10 Ways to Lower Your Car Insurance Costs

American motorists are grappling with the soaring cost of car ownership, skyrocketing gas prices, and higher auto insurance costs.

While gas prices have hit a fresh high, averaging at $5.09 per gallon, the highest in recorded history, according to AAA. The rise in Brent crude oil prices and the geopolitical tension have put a financial strain on drivers, leading to higher prices at the pump.

Besides the skyrocketing prices commuters are paying to fill their tank, some major insurance providers have already increased their car premiums for 2022, with auto insurance now costing $100 more than it did in 2021.

Annual premiums now average at $1,771, roughly $700 more than in 2019, when motorists paid around $1,071, according to a new Bankrate study. The higher premiums have meant that American motorists are seen coughing up roughly 2.57% of their annual income to insure their vehicles.

These soaring costs exclude other ownership expenses such as servicing, fuel, and purchase price.

With millions of Americans already planning to travel this summer, both domestically and internationally, higher overall car ownership costs are biting into their wallets and slashing their budgets as costs keep jumping.

Many have found themselves between a rock and a hard place, as car insurance is vital to the safety and security of drivers and their families. Considering what would happen to a person in a car accident with no insurance, the lasting effects could pose a major financial burden.

Between the rising cost of living and soaring interest rates, it may seem almost impossible to lower costs on your auto insurance. Luckily, there are a few ways that can help you adjust your financial position, looking to save you money while keeping your vehicle covered.

Here are some of the best ways you can save on car insurance this year.

Educate Yourself on Car Insurance Premiums

A recent Forbes Advisor survey polled roughly 2,000 American car insurance holders to establish whether factors such as gender, credit, education, and occupation should play a role when setting up car insurance rates.

While the poll found that consumer opinions vary among these factors, a majority of drivers, roughly 62%, mentioned that gender should not be a determining factor in auto insurance quotes. Moreso, 42% stated that credit should be evaluated during car insurance quotes, and 58% believed it’s fine if occupation weighs in on the final cost of car insurance.

Using this sample, it has become important for drivers to educate themselves on the basics of car insurance premiums. Looking at things that will influence the price you pay, whether it’s your gender, occupation, or even your state of health, Each determining factor weighs in on the final price you’re likely to end up paying.

It seems monumental to read through the seemingly endless product offerings and have to wrap your head around the jargon. But you need to make sure that you pick an insurance company that meets your basic needs and offers you a product based on predetermined principles.

Shop Around

American motorists are in the comfortable position of having more than one option when it comes to their auto insurance provider. There are dozens of insurance providers, allowing you to shop around and choose an option that fits your needs and budget.

Another reason you should research before making a final decision is that not every driver’s profile and circumstances are the same. For example, one company may offer very standardized insurance products, while another builds you a package based on your driving experience, age, credit, and occupation, among other things.

Once you have found a few options that you think might work for you, you can compare them with one another. Again, look for the differences to see which offers you the best possible coverage and rates at the same time.

If you work in healthcare, more specifically, nursing, you might be lucky enough to receive some discount on car insurance if you have a policy with GEICO, Liberty Mutual, or Nationwide. These are among the many perks and benefits that drivers miss out on when they ignore the abundance of auto insurers offering such benefits.

You can also research online to see which national provider has the best rates in your state. Although making a final decision can take a bit more time, it does mean you’ll be well educated on the best possible options.

Don’t Buy Add-Ons You Don’t Need

Insurance companies are notorious for selling additional products and services to their clients. Yes, there are instances where an additional add-on might seem like a smart decision at the time, but that extra $10 or $40 you spend each month quickly starts to add up over time.

In some instances, drivers tend to forget about the add-ons they have purchased over the last few years. And while it may seem necessary, you should weigh the financial implications at the time and reevaluate every year.

Practically, it’s good to have yourself and your vehicle covered against the basics such as theft, break-ins, unpredictable weather, or breakdowns. Any additional products you feel are unnecessary can be slashed from your premiums.

The best option is to review your annual policy to see what you’re covered for and look at the products you want to keep on your policy. Always talk to your insurance company first, and see if it’s possible to restructure your policy to your needs.

Opt For Multi-Car Insurance

Often insurance companies will quote a driver on a single vehicle, which in return can work out a lot more expensive than if a driver quoted more than one vehicle or bulk options.

