annual premium, it may make financial sense to scale back.

However, think carefully before cutting coverage entirely. Accidents, storms, or thefts can still lead to large out-of-pocket expenses. Reassess your coverage annually based on your car’s value and your ability to absorb unexpected losses.

Limit optional add-ons

Add-ons like rental car reimbursement, roadside assistance, and gap insurance can be valuable — but they also add up. Review your policy for extras that may overlap with existing benefits you already have through a credit card, car manufacturer, or auto club membership.

Removing unnecessary add-ons can save money without reducing essential coverage. If you’re unsure which extras are worth keeping, ask your insurer to break down the cost of each optional feature so you can make an informed choice.

Drive less

Fewer miles generally mean fewer risks — and insurers reward that. If you drive less than 7,500 miles a year, you may qualify for a low-mileage discount or be eligible for a pay-per-mile policy that bases your rate on actual driving data.

This can be especially useful for remote workers, retirees, or city dwellers who use public transit most of the time. Just be sure to update your insurer with your accurate annual mileage to make sure you’re getting every discount you deserve.

Improve your vehicle’s security

Cars with advanced security systems are less likely to be stolen or vandalized, which insurers factor into pricing. Installing an alarm, tracking system, or immobilizer can lead to small but meaningful premium reductions.

You can also save by simply parking in a garage or well-lit area rather than on the street. Check with your insurer to see which anti-theft devices qualify for discounts and whether they offer a verification process for security upgrades.

Review your policy annually

Even if you’re happy with your insurer, it’s smart to review your policy once a year. Life changes — like moving, getting married, or improving your credit — can affect your rate. Updating outdated information can lead to instant savings.

Annual reviews also give you a chance to catch new discounts or reconsider your coverage needs. Treat your renewal as an opportunity to shop around, compare quotes, and ensure your policy still matches your current financial situation.

Ask your insurer about usage-based or telematics programs

Usage-based or telematics programs use a mobile app or plug-in device to track your driving habits, offering personalized discounts for safe drivers. Good braking, moderate acceleration, and limited nighttime driving can all work in your favor.

These programs can reduce premiums by up to 30% for cautious drivers. However, they’re best for people confident in their driving habits, as risky behavior can have the opposite effect. Always review how your data will be used before enrolling.

The bottom line

Car insurance rates may be climbing, but that doesn’t mean you’re powerless. Small, strategic changes — from adjusting your deductible to exploring new programs — can add up to big annual savings. The key is to stay proactive: review your policy regularly, compare quotes often, and ask questions when something doesn’t look right. With the right approach, you can get the coverage you need at a price that fits your budget.

Penny Gusner

Contributor

 

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Penny is an expert on insurance procedures, rates, policies and claims. She has extensive knowledge of all major insurance lines -- auto, homeowners, life and health insurance. She has been answering consumers’ questions as an analyst for more than 15 years and has been featured in numerous major media outlets, including the Washington Post and Kiplinger’s.