How to get cheap car insurance

There are many ways to get cheaper car insurance, including shopping around, bundling your coverage and increasing your deductible. The tips below may not all apply to you, but applying even one can get you cheaper car insurance. The best part is that there are things you can do to start saving on car insurance today.

1. Compare car insurance quotes regularly

What is the cheapest car insurance, and how do you get it? It's simple: shop around and compare rates. It's the No. 1 way to save on your auto insurance.

Compare car insurance quotes from as many car insurance companies as possible to find the best policy at the lowest rate. You can do this anytime.

Comparison shopping can help you find cheap car insurance companies and even new auto insurance discounts.

Cheaper car insurance companies aren't always the biggest companies. An Insurance.com rate analysis found that American National Insurance had the lowest average rates even when compared to well-known companies like Nationwide and USAA.

You should comparison shop at least once a year, and also when you:

Remember, the more you comparison shop, the more likely it is that you will find cheap car insurance quotes.

2. Bundle your insurance for a multi-policy discount

One of the best ways to get cheaper insurance rates is to ask about bundling your insurance policies for a discount.

For example, purchasing homeowners or renters insurance from the company that provides your car insurance coverage can earn you a discount on both policies.

Depending on the company, these multi-policy discounts can be up to 29%.

Similarly, you can get up to 25% off by taking advantage of a multi-car discount when you insure two or more vehicles with the same company. This discount is typically on your liability, collision and comprehensive coverages.

But be wary, as you don’t always save money by bundling coverage. It is important to compare what it would cost to purchase your policies separately to the price break you get on a bundled deal.

National averages for multi-policy discounts are:

3. Increase your deductible for instant savings

Increasing your deductible from $250 to $500 can lower the collision or comprehensive portion of your premium. According to Nationwide, you may save between 15% and 30%; other insurers could be even cheaper. Increase the deductible to $1,000, and you can save even more, potentially 40%.

Remember, though, that a higher deductible means more money out of your pocket in case of a claim. Make sure you understand how car insurance deductibles work before you choose one.

4. Ask about auto insurance discounts

Talking to your agent can help you find overlooked ways to save on car insurance, says Robert Passmore, vice president of auto and claims policy at the American Property Casualty Insurance Association.

“Consumers should check in with their agent or insurance company to have a conversation and ask what discounts are available,” he says. “They will work with you to maximize all your benefits.”

While you might qualify for a lot more discounts, here are a few of the common ones that help you get affordable car insurance:

  • Good student. Many car insurance companies offer high school and college students a good student discount. You'll usually need a B average (3.0 GPA) or better to qualify for this discount. The average base premium for the student-driving population is $6,110. Add a good student discount, and that yearly policy rate dips to an average of $5,750. That’s a savings of $361, or about 7%. Homeschooled teen drivers may also be eligible. They must achieve a specific score on standardized tests.
  • Student away from home. Likewise, most insurance carriers offer discounts for students who are away at college without a car.
  • Loyalty. Several insurance companies offer a discount for staying with your company over the years, which reduces rates by up to 10%.
  • Good driver. Good driver and safe driver discounts can save you between 5% and 25%, depending on your carrier.
  • Vehicle security. Do you have an alarm or security/anti-theft device installed in your vehicle, such as a LoJack? That could qualify you for a safety feature discount of up to 30%.
  • Paid in full. Paying your annual bill in full can save you up to 10%, rather than paying in installments.

Ask about the car insurance discounts each company offers so you don't miss out.

5. Compare insurance rates when you're car shopping

When you're car shopping, consider the cost of insurance. Cars that cost less to repair or replace generally have more affordable car insurance rates. Safety records and theft statistics also affect a vehicle's rates.

Make sure you compare car insurance rates by vehicle when shopping for a car. Choosing your new (or used) car wisely could save you a lot of money on insurance.

6. Keep a clean driving record

Poor driving history can disqualify you from getting the cheapest car insurance. Speeding tickets, accidents, and citations for driving under the influence will all increase your insurance rates.

As noted above, good driver discounts can save up to 25%. The insurance company usually requires that you have a clean driving record for at least three years. That means no DUIs, no moving violations, and no at-fault collisions.

7. Drop coverage you don't need

You can get cheaper car insurance by dropping comprehensive and collision coverage if you have an older car.

Don’t drop that coverage without giving it some thought, however. Many experts say it's time to drop these coverages when the actual cash value you'd receive for your vehicle doesn't justify the insurance expense.

Another type of coverage that you might not need is rental reimbursement coverage. You can skip that if you have an extra car in the household or if you have easy access to public transportation.

Also, you may want to forgo personal injury protection or medical payment insurance (if your state doesn’t require it). Consider taking this step if your family already has an excellent health insurance plan.

8. Buy basic car insurance (very cautiously)

You'll get the cheapest car insurance rates when you buy bare-bones coverage, but this should always be a last resort. Consider other options first, as basic coverage will leave you underinsured and can cost you more in the long run. The minimum coverage in most states isn't enough to cover even a moderately serious accident, especially if it involves injuries.

Liability limits are usually written like this: 25/50/25. In this example, the numbers show coverage that would pay:

  • Medical expenses of up to $25,000 per person
  • Medical expenses up to $50,000 per accident
  • Up to $25,000 for property damage

The example above shows the most common legal minimums, but many states have lower minimums. It's simply not enough to adequately protect you in an at-fault crash.

But if you don’t drive much and are desperate to find a way to get cheaper car insurance, bare-bones coverage is better than nothing. Upgrade it as soon as you are financially able.

9. Sign up for a usage-based insurance or pay-per-mile insurance plan

People who drive less than a specified number of miles yearly, usually 7,500 to 10,000 miles, can get cheaper rates.

To monitor mileage, car insurance companies may require installing a small device in your vehicle that transmits data to the company. Usage-based programs may also monitor driving habits like braking and speed for an additional discount.

Actual pay-per-mile insurance allows you to pay based on the actual miles you drive.

"Driving fewer miles means you have less road time, resulting in a lower risk of getting into an accident," says Janet Ruiz, director of strategic communication at the Insurance Information Institute. "Most insurers ask for yearly mileage to give a lower rate to drivers who are on the road less."

Passmore notes that many insurance companies will offer you a discount simply for signing up for this type of program.

“These programs are increasing in popularity as more people work remotely and drive less,” he says.

10. Ask about group insurance or an affinity discount

Some companies offer lower rates to drivers who get insurance through a group plan from their employer or professional, business and alumni groups, and other associations or schools. Experts from the Insurance Information Institute suggest checking with your affiliated organizations to see what they offer.

Employers often offer health insurance group plans, but a lesser-known option is group car insurance. Larger companies are more apt to provide this option to their employees because the number of employees allows them to secure a group rate.

Large colleges or trade schools sometimes offer their students and alumni the benefit of buying into group insurance. Some insurance companies also offer members of certain groups an affinity discount.

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