A bulk or multi-vehicle option allows drivers who reside on the same property and are related by blood or marriage to obtain cheaper car insurance. This means that instead of individually ensuring each vehicle, drivers can ensure the bulk of their cars at once.

Not all auto insurance providers will have this option, and it’s always a good idea to ask your insurer if you qualify.

Some insurance companies may also provide you some form of discount rate if you already own a different product or service from them. In this instance, you will be able to pay a lower premium on your auto insurance simply because you’re already an existing customer or member.

Downsize Larger Vehicles

If you notice that your budget is being stretched too thin, there’s a chance that you might need to downsize your cost of living. After eliminating other costly expenses, take a look at downsizing any large or heavy vehicles.

One of the many factors that influence the cost of your insurance is your car’s size, model, make and color. Newer, top-of-the-line vehicles can sometimes be a bit more expensive to insure, as they carry more value. On the other hand, a second-hand car or something with a bit more miles on the clock can often be a bit cheaper.

There’s also the chance that an insurance provider may offer discounts to drivers who have alternative fuel vehicles such as electric or hybrids. Again, your provider may see this as something that plays in your favor, or if you’re insuring a vehicle with a specific purpose, i.e., for business, transportation of goods, etc.

Not all insurance products are the same, so make sure to look at the different options you have available before making a final decision.

Improve Your Credit Record

Having a good credit record can help you with many things. In some states, insurance companies review your credit record before approving your insurance policy. Having good credit can lower insurance costs.

Many drivers do not know there is a strong correlation between your credit rating and your chances of you filing a claim, and auto insurance providers underwrite this in your policy, which makes a big difference in the final price you pay.

Not all companies or states have this option, but it’s always a good idea to review your credit record to see if you’re making improvements. Look for things that can help you build a strong and stable credit score, but keep in mind not all avenues may offer the same outcomes, so be sure about your decision.

Change Your Policy

When your lifestyle changes, so should your policy, and not many people know this.

If you recently started working remotely, moved closer to your work, or are now working from home more frequently, meaning less commute time, you might be able to switch your policy to a pay-per-mile basis.

The usage-based or pay-per-mile insurance coverage works differently than standard products, as it only considers the physical miles you are projected to drive throughout your coverage.

Some insurance companies will provide you with a telematics device or an automatic log book. This will monitor your driving behavior and range to determine the number of miles you put on your vehicle. Additionally, it looks at how well you drive and how often you’re traveling.

Increase Deductibles

The deductible is generally seen as the amount of money you will need to pay before an insurance company pays out for theft or any other damages to your car.

Deductibles can range between $250 to $1,250 and more. The higher your deductible is, the lower your premium tends to be. It works the same way around – if your deductible is lower, you tend to pay a bit more on your monthly premium.

If you’re unsure what your current deductible is, you can talk to your insurance company to find out what the difference would be if you decide to increase your deductible. The increase can help you save a bit on your monthly premium or maybe bump up your premium by several percentage points.

There are different ways to work around this to see what works for your vehicle and budget.

Make Use of Public Transportation

Public transportation tends to work out much cheaper if you reside in an area with a well-established mass transit system. Not only are you able to save on fuel costs, but you’re also able to lower the mileage on your vehicle.

If you tend to use public transportation more often than driving your car, you should inform your insurance company about these changes. In some instances, the insurance company may review your policy and determine whether driving less may impact your premium.

Keep in mind that you will need to lower the miles on your insurance or premium a bit, but it could play in your favor, especially if you work from home or reside in an area where public transportation is more frequently available.

Review Your Insurance Annually

As a paying insurance member, you can review your insurance coverage by talking to an agent from your insurance provider.

Make sure you know what you’re paying for and why you’re paying for it. If you notice something strange or an irregular amount you didn’t agree on, flag it and query your company.

Be honest about your situation, and inform your insurance company about any lifestyle changes you have made over the last couple of months that could have a positive impact on your costs.

The Bottom Line

Auto insurance is something one can’t do without. It protects your family and your financial well-being if you ever encounter any problems or unforeseen accidents.

These products exist to provide you with peace of mind wherever you may be driving or traveling.

Although the cost of living may be sky-high at the moment, it’s not to say that you should be paying more for your auto insurance. Be open to doing a bit of research on your current policy and what you’re paying for. If you’re unsure about something, always query it with your company. And if you’re unhappy about something, talk to an affiliated agent or even shop around for something more suitable.

There’s a lot that can determine the price you pay for car insurance, so make sure you get the best possible deal.

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