How To Save On Your Car Insurance

When your next car insurance bill arrives, you might want to prepare for an unpleasant surprise, as The Associated Press reports that auto insurance premiums jumped 22% in the year-over-year period ending March 2024. That's far greater than the official rate of inflation for other goods and services. In fact, the average American pays an eye-popping $2,348 per year for car insurance, per Bankrate.

So what's driving the staggering rise in auto insurance rates in the U.S.? Part of the reason is that crashes are becoming more frequent and severe. Drivers are increasingly careless, while at the same time, their vehicles are heavier and more powerful than ever. As well, models are more expensive to repair today after being involved in a crash. That's because of the increased complexity of modern vehicles combined with a shortage of skilled labor (like mechanics) who can fix them. While some of these mitigating factors are outside the control of the individual consumer, you can stretch your insurance dollar by maintaining a clean driving record and following some simple tips to save on insurance.

We know shopping for a new auto insurance policy or adjusting your existing coverage is only slightly more appealing than completing an income tax return. However, there are ways to save on your bill, and some of these savvy tricks can even make you a more conscientious driver in the process.

What might these car insurance tricks be? For one, you could take a driver safety or a defensive driving course. Many insurance companies will offer a discount to customers who keep their driving skills sharp with an approved driver education course (costs start at $25) every few years. The length of these courses vary, from 60 minutes to two hours to as long as six hours spent online. Do verify with your insurer first that a discount exists before signing up, but a 5%-10% discount is typical.

Another way to save on your car insurance is to reap rewards for driving less. Perhaps your work commute is short or you work from home and only drive during occasional errands? If so, it may be possible to save hundreds per year by signing up for usage-based car insurance that's charged on a per-mile basis. Alternatively, let your current insurer know if your car is used sparingly. Typically, policy discounts are available for traveling under a certain mileage, like 3,000, 6,000, or below 10,000 miles per year.

Similar to updating your policy if you start to drive fewer miles, you also might want to consider increasing your deductible, which will lower your premiums. In the event of a crash, theft, or other damage to your vehicle, a higher deductible (for example, going from $500 to $1,000) will increase your out-of-pocket costs before your insurance kicks in; however, the savings from doing so can amount to $400 to $500 per year, which makes this move a risk worth taking.

Yet another number you'll want to check is your credit score. Not every state allows car insurance companies to factor your credit score into your insurance rates, but the majority do. Apart from your driving history and type of vehicle, your creditworthiness is the third-most important consideration when determining rates. After all, insurers want responsible customers that pay their premiums.

Lastly, this one isn't a trick, but a reminder; and that's to shop multiple providers. It's easy to get comfortable with the same auto insurance company you've had for years, and while shopping for new insurance isn't exactly fun, it can cost you if you've gotten complacent. Average annual rates between different car insurance companies can vary by more than $1,000 so it definitely pays to compare providers periodically.