7 Ways to Save on Auto Insurance

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Mar 21, 2026

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My auto insurance dropped $612/year after one phone call. These 7 tricks work even if you already have a "good rate."

1. Shop Around and Compare Quotes

This is the single most effective way to save money on auto insurance, period. Loyalty doesn't pay in the insurance world; in fact, it often costs you. Insurance companies rely on inertia. They know that many people simply auto-renew their policies year after year without ever checking if they could get a better deal elsewhere. Don't be one of those people.

Get quotes from multiple insurance companies – at least three, but ideally five or more – every year. This doesn't have to be a huge time sink. There are plenty of online comparison tools that let you enter your information once and receive quotes from multiple insurers.

When comparing quotes, make sure you're comparing apples to apples. Ensure that the coverage levels, deductibles, and policy features are the same across all the quotes you're reviewing. A cheaper premium isn't a bargain if it comes with significantly lower coverage limits that could leave you financially exposed in the event of an accident.

Personal Anecdote: I recently saved over $400 per year by switching from a well-known national insurer to a smaller, regional company. The coverage was identical, the service has been excellent, and the only difference is that I'm now paying significantly less. I had been with my previous insurer for over five years, assuming they were giving me a good rate. Lesson learned.

Factors Affecting Your Auto Insurance Premiums

Insurance companies use a complex algorithm to determine your premiums. Here are some of the key factors they consider:

Age: Younger drivers, especially those under 25, typically pay higher premiums due to their lack of driving experience and statistically higher accident rates.

Driving Record: Accidents, tickets, and other violations on your driving record will significantly increase your insurance costs. A clean driving record is your best asset when it comes to getting lower rates.

Credit Score: In most states, insurance companies use your credit score as a factor in determining your premiums. A higher credit score generally translates to lower rates.

Vehicle Type: The make and model of your car, as well as its age and safety features, all play a role in determining your insurance costs. Expensive cars, sports cars, and cars that are frequently stolen typically have higher premiums.

Location: Your location, including your city and state, can affect your insurance rates. Densely populated areas with high traffic congestion and higher rates of accidents tend to have higher premiums.

Coverage Levels: The amount of coverage you choose, including liability limits, collision coverage, and comprehensive coverage, will impact your premiums. Higher coverage levels mean higher premiums, but also greater financial protection.

Deductibles: Your deductible is the amount you pay out-of-pocket before your insurance coverage kicks in. Choosing a higher deductible will lower your premiums, but you'll need to be prepared to pay more out-of-pocket in the event of an accident.

Annual Mileage: The number of miles you drive each year can affect your insurance rates. The more you drive, the higher your risk of being involved in an accident, and the higher your premiums will be.

2. Increase Your Deductibles

Your deductible is the amount you pay out-of-pocket before your insurance coverage kicks in. It applies to both collision and comprehensive coverage. Collision covers damage to your vehicle if you hit another object, while comprehensive covers damage from things like theft, vandalism, fire, or natural disasters.

Increasing your deductible is a simple way to lower your auto insurance premiums. The higher your deductible, the lower your premiums will be. For example, increasing your deductible from $500 to $1000 could save you 10-20% on your collision and comprehensive coverage.

However, it's key to choose a deductible that you can realistically afford to pay out-of-pocket in the event of an accident. Don't choose a high deductible just to save money on your premiums if you wouldn't be able to cover that amount if you had to file a claim. Consider your financial situation and your risk tolerance when deciding on the right deductible for you.

Example: Let's say your collision and comprehensive coverage costs $800 per year with a $500 deductible. If you increase your deductible to $1000, your premiums might drop to $650 per year. That's a savings of $150 per year. Over three years, you'd save $450. The break-even point is if you had to make a claim.

After the 2nd major section (H2): !Insurance guide

3. Bundle Your Insurance Policies

Many insurance companies offer discounts if you bundle multiple insurance policies with them. This typically means combining your auto insurance with your homeowners or renters insurance. Some insurers may also offer discounts for bundling other types of insurance, such as life insurance or umbrella insurance.

Bundling your insurance policies can save you a significant amount of money. The discount can range from 5% to 25% or even more, depending on the insurance company and the policies you bundle.

How to take action:

Contact your current insurance provider: Ask them about bundling discounts and how much you could save by combining your auto and home/renters insurance.

Shop around for bundled quotes: Get quotes from other insurance companies for both auto and home/renters insurance. Compare the total cost of the bundled policies to see if you can get a better deal elsewhere.

Consider the coverage: Don't just focus on the price. Make sure the bundled policies offer the same level of coverage as your current policies.

I've found that bundling is often a no-brainer, especially if you already have multiple insurance policies. It simplifies your insurance management and can save you a significant amount of money.

4. Inquire About Discounts

Most insurance companies offer a variety of discounts that you may be eligible for. It's worth taking the time to inquire about all the available discounts and see which ones you qualify for. Some common discounts include:

Good Driver Discount: Offered to drivers with a clean driving record.

