The fastest ways to lower your premium

Your auto insurance premium is set by a formula that weighs your driving record, the car you drive, how much you drive, where you live, and the coverage limits you choose. You cannot change your zip code or your past accidents, but you can change almost everything else—and each change saves money in a measurable way. The biggest savings come from raising your deductible, bundling policies, and asking your insurer what discounts you already meet the conditions for.

Most people pay more than they need to because they have never asked their insurer directly what discounts exist or because they are carrying coverage they no longer need. A single phone call to your agent or a visit to your insurer's website can surface $300 to $600 in annual savings without changing your driving habits or your car.

Key Takeaways

  • Raising your deductible from $500 to $1,000 typically cuts your collision and comprehensive premiums by 15 to 30 percent, depending on your insurer and state.
  • Bundling your auto policy with homeowners or renters insurance usually saves 10 to 25 percent on your auto premium alone.
  • Low-mileage discounts, good-driver discounts, and safety-feature discounts are common but require you to ask—insurers do not always explore them automatically.
  • Paying your premium in full rather than monthly can save 5 to 10 percent, and paying by automatic bank transfer instead of check or credit card sometimes saves an additional 1 to 3 percent.
  • Switching insurers every two to three years often saves more money than staying loyal, because new-customer discounts and rate reductions for competitors are larger than loyalty rewards.

Raise your deductible if you have emergency savings

Your deductible is the amount you pay out of pocket before your insurance covers a claim. Collision and comprehensive coverage (which cover damage to your own car) both have deductibles. Liability coverage does not.

Moving from a $500 deductible to $1,000 typically reduces your collision and comprehensive premiums by 15 to 30 percent combined, depending on your insurer, your car's age, and your state. A $250 deductible costs noticeably more than $500, so the jump from $500 to $1,000 is usually the best trade-off. Only raise your deductible if you have at least that amount in savings and can afford to pay it if you have an accident.

If you have an older car worth less than $5,000, dropping collision and comprehensive coverage entirely saves even more—often $40 to $80 per month. You would pay for repairs out of pocket, but the math works if your car is worth less than three years of premiums.

Bundle your auto policy with other insurance

Bundling your auto policy with homeowners, renters, or umbrella insurance typically saves 10 to 25 percent on your auto premium. Some insurers offer smaller discounts—5 to 10 percent—but most major carriers (State Farm, Allstate, GEICO, Progressive, Nationwide) offer the larger range. The discount applies even if you bundle only two policies.

If you rent rather than own, bundling auto and renters insurance still qualifies for the discount at most insurers. The savings usually exceed what you would pay for renters insurance alone, so bundling often costs less than keeping policies separate.

To bundle, contact your current auto insurer and ask what other policies they offer, or get a quote from an insurer that sells multiple types of coverage. Some insurers require you to bundle through their website to lock in the discount; others explore it automatically once policies are linked to the same account.

Ask about discounts you may already meet

Most insurers offer discounts for safe driving, low annual mileage, completing a defensive driving course, having safety features on your car, being a student with good grades, and bundling. Many also offer discounts for paperless billing, automatic payments, and being a long-term customer. The problem is that insurers do not always explore these discounts automatically—you have to ask.

Call your insurer's customer service line or log into your online account and look for a "discounts" or "savings" section. Write down every discount you see listed, then call and ask which ones you currently receive and which ones you could receive by meeting straightforward conditions. A good-driver discount usually requires three to five years without accidents or violations. A low-mileage discount typically applies if you drive fewer than 7,500 to 10,000 miles per year—you may need to install a mileage-tracking app or provide odometer readings.

Defensive driving course discounts (sometimes called accident-prevention or safe-driver course discounts) typically save 5 to 15 percent and require you to complete an online or in-person course, usually two to four hours long. Your insurer will tell you which courses they accept. Some states also offer insurance discounts through their Department of Motor Vehicles for completing an approved course.

