How I Lower Our Auto Insurance Premium Costs

Did your car insurance premiums go up a lot recently?

You’re not alone.

The U.S. Bureau of Labor Statistics reports that motor vehicle insurance went up a whopping 20.6% in the last year.

That is not a typo – over twenty percent increase!

(this is on top of a near 15% increase from January 2022 to January 2023)

If you’re looking for ways to lower your car insurance premiums, we have a few tips that might be able to make that payment a little less painful this year.

Ask Your Agent

The simplest way to reduce your premiums is by asking your agent for suggestions. Agents are usually on your side because they want to keep your business and they don’t lose much (if anything at all) if you take advantage of discounts.

Plus, your insurance agent will know what you can do to lower your insurance premiums. This can include organizations you can join, classes you can take, and any other modifications you can make to your vehicle or your habits. They have a laundry list of items, just go through and see what you need to do to qualify for each one.

Remember, your agent wants to help you because it means they can keep you as a customer. You can save yourself a lot of time guessing and get recommendations directly from someone who knows your exact policy and any changes you may have.

Don’t be afraid to go through the list of discounts to see what you can do to qualify for them. You can get a discount based on what you do for a living (occupational discount) to paperless statements to having anti-theft systems to being a good student.

Asking can save you a lot of money.

Shop Around

Even if you love your agent and the insurance company, sometimes your agent needs help to get you a lower rate (and they may not be able to tell you this).

To get a better deal, you might have to get quotes from other insurance companies as a bargaining chip.

Car insurance companies make it easy to get quotes – they can look up a ton of information without you having to enter it. With just your name and a few other personal details, GEICO, Esurance, and several other companies were able to pull up both of our vehicles. I entered in some more information and had a quote within minutes that I could screen grab and send to my agent for comparison.

If you want to search several companies at once, a marketplace can be convenient. Take a look at Insurify – they can help you compare car insurance quotes quickly and easily so you can find the lowest rates.

Bundle Up

Buy all of your policies from one place and you will almost always get a discount. Every car insurance company offers anywhere from 5-15% off if you get 2+ policies.

Keep shopping around after that because you don’t usually get a bigger percentage off with more policies, you could find that 3rd policy for cheaper elsewhere.

Increase Your Deductible

Deductibles are what gets deducted against a claim before the insurer pays out. If you have a $1,000 deductible and you have damage to your car of $1,500, the insurance company will pay you $500. Increase your deductible and decrease your premium.

This is risky because now you’re venturing into self-insurance – where you increase your savings to pay for any potential claims. Just remember to put the savings in your emergency fund because your personal funds will be needed.

Join Associations & Organizations

Years ago, while with GEICO, I joined the National Military Family Association for a discount on my auto policy (it’s a Military and Federal Organization that gets a discount as part of GEICO’s membership discounts program). Membership was a mere $20 then (only $15 now), went to a good cause, and I saved far more on my annual insurance bill (7-8%).

Your insurance company will have a list of related organizations that, if you were a member, would afford you a discount on your policy. Ask them, they will provide it if they offer this type of discount, and join if it makes financial sense.

Maintain Good Credit

Your credit is used to determine your premiums and you can reduce your premiums by increasing your credit score.

If you haven’t reviewed your credit in a while, review our guide on increasing your credit score for what you should do.

Cut Collision or Comprehensive Coverage

🔴 This is the riskiest option on our list.

I cut comprehensive coverage with my first two cars after they were a bit older and saved hundreds each year. When the insurance company doesn’t have to cover you in the event of non-collision perils, they will give you a big discount because that’s a big risk.

It’s a big gamble because I could be in big trouble if a tree fell on my car, but I took on that extra risk and put the savings in my high yield savings account.

If you do not fully own your vehicle, because it’s a lease or you have a loan, you can’t do this. Leases and loans will require you to have this coverage.

When you look at your policy, review your policy coverage and you’ll see exactly how much collision and comprehensive coverage is costing you.

We currently have coverage on our 2011 Toyota Venza and it’s costing us $71.09 (collision) and $37.93 (comprehensive) per six months, with a $1,000 deductible. It’s an older car worth only abut $5,000 and I was OK with paying $200 a year for those coverages. It’s getting to the point where it may not make sense to pay it anymore.

We also have the same coverage on a 2015 Toyota Highlander — $136.31 (collision) and $74.86 (comprehensive). The car itself is worth about $16,000 and we’re paying $400 a year, which feels fair.

If you do this, you’re now self-insurance so put your savings into your emergency fund and be aware that you are taking on added risk.

Update Your Driving Patterns

If you drive less than 8,000 miles a year, you may qualify for a low mileage discount. Many companies offer a low mileage discount and the number of miles will vary, but it’s typically in the 7000-8000 range. Some insurers offer different discounts based on the tier you fall into, so you may get a discount – be sure to ask.

If your driving habits change, let your agent know.

Perhaps you changed jobs and now the office is closer to your home. Or maybe you’re fully remote with no plans to return to the office. Or you quit and are now self-employed (yay! congrats!). Or you started carpooling because you love the Earth.

Even if you don’t have less mileage but work from home, that could be good enough for your insurance company. They may be able to do something for you.

You will need to periodically update your agent on your vehicle odometer, to confirm you are driving less, so you can’t just say you drive 7,000 miles when it’s 10,000.

Take a Driving Class

Many insurers will give you a discount if you take a defensive driving course. Some states mandate the discount. In New York, as part of the Point & Insurance Reduction Program, you will get a 10% reduction of the base rate of your auto insurance premiums every year for three years).

Check with your insurance provider before you sign up for a class because they cost money and time, so you don’t want to be wasting it on a class that won’t save you money.

Shop Around Annually

Put a recurring event in your calendar to review your auto insurance every year. It’s worth shopping around each year and at the very least, gives you a reason to contact your agent to see if there are new discounts you qualify for.

When I originally wrote this article, I contacted my agent at State Farm and she chopped $100 off our annual premium because my wife no longer drove ~20 miles each way to graduate school every day.

A few emails back and forth for $100? A deal I’ll take any day.