Safe Driver Discount: Similar to a good driver discount, but may require additional criteria, such as completing a defensive driving course.

Student Discount: Offered to full-time students with good grades.

Multi-Car Discount: Offered to households that insure multiple vehicles with the same company.

Low Mileage Discount: Offered to drivers who drive fewer than a certain number of miles per year.

Affiliation Discounts: Offered to members of certain organizations, such as alumni associations or professional groups.

Anti-Theft Device Discount: Offered if your vehicle has anti-theft devices, such as alarms or GPS tracking systems.

Safety Feature Discount: Offered if your vehicle has safety features, such as anti-lock brakes or airbags.

Pay-in-Full Discount: Offered if you pay your entire insurance premium upfront instead of in monthly installments.

Don't be afraid to ask your insurance company about all the possible discounts you could be eligible for. You might be surprised at how much you can save.

Specific example: My insurer offers a discount for having taken a defensive driving course within the last three years. It was a one-day course, and the discount more than paid for the cost of the course. It also improved my driving skills.

5. Improve Your Credit Score

In most states, insurance companies use your credit score as a factor in determining your auto insurance premiums. A higher credit score generally translates to lower rates. This is because studies have shown that people with better credit scores are less likely to file insurance claims.

If your credit score isn't where you'd like it to be, taking steps to improve it can potentially lower your auto insurance premiums. Here are some tips for improving your credit score:

Pay your bills on time: Late payments can negatively impact your credit score.

Keep your credit utilization low: Try to keep your credit card balances below 30% of your credit limit.

Avoid opening too many new credit accounts: Opening multiple credit accounts in a short period of time can lower your credit score.

Check your credit report for errors: Review your credit report regularly to make sure there are no errors or inaccuracies. Dispute any errors you find.

Improving your credit score takes time and effort, but it's worth it in the long run. Not only can it lower your auto insurance premiums, but it can also help you get better interest rates on loans and credit cards.

Analogy: Think of your credit score as your financial GPA. A good GPA opens doors to opportunities, and a good credit score opens doors to better financial products.

6. Re-evaluate Your Coverage Needs

Your insurance needs change over time. The coverage that was appropriate for you five years ago may not be the best fit for you today. Take the time to re-evaluate your coverage needs and make sure you're not paying for coverage you don't need.

For example, if you have an older car that is no longer worth much, you may want to consider dropping collision and comprehensive coverage. The cost of these coverages may be higher than the actual value of your car, making it not worth the expense.

Rule of thumb: If your car is worth less than 10 times the annual premium for collision and comprehensive coverage, it may be time to drop those coverages.

On the other hand, if you have significant assets or liabilities, you may want to consider increasing your liability coverage. Liability coverage protects you financially if you're at fault in an accident and cause injuries or property damage to others. The higher your liability limits, the more protection you have.

Hypothetical Scenario for 2026: Imagine a scenario in 2026 where inflation continues to rise. What seems like adequate coverage today might not be enough to cover potential liabilities in the future. It's a good idea to revisit your coverage limits periodically, especially in times of economic uncertainty. Aim to have at least $100,000 per person and $300,000 per accident, if feasible.

7. Consider Usage-Based Insurance

Usage-based insurance (UBI), also known as telematics insurance, is a type of auto insurance that uses data about your driving habits to determine your premiums. This data is typically collected through a device installed in your car or through a smartphone app.

UBI programs track factors such as:

Speed: How often you exceed the speed limit.

Hard Braking: How often you brake suddenly and aggressively.

Acceleration: How quickly you accelerate.

Time of Day: When you drive (driving at night is generally considered riskier).

Mileage: How many miles you drive.

If you're a safe driver, UBI can potentially save you a significant amount of money on your auto insurance. However, if you're not a safe driver, UBI could actually increase your premiums.

Caveats:

Privacy Concerns: Some people may be uncomfortable with the idea of having their driving habits tracked.

Data Accuracy: The data collected by UBI devices or apps may not always be accurate.

Before signing up for a UBI program, carefully consider the pros and cons and make sure you're comfortable with the terms and conditions.

Before your closing section: !Insurance tips

Your Next Move

Saving money on auto insurance isn't a one-time event; it's an ongoing process. By taking these seven steps, you can potentially lower your auto insurance bill this year and for years to come.

Here are three actionable steps you can take right now:

Get Quotes: Spend 30 minutes getting quotes from at least three different insurance companies. Note the current date and set a calendar reminder for 335 days in the future to repeat the process.

Contact Your Current Insurer: Call your current insurance company and ask about any discounts you might be eligible for.

Review Your Coverage: Re-evaluate your coverage needs and see if you can lower your premiums by increasing your deductibles or dropping unnecessary coverages.

Good luck, and happy saving!

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Some links may be affiliate links.