Car insurance is one of the largest fixed costs for most households that own a vehicle, and it is also one of the most flexible. Unlike rent, the rate you pay is not determined by a single landlord. It is calculated by algorithms that weigh dozens of factors, and those algorithms produce dramatically different prices across companies for the same driver and the same car. Shopping around is the single most effective thing you can do to reduce your premium.
Get quotes from at least three companies
The difference between the highest and lowest quotes for the same coverage can be 40 to 50 percent. Sites like The Zebra, Policygenius, and Insurify compare multiple insurers simultaneously and take about 10 minutes to use. You should also get a direct quote from your current insurer and from any company you have heard of but not checked recently, since some companies specifically target customers who have clean records and are simply with a more expensive carrier.
Review your coverage levels honestly
Comprehensive and collision coverage pay to repair or replace your own vehicle. For an older car with a low market value, the premium for these coverages may exceed what you would actually receive in a claim. A general rule of thumb is that if the annual cost of comprehensive and collision coverage exceeds 10 percent of the car's value, dropping those coverages may make financial sense. This is not appropriate for newer or high-value vehicles, but it is worth running the numbers on an older paid-off car.
Ask about discounts your insurer has not told you about
Insurers offer discounts for good driving records, completing a defensive driving course, bundling auto with home or renters insurance, paying the full premium annually rather than monthly, having safety features on your vehicle, and in some cases for low annual mileage. These discounts exist but are often not proactively offered. Calling your insurer and asking what discounts you currently qualify for and what additional ones you might be eligible for takes about 10 minutes and occasionally produces meaningful savings.
Consider usage-based insurance
Many insurers now offer usage-based programs that track your actual driving through a mobile app or a device plugged into your car. If you drive safely and do not drive many miles, these programs can reduce your premium by 10 to 30 percent. They work best for people who drive infrequently, commute off-peak hours, and do not accelerate or brake hard. If you are a high-mileage or primarily highway driver, the savings may be smaller or nonexistent.
Shop again every year or two
Insurance rates change over time as your driving history ages, your vehicle depreciates, and insurers adjust their pricing models. A rate that was competitive two years ago may not be today. Setting a reminder to get comparison quotes each year when your policy renews takes about 20 minutes and can save hundreds of dollars if you are with a carrier whose pricing has drifted above the market.