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Last updated: April 6, 2024

5 Ways to Lower Your Car Insurance Costs

Get the insurance coverage you need without stressing your budget.

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The potential costs of owning a vehicle can be overwhelming. Buckle up, because it is time to talk about the cost of car insurance. Car insurance protects you, your passengers, and your investment. And it’s more than a nice-to-have; car insurance is required in every state except New Hampshire and Virginia.

However, it doesn’t have to be another daunting monthly expense added to the pile. And while you should prioritize long-term stability over short-term gains, there are many ways to lower your monthly car insurance payments without sacrificing coverage, from reputable car insurance companies. Let’s start saving on car insurance premiums now.

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1. Raise Your Deductible

raise your deductible

Your auto insurance deductible is the amount of money you agree to pay before insurance contributes to covered damages. The higher your deductible, the lower your insurance premium. On the other hand, with a higher deductible, you will need to pay more out of pocket in the event of an accident.

Most car insurance policies include deductibles on collision and comprehensive coverage only. Collision coverage pays for your property damage from an accident, regardless of fault; comprehensive coverage pays for damage from theft, weather, vandalism, and wild animals — really, any event aside from a collision. Typically, collision coverage costs more than comprehensive coverage, so your collision deductible might affect your insurance premium more than your comprehensive deductible.

You can choose different deductibles for collision and comprehensive, also known as a split deductible. If you live in an area with a high risk of natural disasters, you may consider a lower deductible for comprehensive insurance. If you’re a safe driver and have never caused an accident, on the other hand, choosing a higher deductible for collision coverage will keep your auto insurance premium low.

When you sign up for auto insurance, you’ll pick the amount of your deductible from several options:

  • $0
  • $250
  • $500
  • $1,000
  • $2,000

The average deductible for collision coverage is $5001.

The most important rule when choosing a deductible is to select an amount you feel comfortable paying within 24 hours. Small, unexpected expenses can be challenging for many. According to the Federal Reserve, more than 25 percent of adults were one $400 financial setback away from being unable to pay their bills in full in 20212.

Run the numbers on your auto insurance deductibles with your car insurance provider. If your savings account has a good amount of cushion, a higher deductible might be a good way to save money on your insurance premium.


Paying a higher deductible will lower your insurance premium but will increase your upfront costs in the event of an accident or damage.

2. Bundle Your Home Insurance and Auto Insurance

Many companies provide discounts on your auto insurance premium if you bundle your auto insurance policy with another policy from the same provider, like homeowners insurance. Bundling is also known as a multi-policy discount.

Liberty Mutual, for example, allows you to bundle auto insurance with homeowners or condo insurance. The average annual bundled rate for auto insurance with Liberty Mutual is $750 compared to $1,637 without bundling. We’re talking about a 50 percent savings rate for bundling here! Learn more about Liberty Mutual’s pricing.

Allstate’s multi-policy discount extends to homeowners and renters insurance. The average annual bundled rate for auto insurance with Allstate is $1,255 compared to $1,673 without bundling, a 25 percent discount.

3. Drop Coverages

drop coverages

One way to reduce your car insurance rates is to drop unnecessary coverages. There are six basic types of auto insurance. Some states require these four:

  • Bodily injury
  • Property damage
  • Medical payments or personal injury protection
  • Uninsured/underinsured motorist

No states require collision or comprehensive insurance. In most cases, it pays to purchase them; however, reducing coverage to the minimum on older cars might lower your car insurance costs.

Insurance payments for collision and comprehensive coverage are limited to the car’s actual cash value. If you total an older car in a covered collision, the maximum amount your insurer will pay you to replace it is the car’s depreciated value, which could be lower than the cost of your premium. A rule of thumb is that if your car is worth less than 10 times the premium, purchasing collision or comprehensive coverage might not be cost-effective3.

Read over your auto insurance policy thoroughly if you’re renewing or considering switching providers; it may contain features you don’t need. If you find coverages that don’t apply to your situation or know you can live without, like rental car insurance or roadside assistance, eliminate them.

4. Get Car Insurance Discounts

One of the easiest ways to reduce car insurance costs is to take advantage of auto insurance discounts. These discounts differ between companies, but some of the most common include:

  • Installing anti-theft devices
  • Having safety features like airbags, daytime running lights, and antilock brakes
  • Taking a defensive driving course
  • Avoiding accidents and traffic violations
  • Being a longtime customer (loyalty)
  • Insuring more than one car

Some auto insurance providers offer discounts based on affiliation, such as senior driver and military discounts. Driving habits change as you get older — maybe you stop commuting or get a new vehicle — prompting you to rethink your coverage. Here are some discounts based on customer profile:

  • Military: Drivers in unique circumstances, like active duty military and veterans, should shop around for affordable and personalized coverage. For example, USAA serves only the military community and offers discounts geared toward service members, like for garaging your car while deployed or on a military installation.
  • Young driver: Parents of teen drivers should be on the lookout for discounts like:
    • Defensive driving or driver training
    • Good student
    • Multi-car/family
    • Teen driver monitoring (GPS)
    • Young driver
    • College students may also be eligible for good student or student away from home discounts. College or university students who leave their insured cars at home while attending school more than 100 miles away could qualify for a lower rate.
  • Group rates: Another way to receive discounted insurance rates is to insure your car through your employer, a professional organization, or an alumni group. Group insurance reduces costs due to the relatively higher negotiating power of a large group versus an individual.

Some auto insurance providers offer a garage discount if you park in a secure lot, which reduces the likelihood of auto theft and vandalism. In the U.S. in 2020, a motor vehicle was stolen every 39 seconds4. Parking in well-lit, secure garages reduces the risk of theft and damage.

Save money by switching to usage-based insurance that adjusts your price based on how much you drive. There are a couple of types of usage-based insurance discounts:

  • Mileage: Pay-as-you-drive (PAYD) programs translate to better prices if you drive fewer miles. Your insurer will check your odometer at each renewal period.
  • Safe driving behaviors: Some usage-based programs offer discounts for safe driving habits. Typically, insurers will install a device in your car or require you to use a mobile app that tracks how you drive using a technology called telematics. Certain behaviors, including how sharply you turn, how hard you brake, and how fast you accelerate, will contribute to an adjusted discount based on your driving record at renewal time.


You’ll pay less for car insurance if you drive safely and avoid accidents. Many insurance companies incentivize safe driving habits through discounts for taking a defensive driving course, installing safety or anti-theft technology, or tracking your driving habits.

5. Lower Limits

lower limits
An insurance limit is the maximum amount your insurance company will pay for a covered claim. Each type of coverage you purchase with your policy has a limit. Liability coverage limits are determined by state law, with each state setting the minimum amount drivers must purchase (you can buy coverage above that limit if you want). Comprehensive and collision coverage max out at the cash value of your car at the time of the accident.

Lowering your limits will decrease your monthly premium because you will be on the hook for more money in the event of an accident. Once you reach your coverage limit, you will pay out of pocket for additional expenses. Think carefully about how much you would be able to pay in an emergency before you decrease your coverage limits.


  1. How Do Auto Insurance Deductibles Work? American Family Insurance. (2022).

  2. Economic Well-Being of U.S. Households in 2020 – May 2021. Board of Governors of the Federal Reserve System. (2021).

  3. Nine ways to lower your auto insurance costs. III. (2022).

  4. Vehicle Theft Prevention. NHTSA. (2022).