You own a car, you pay for insurance. It’s as simple as that. What may not be as obvious is that you may have some control over what you spend. Despite the fact that the industry is highly regulated, not all car insurance is the same. Shop online and you’ll find different prices and products. This is because insurance companies have their own ways of calculating prices, and that provides consumers with options to shop and compare. If you're looking to lower your premiums—and who doesn’t want to save money?—here are a few ideas to consider.

Key Takeaways

  • Shopping around may match you up with an insurer that provides coverage that’s the best fit for your needs.
  • Make sure you haven’t bought too much coverage, especially if you drive an older car.
  • Increasing the deductible on your policy may lower your premium.
  • Bundling your car insurance with your homeowners or other insurance might also cut your costs.


Shop and Compare

The first thing that you'll want to do is compare your rates with quotes from different insurers. Despite strict state oversight, companies have different pricing algorithms, so shopping around should pay off. This is especially true if your credit score is low, you’ve had a recent accident, or you have an insurance claim on your record. Companies will treat that activity differently, so getting quotes from several insurance carriers is a good way to find a proper fit for your situation.

Even if you have a perfect driving record and great credit, getting multiple quotes is a good idea. Again, each company has a different way of calculating the amount they charge, and not all of those are in your control. Your demographic information, vehicle information, and location will factor in differently depending on the company, so shop around. Most insurance companies make getting a quote simple, which makes getting prices from different insurance carriers pretty easy.

Buying Too Much Coverage?

You may have too much insurance. The more coverage you have, the higher your premiums will be, so make sure you don't buy more than you need. In addition to liability insurance, which covers damage to other cars or property if you’re at fault, many policies include comprehensive insurance or collision insurance. If you have an older vehicle or one that isn't driven often, you may decide to forfeit these kinds of insurance. This will lower your costs. Just be sure that your quotes are for the same coverage and terms when comparing policies.

Consider Increasing Your Deductible

Another way to lower your insurance costs is by increasing your deductible. A deductible on an insurance policy is the out-of-pocket amount you pay on a claim before coverage kicks in. If you have a policy with a $500 deductible and have a claim for $2,800, then you will get $2,300 (the $2,800 claim amount minus the $500 deductible).

Increasing the amount of your deductible generally cuts your premium. Remember that if you win a claim, the amount of money you'll receive will be less with a higher deductible. Still, if you're comfortable with the risk, this can make sense, especially if you drive an older car or insure one that’s not driven much.

Bundle Different Types of Insurance

Insurance companies typically offer many kinds of policies. If your policies are spread among different insurers, you may be leaving money on the table. Companies want as much of your business as possible, so they often offer discounts if you buy multiple policies. Bundling your home, auto, and other types of insurance with one carrier may lower the amount you pay each month.

The Bottom Line

Saving money is a good thing, and lowering your car insurance premiums can be one way to keep a little extra in your pocket. Shopping around and comparing rates at different companies is one way to save: Different companies have different pricing algorithms, which explains why there is so much variation in insurance premium costs.

Another thing you can do to lower your premium is to make sure you have the right coverage for your situation. You may be comfortable with less coverage overall, or a higher deductible on an older car or a car that you rarely drive. Finally, consider bundling homeowners, renters, or other insurances with the same company as the one that provides your car insurance. Many carriers offer additional discounts when you have multiple policies with them.

Consumers may not know they can shop for cheaper car insurance. This article features step-by-step instructions on how to evaluate and cut your costs.