Reducing Your Car Insurance Premiums

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Insurance rates are extremely flexible. They can shift constantly, even within a single provider. So it’s beneficial to monitor your provider’s rates for any improvement in price or change in terms. Auto insurance is especially complex, with dozens of different factors playing into the amount you’ll be charged. With all of those separate data points, there are a variety of ways you can actually reduce your premiums. Here are some of the best ways you can save money on your car insurance. Just remember to call and ask — your insurance company isn’t likely to offer you any unsolicited discounts!

What You Drive Matters

Your vehicle choice plays a major role in the resulting insurance premium. For instance, you will be looking at a much higher insurance premium for a sports car or SUV.

Insurers keep track of all the claims made, along with industry-published figures to help them determine the break-even point for their policies. This includes how much it costs to repair your vehicle, along with bodily injuries suffered and the cost for medical care. The Highway Loss Data Institute provides a large variety of statistics related to each type of vehicle. Take some time and look at their data as it may help you narrow down your choice of vehicle.

As the site shows, larger vehicles, such as SUVs or trucks, have much fewer injury claims, but often much higher collision costs. The safety of a large vehicle comes at a fairly large sticker price upon purchase, along with higher insurance costs should you ever get into an accident. As many SUVs now come with AWD or 4WD, insurers will knock you again for the added costs to repair the systems. If you can barely afford such a large car, the insurance may push you over the edge.

On the opposite end of the spectrum are the small, sporty cars. Cars like these are often the smaller of the two vehicles involved in a collision, resulting in higher repair costs. Additionally, the size causes many more physical injuries to the passengers within and will once again raise the insurance premium due to the larger associated medical costs.

So now, what doesn’t eat your soul with insurance premiums? We could all drive Volvos and Saabs and have no issues with insurance costs, but alas that is not the case. Most “sensible” cars, as suggested by many publications, are good starting points for many insurance rates. The cost of your insurance will increase with each new feature you add to your car.

With the instant quotes that many insurance companies have available on their website, it is very easy to learn of the insurance premium prior to purchasing your car.

Who Is the Driver?

Like it or not, you’re going to be profiled here. If you’re a young, single male in your 20s, you’re simply going to pay more than a married female in her 40s (assuming all other factors were equal). It doesn’t matter if you’re the safest driver in the history of driving. The insurance companies have decades of statistics that show your demographic is more likely to be involved in accidents due to aggressive driving. It’s hardly fair, but it’s life.

The good news is that your insurance premiums may go down as you get older. That’s assuming a bunch of other factors aren’t also working against you. Unfortunately, you can’t do much to change your age or gender. You can, however, be conscious of your driving habits. Which leads us too…

Just Drive Safer

While you can’t change who you are as a person, you can change who you are as a driver. That means slowing down, driving with more patience, and staying alert at all times. If you can stay ticket- and accident-free, you won’t have to pay so much for insurance. Unfortunately, this is a longer term goal. Speeding tickets and accidents can stick around on your driving record for years, depending on the specific infraction and local laws.

Do yourself a favor and adjust your driving habits. Leave a bit earlier so you’re not in a rush. Ignore that text message until you’re parked. Obey the speed limit. Your insurance company will see how safe you are behind the wheel, and reward you with a lower rate.

Or Drive Less

One of the most common questions when you’re applying for car insurance is what your commute to work looks like. The twice-daily drive accounts for the majority of driving for most average drivers. If you’re driving an hour (or more, with traffic) on a major highway every day, you’ll pay for it. On the other hand, if you work a short drive from your home, you’re putting on way fewer miles. Tell your insurance company that you’re driving less than 10 miles per day, and it will make a difference.

You can also go one step further. If you walk, bike, or take transit to get to work, make sure your insurance company knows about it. They can sometimes reclassify your car to “pleasure use” instead of “commuter use.” Basically, if you’re only using your car to visit friends on the weekend or to get groceries once a week, you should pay less than someone who spends hours in their car every single weekday.

Pay Less With Add-Ons

There are a few things you can get for your car that will lower your insurance premiums. Unfortunately, these usually come with an up-front cost. The good news is that you’ll only have to pay the cost once, and then you can enjoy a lower monthly premium for years to come. Of course, most of these add-ons will make you and your car safer to drive too, which is another reason to spend the money.

If you live in an area that gets real winter — we’re talking serious snow and ice — invest in some winter tires. They will make driving in those conditions much easier. Not only that, but your insurance company will probably knock your rates down if they know you use them.

You can also invest in additional security systems for your car. Whether it’s a basic steering wheel lock or a more advanced GPS tracking system, both make your car less likely to be stolen. And that means less chance of an insurance claim.

Adjust Your Coverage

If you just bought a brand new luxury car, by all means, insure the heck out of it. You’ll want the peace of mind to know that you can get it fixed or replaced in the event of an accident. However, if you’re driving around an old beater with 150,000 miles on it, the situation changes.

The simple truth is that your car might not be worth fixing if it gets into even a minor accident. Your insurance company will just write you a check for the bluebook value of your car. Chances are, it won’t be nearly as much as you hope. If you’re in this (more likely) situation, double check your insurance coverage. Are you paying for collision coverage? It’s not required by law in most places, as long as your car is completely paid off. Consider cancelling it and saving on your monthly premiums. Just be aware that you won’t get any help from your insurance company when its time to write off your car for good.

Increase Your Deductible

Another way to alter your monthly premiums is to increase your deductible. That’s the part of any repair cost that you agree to cover yourself, before your insurance kicks in to cover the rest. It’s often $500 or $1,000 on many standard policies. If you can afford a bit more when it comes to a potential unexpected cost, consider increasing your deductible.

You’ll pay lower premiums if you tell your insurance company that you’re willing to pay a $1,500 or $2,000 deductible. It is a bit of a gamble, though. If you cause an accident, you’ll be forced to pay that higher deductible. It will essentially wipe out any savings you saw on your premiums. However, we already told you to be a safer, more attentive driver, right? So just be smart behind the wheel and enjoy your lower insurance premiums.

Ask For Discounts

You may be eligible for discounts that you aren’t even aware of. Some insurance companies offer slight discounts to students, seniors, veterans, or anyone who has completed a driver’s education course. You may even be able to get a discount if you belong to a certain organization or own a certain brand of credit card. We’re not saying you should go out and apply for a new credit card just to get a 5% insurance discount. But maybe you’ll get lucky and already own the right card. The point is this: you don’t know if you don’t ask.

Ask your insurance company if they offer additional discounts for any particular groups. You may have to pry a bit, but it could be worth it. As a last resort, you can also ask about bundling your insurance products together (if you also have home/boat/life/renter’s/pet insurance too).

The Bottom Line

Hopefully, with a little luck, your vehicle will be insured in a way that doesn’t cause your wallet doesn’t shrink in size. Insurance companies do try to weasel their way out of offering you cheap prices. Like we said, they aren’t going to offer you any unsolicited discounts. However, if you are diligent and vigilant, you’ll be adequately insured at a semi-reasonable price.

Piggy Bank and Cash by Car

Africa Studio / Shutterstock

Joshua Williams

Joshua Williams

Joshua is a freelance writer with years of experience blogging about business and finance, and a whole host of other things too. When he's not writing, he enjoys camping with his dog, a golden retriever named Oakley.

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