How to Save Money on Car Insurance

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If it’s time to renew your auto insurance policy and you’re facing a serious case of sticker shock, you will be glad to know there are a lot of ways to reduce what you pay without sacrificing the necessary level of coverage. In this article, we’ll take a look at some of the most popular ones.

Check Out These Ways to Save Money on Car Insurance

Paying the premiums on your auto insurance policy can take a big chunk out of your monthly budget. But there are ways to reduce the cost:

Get Multiple Quotes

Comparison shopping is a crucial part of knowing how to shop for car insurance. You’ll want to get a minimum of three quotes to compare. You can do this online or over the phone.

Be sure you have your current policy in front of you before you begin. That way you can make sure you’re shopping for the same level of coverage you already have.

If the idea of getting three or more quotes on your own seems daunting, consider working with an insurance broker.

Brokers have relationships with multiple insurers and can easily shop you around to all of them. It’s like having the best of both worlds: You get the comparison shopping, but you don’t have to put in all the legwork.

Increase Your Credit Score

In all but a handful of states, insurers are permitted to use your credit to establish your premiums. So having good credit really pays when it comes to insurance. (Notable exceptions include California, Hawaii, Massachusetts, Michigan and Washington.)

Let’s say you have a credit score somewhere in the 660s. If you can bump it up by just 10 to 20 points, you’ll enter the next tier in the credit scoring model. Research from The Zebra’s State of Auto Insurance 2022 shows making that leap can save you an average of 17% on your premiums.

Raising your credit score is easier than you think. The #1 rule is to pay every bill on time every month without fail.

Buy Used Instead of New 

Money expert Clark Howard is a big fan of buying used vehicles and calls buying used “one of the smartest financial moves you can make.”


That’s doubly true when it comes to what you pay for car insurance. A new car is always more expensive to insure than a reliable used car that’s two or three years old.

In fact, The Zebra’s research found that buying a five-year-old used car will save you an average of 27% on insurance premiums versus buying a new car.

If you’re looking to buy a used car, be sure to read our simple 7-step guide before you start shopping.

Drop Comprehensive and Collision Coverage on Older Cars

If you have an older vehicle, it often doesn’t make sense to carry full coverage on it. That’s because the car has so little value to begin with that you’re not going to get a big, fat check to replace it if you have an accident

Depending on the age and condition of the vehicle, you may be lucky to get a few hundred or even a thousand dollars.

So, the general rule is: When the cost of comp and collision exceeds 10% of your old vehicle’s value, that’s the time to dump it and carry only liability coverage. You can determine your vehicle’s value at, or

Bundle With Your Home Policy

Combining your auto and homeowners insurance can deliver some big-time savings, depending on where you live and your personal history of credit, accidents and other factors.

One study from Quadrant Information Services found that the average discount for bundling home and auto is 16%, while bundling auto and renters insurance will save about 8% on annual premiums.

Raise Your Deductible

Raising your deductible — the amount of money you have to pay out of pocket when you file a claim before coverage kicks in — is a great strategy when you’re wondering how to save money on car insurance.

You should always opt for a $1,000 deductible for the best savings on your policy. At that level, you’ll pay a lower premium and won’t be tempted to file any claims for small things like a cracked windshield.


Maintain Continuous Coverage

Rates will drop by 5% on average after you have insurance for at least six months. That’s thanks to a discount that most companies offer for maintaining continuous insurance, according to the State of Auto Insurance 2022 report.

“Maintaining continuous insurance coverage with no lapses is important because insurance companies view drivers who are already insured as being financially responsible and therefore lower risk,” the report notes.

Look for Discounts

You may be familiar with the kind of discounts that most auto insurance companies promote — like those for prepaying your policy in full, switching to paperless billing, setting up auto-pay and more.

But there are also a good many lesser-known discounts out there:

  • Anti-theft devices
  • College students living away from home
  • Drivers ed courses
  • Low annual mileage
  • Long-time customer
  • More than one car
  • No accidents in three years
  • No moving violations in three years
  • Student drivers with good grades

Call your insurance company, agent or broker to ask about discounts you may qualify for.

Drive Safely

While many vehicles come equipped with a variety of modern safety features, there’s no substitute for good old-fashioned common sense behind the wheel.

Distracted driving can lead to tickets that can raise your premiums. So too, can DUI, reckless driving, driving with a suspended license, being involved in an at-fault accident and more.

So give yourself a break (brake?) and slow down out on the road!

Take a Defensive Driver Class

Many insurance companies will give you a discount if you complete a defensive driving course. Courses can be taken online or behind the wheel. Online courses tend to be cheaper, usually between $20 and $40, according to In-person courses can go as high as $100.

But that’s money well spent. A wide variety of insurers will give you a discount, typically between 5% and 20%, for completing a defensive driving course.


Consider Pay-per-Mile Insurance

If you’re accustomed to driving less than 10,000 miles per year, this kind of policy might be right up your alley. Pay-per-mile insurance is full coverage insurance, but the less you drive, the less you pay.

How does it work? You plug a dongle into your vehicle’s port and it records your daily mileage. Or you download an app to your phone and your driving is tracked through that app.

As a general rule, how you drive is not being assessed here. It’s how much you drive that’s the key.

Final Thought

Nobody likes to pay too much for auto insurance. By following the advice in this article, you can lower the cost of your premiums and keep more money in your pocket.

If you’re ready to switch insurance companies, be sure to check our guide to the Best and Worst Auto Insurance Companies. We’ve got a special section on Clark Howard’s three top picks for car insurance.

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