If you’re wondering how to lower auto insurance, the first step is to compare coverage from multiple insurance companies. Once you’ve decided on an insurance company that’s right for you, you can save by driving safely, choosing a higher deductible, bundling auto insurance with home or renters or improving your credit score.
WHAT YOU SHOULD KNOW
Driving a car with modern safety features, completing a defensive driving course, or opting into a safe driver discount program can all lower your auto insurance rates
Choosing a higher deductible means you’ll pay a lower monthly rate
Bundling auto insurance with home or renters insurance can lead to hundreds of dollars in annual savings
Auto insurance payments add up fast. By finding ways to lower your auto insurance rates, you can save a small fortune over time. From taking defensive driving courses to improving your credit, there are a number of ways to lower your auto insurance rates.
With this guide, we’ll show you how to lower auto insurance rates with five tips that are completely legal and can work for anyone. Whether your auto insurance payments are unreasonably high or unusually low, take a look at the tips below to find ways to save.
Looking for affordable auto insurance? Enter your ZIP code in our free online tool to compare rates and find coverage that’s right for you.
Table of Contents
Tip #1: Drive a Car with Modern Safety Features
Many major auto insurance companies offer discounts based on the safety features your car has. Purchasing a car with a modern suite of safety features or adding them to your existing vehicle can save you money on auto insurance — at least, up to a point. Because many safety features are also costly to replace, insurance companies may increase or decrease your rates depending on how much they think safety features will reduce your risk on the road.
Contact an insurance agent to see if having any of the following safety features can save you money on your next insurance payment:
Lane departure warning
Automatic emergency braking
Anti-theft devices in particular are a great way to lower your auto insurance premiums since many companies offer specific anti-theft discounts if you show that you have one of these devices in your car.
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Tip #2: Complete a Defensive Driving Course
Depending on your age, state, and insurance company, you may be able to take a defensive driving course to save as much as 15% on your insurance rates. These courses usually take only around 10 hours to complete, and many cost less than $30. They’re also a great way to learn about local driving laws if you’ve recently moved to a new area.
According to the Insurance Information Institute, the price of an auto policy is based partly on background information that is mostly or completely out of your control (age, gender, location, etc.) and partly on factors that you can make changes to, like the car you drive, your driving habits, and your credit rating.
While discounts for completing these programs are most commonly offered to young drivers or drivers over the age of 60, it’s worth checking with your insurance company to see if they offer discounts to all drivers who enroll in a defensive driving course.
Tip #3: Enroll in a Safe Driver Discount Program
Many of the largest auto insurance companies in the United States now offer optional safe driver discount programs that allow drivers to save by driving safely. State Farm’s “Drive Safe and Save” and Allstate’s “Drivewise” are two versions you may know. Most of these programs require drivers to download an app and/or install a telematics device in their car. In general, these programs determine how safe a driver you are by monitoring some or all of the following driving behavior:
How often you go over the speed limit
How quickly you brake
How smoothly you accelerate
How careful you are when making turns
Some programs also look at what time of day you drive and may reduce your discount if you drive late at night. Enrolling in a safe driver program will likely lower your insurance rates slightly even if you aren’t an especially careful driver.
Insurance companies want more drivers to install telematics devices because the data they receive helps them adjust rates for everyone with greater precision. That said, if you’re not comfortable with having your location and driving habits monitored, safe driver discount programs probably aren’t right for you. This is one of the ways to get cheap insurance.
Tip #4: Choose a Higher Deductible
Far more often than not, a higher deductible means a lower monthly rate on your auto insurance. Your deductible is how much you pay for repairs or replacement before your insurance company will step in and cover the remainder. For example, if you have a $500 deductible and your car needs $1,000 worth of repairs after an accident, you’ll pay the first $500 out of pocket and your insurance company will cover the rest.
Since insurance companies have to pay less in the event of an accident, monthly rates are always lower when you choose a higher deductible.
Of course, a higher deductible isn’t for everyone. For instance, if your car isn’t worth all that much to begin with, a deductible of $1,000 or more may be greater than the cost to repair the car after an accident. In the event that the cost of repairs is lower than your deductible, your insurance won’t help you at all.
Generally speaking, to save on monthly insurance costs, you want to have a reasonably high deductible that doesn’t go over the cost to repair your car after an accident.
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Tip #5: Bundle Your Home and Auto Insurance
Many insurance companies that offer both home and auto insurance allow their customers to bundle the two forms of coverage together, resulting in savings on both. Liberty Mutual, for example, claims that customers can save over $900 by bundling home and auto insurance policies. Likewise, State Farm states that customers can save nearly $1,200.
If you’re not a homeowner, you may also be able to save on auto insurance by bundling it with renters insurance. State Farm, Allstate, USAA, Liberty Mutual, Nationwide, Farmers, and American Family all allow customers to bundle their renters and auto insurance policies. Contact an insurance agent for details.
Bonus Tip: Improve Your Credit Score
Some states don’t allow insurance companies to look at your credit score when calculating rates, so this tip won’t work for every driver. That said, the majority of U.S. states do allow insurance companies to review your credit rating when determining the cost of your coverage. By improving your credit score, you can significantly lower your monthly auto insurance payments.
Here are some basic steps you can take to improve your credit:
Make on-time payments consistently
Have multiple open and active credit accounts
Catch up on any past-due bills
What to Remember About Lowering Auto Insurance Rates
Safe driving helps you save. Driving a car with modern safety features (especially anti-theft devices), completing a defensive driving course, or opting into a safe driver discount program can all lower your auto insurance rates.
Choosing a higher deductible means you’ll pay a lower monthly rate. If you want to lower your auto insurance payments, choose the highest deductible that still makes financial sense based on the value of your car.
Bundling auto insurance with home or renters insurance can lead to hundreds of dollars in annual savings.
One of the best ways to lower your auto insurance premiums is to compare coverage options from different insurance companies. Looking for the most affordable insurance that meets your needs?
Find out how much you could save on insurance by entering your ZIP code in our free online quote tool.