Car insurance is one of those expenses that feels like a necessary evil. We all need it, but no one likes paying for it. For years, I just accepted my high premiums as part of the cost of owning a car. That is, until I realized I was paying way more than I needed to. After some research, strategic moves, and a few phone calls, I managed to cut my car insurance costs by 40%—without sacrificing the coverage I needed.
In this article, I’m sharing the exact steps I took so you can do the same. If you’re tired of high premiums eating into your budget, here’s how you can reduce your car insurance costs while keeping the protection you deserve.
Why My Insurance Costs Were So High
Before I dive into the solutions, here’s a bit of context. I was paying around $180 a month for car insurance, totaling $2,160 a year. My coverage included:
- Liability: $100,000 per person, $300,000 per accident
- Collision and Comprehensive coverage
- Uninsured Motorist protection
- A $500 deductible
I have a clean driving record, but my rates were still high because:
- I was driving a newer vehicle (a 2018 sedan).
- I hadn’t shopped around for a better deal in years.
- I wasn’t taking advantage of available discounts.
It was time for a change. Here are the five strategies I used to cut my insurance costs by 40%.
1. Shopping Around and Switching Providers
The Power of Comparison Shopping
I realized my loyalty to my current insurer wasn’t doing me any favors. Car insurance rates can vary widely between providers for the exact same coverage. The first thing I did was get quotes from multiple companies. I used online comparison tools like:
- The Zebra
- Gabi
- Policygenius
After entering my information, I was surprised to see that some insurers were offering me rates as low as $110 a month for the same coverage I currently had.
How to Compare Effectively
- Gather Your Information: Have your current policy details, vehicle info, and driving history ready.
- Get Quotes from at Least 5 Companies: Don’t settle for the first quote.
- Look Beyond the Big Names: Consider regional insurers who may offer competitive rates.
My Savings: $40 a Month
I ended up switching to a new insurer that offered the same coverage for $140 a month, saving me $40 a month right off the bat.
Lesson Learned: Loyalty doesn’t always pay. Shop around every year or two to make sure you’re getting the best rate.
2. Increasing My Deductible
Balancing Risk and Reward
My previous policy had a $500 deductible for both collision and comprehensive coverage. This meant if I filed a claim, I’d pay $500 out of pocket before insurance kicked in. The lower the deductible, the higher the premium.
I realized that by increasing my deductible to $1,000, I could lower my premium significantly. Since I have a good driving record and a small emergency fund, I decided the risk was worth it.
The Math Behind the Move
- Old Deductible: $500
- New Deductible: $1,000
- Monthly Premium Reduction: $30
By raising my deductible, I was saving $360 a year. And because I drive carefully, the likelihood of needing to file a claim was low.
Is Raising Your Deductible Right for You?
- Evaluate Your Risk: If you drive frequently in high-traffic areas, weigh the risk carefully.
- Have an Emergency Fund: Make sure you can cover the higher deductible if needed.
- Consider the Savings: If the premium savings are significant, it may be worth the risk.
Lesson Learned: Increasing your deductible is a simple way to lower your premium, but only do it if you can afford the higher out-of-pocket cost in case of an accident.
3. Taking Advantage of Discounts
Uncovering Hidden Discounts
I wasn’t actively looking for discounts before, and it turns out I was leaving money on the table. When I asked my new insurer about available discounts, I was amazed by the options. Here are the discounts I qualified for:
- Good Driver Discount: For maintaining a clean driving record.
- Bundling Discount: By bundling my auto insurance with renters insurance, I saved 10%.
- Low Mileage Discount: Since I drive less than 10,000 miles a year, I qualified for a low mileage discount.
- Pay-in-Full Discount: By paying my premium annually instead of monthly, I saved another 5%.
How to Maximize Discounts
- Ask About All Available Discounts: Don’t assume your insurer will automatically apply them.
- Combine Policies: Bundle your auto insurance with home, renters, or life insurance.
- Stay Accident-Free: Many insurers reward safe driving with lower rates.
- Check for Affiliation Discounts: Some insurers offer discounts for being part of certain organizations or professions.
My Savings: $20 a Month
By stacking these discounts, I reduced my premium by another $20 a month, saving $240 a year.
Lesson Learned: Always ask about discounts. You might be surprised by how much you can save.
4. Improving My Credit Score
How Credit Affects Your Premium
I knew my credit score affected my ability to get a loan, but I didn’t realize it also impacted my car insurance rates. Many insurers use credit-based insurance scores to determine premiums. A higher credit score can mean lower rates.
When I checked my credit score, it was 680—decent, but not great. Over the next few months, I focused on:
- Paying down credit card balances
- Making all payments on time
- Avoiding new credit inquiries
The Result
My score improved to 730, and when I updated my information with my insurer, my premium dropped by $10 a month.
How to Boost Your Credit Score
- Pay Bills on Time: Late payments hurt your score.
- Lower Your Credit Utilization: Aim to keep your credit card balances below 30% of your limit.
- Check Your Credit Report for Errors: Dispute any inaccuracies.
Lesson Learned: A good credit score isn’t just for loans; it can save you money on insurance, too.
5. Dropping Unnecessary Coverage
Assessing My Real Needs
When I reviewed my old policy, I realized I was paying for coverage I didn’t really need. For example:
- Rental Car Reimbursement: I rarely rent cars, so I dropped this coverage.
- Roadside Assistance: I already had roadside assistance through my credit card.
- Comprehensive Coverage: Since my car was now five years old, I considered whether I still needed full coverage.
By trimming unnecessary add-ons, I saved another $20 a month.
How to Decide What Coverage to Drop
- Evaluate Your Situation: If your car is older and paid off, you might not need comprehensive coverage.
- Check for Redundant Coverage: See if you’re double-covered through memberships or credit cards.
- Weigh the Risk: Only drop coverage if you’re comfortable with the potential risk.
Lesson Learned: Customize your policy to fit your actual needs, not just what the insurer suggests.
The Results: Cutting Costs by 40%
Here’s how it all added up:
- Switching Providers: Saved $40/month
- Increasing Deductible: Saved $30/month
- Discounts: Saved $20/month
- Improving Credit Score: Saved $10/month
- Dropping Coverage: Saved $20/month
Total Savings: $120/month (from $180 to $108)
That’s a 40% reduction in my car insurance costs, saving me $1,440 a year. And the best part? I still have the coverage I need to feel protected.
Final Thoughts
Cutting your car insurance costs doesn’t mean cutting corners on coverage. By shopping around, adjusting your deductible, maximizing discounts, improving your credit score, and customizing your coverage, you can save hundreds—or even thousands—of dollars a year.
If you’re tired of overpaying for car insurance, take action today. A few simple changes could lead to big savings and put more money back in your pocket.