Pay your premium in full and by automatic transfer

Paying your entire annual or six-month premium at once instead of in monthly installments typically saves 5 to 10 percent. Paying by automatic bank transfer (also called automatic draft or ACH) instead of by check, credit card, or phone payment sometimes saves an additional 1 to 3 percent. Combined, these two changes can save $100 to $200 per year on a typical premium.

The savings exist because monthly payments require the insurer to process more transactions and send more billing notices, and because credit card payments include processing fees. Automatic bank transfer is the cheapest method for the insurer, so they discount it. If you cannot afford to pay the full premium at once, paying by automatic transfer still saves you the 1 to 3 percent compared to other payment methods.

Switch insurers every two to three years

Loyalty to one insurer rarely pays. Most insurers offer the largest discounts to new customers and raise rates for existing customers over time—sometimes by 10 to 20 percent after three years, even if you have had no accidents or violations. Switching to a competitor every two to three years usually saves more money than staying put.

Get quotes from at least three insurers before you switch. Use the same coverage limits and deductibles for each quote so you can compare apples to apples. Many insurers offer online quote tools that take 10 to 15 minutes. Once you find a lower rate, contact your current insurer and ask if they will match it or offer a retention discount. Some will; many will not. If they do not, switch. The new insurer will handle the cancellation of your old policy as part of the process, or you can cancel it yourself once your new coverage starts.

Switching does not affect your driving record or your insurance history. Your new insurer will see your claims history and driving record, but they will price you as a new customer, which usually means a discount.

Compare coverage types you may not need

Liability coverage (which pays for damage you cause to someone else's car or property) is required by law in every state. Collision and comprehensive coverage (which cover your own car) are required only if you have a loan or lease on the vehicle. Once you own the car outright, you can drop them.

Uninsured motorist coverage protects you if someone without insurance hits you. Underinsured motorist coverage protects you if someone with low liability limits hits you. Both are optional in most states but are worth keeping if you live in an area with high rates of uninsured drivers. Your insurer can tell you the uninsured-driver rate in your state.

Medical payments coverage (sometimes called med-pay) pays your medical bills after an accident, regardless of who was at fault. It is optional and overlaps with your health insurance, so you may not need it. Rental reimbursement covers a rental car while yours is being repaired. It is cheap (usually $10 to $20 per year) but only useful if you cannot go without a car during repairs. Review your policy's coverage section to see what you are paying for and whether you actually need it.

Frequently Asked Questions

Does shopping around for quotes hurt my credit score?

No. Insurance quotes are considered soft inquiries and do not affect your credit. You can get quotes from 5 to 10 insurers without any impact. Hard inquiries (which do affect credit) happen only if you actually purchase a policy, and even then the impact is small and temporary.

Will my rate go up if I file a claim?

Usually yes, but the amount varies by insurer and state. A minor claim (like a small fender-bender) might raise your rate 10 to 15 percent for three years. A major claim or at-fault accident can raise it 20 to 40 percent. Some insurers offer accident forgiveness, which prevents your first accident from raising your rate—ask if you have this coverage.

What is the difference between actual cash value and agreed value?

Actual cash value pays what your car is worth at the time of the loss, minus depreciation. Agreed value (usually available for classic or specialty cars) means you and the insurer agree on the car's value upfront, and that is what you get paid if it is totaled. Agreed value costs more but protects you if your car is rare or has appreciated.

Can I get a discount for taking a defensive driving course?

Yes. Most insurers offer 5 to 15 percent discounts for completing an approved defensive driving course, usually two to four hours long. Some courses are online, others in person. Your insurer will tell you which courses they accept. Some states also offer DMV-based discounts for completing an approved course.

What happens to my insurance if I move to a different state?

Your rates will change because insurance is regulated by state and rates vary by state. Contact your insurer and give them your new address. They will recalculate your premium based on your new location's risk factors. You may also need to update your driver's license and vehicle registration. Some states have different minimum coverage requirements, so your policy may need to change.