Where to Start Looking for Lower Rates

The fastest way to lower your car insurance cost is to get quotes from at least three different insurers, because the same driver and vehicle can cost $800 a year with one company and $1,200 with another. You do not need to switch insurers to find out — most will quote you online in 10 minutes without requiring you to commit.

Start with the insurers you have heard of: State Farm, Geico, Progressive, Allstate, USAA (if you are military or a veteran), and your current insurer if you have one. Then add one regional carrier that operates in your state — these often undercut national companies for drivers in specific areas. Your state's insurance commissioner website lists all licensed insurers in your state, though calling three to five companies is usually enough to find the lowest price.

When you get quotes, use the same coverage limits and deductibles for each one, so you are comparing apples to apples. Most states require liability coverage (which pays for damage you cause to someone else), and if you have a car loan or lease, your lender requires collision and comprehensive coverage (which covers damage to your own car). The deductible is what you pay out of pocket when you file a claim — raising it from $500 to $1,000 usually lowers your premium by 10 to 15 percent, but only if you have that cash available when you need it.

Key Takeaways

  • Getting quotes from at least three insurers takes 30 minutes and often reveals price differences of $300 to $500 a year for the same coverage.
  • Raising your deductible from $500 to $1,000 typically cuts your premium by 10 to 15 percent, but only do this if you can afford to pay that amount out of pocket.
  • Bundling your car insurance with home or renters insurance usually saves 10 to 25 percent on your car policy.
  • Discounts for good driving records, completing a defensive driving course, and paying your premium in full upfront can each save you 5 to 15 percent.
  • Your age, location, driving history, and the type of car you drive affect your rate more than any discount can, so switching insurers every two to three years often saves more than staying loyal.

Discounts That Actually Lower Your Bill

Most insurers offer the same core discounts, though the size of the discount varies. A clean driving record (no accidents or tickets in the past three to five years) typically saves 10 to 15 percent. Bundling your car insurance with a home or renters policy usually saves 10 to 25 percent on your car premium. Paying your full premium upfront instead of monthly often saves 5 to 10 percent because the insurer avoids processing fees.

Completing a defensive driving course — usually an online class that takes three to four hours — can save 5 to 10 percent for three years, then you need to retake it. Some insurers offer discounts for low mileage (usually under 7,500 miles per year), for having safety features like automatic emergency braking, or for letting them monitor your driving through a mobile app. These monitoring programs typically save 10 to 30 percent if you drive safely, but they track your location and driving habits, so read the privacy terms before signing up.

Ask your insurer for a full list of discounts when you get a quote, because not all of them appear on the website. Some insurers discount for paying by automatic bank transfer, for being a student with good grades, for being retired, or for working in certain professions. The total of all discounts can reach 40 to 50 percent off the base rate, though most people may have access to for three to five.

How Your Driving Record and Age Affect Your Rate

Your driving record is the single largest factor in your rate. A single at-fault accident or ticket can raise your premium by 20 to 40 percent for three to five years, depending on the severity and your insurer. A DUI or reckless driving conviction can raise it by 50 to 100 percent or more, and some insurers will not cover you at all if you have one within the past five to seven years.

Age also matters significantly. Drivers under 25 and over 70 pay substantially more than drivers aged 30 to 65, because insurance data shows these groups have more accidents. A 19-year-old might pay two to three times what a 40-year-old pays for the same car and coverage. This does not change until you reach your mid-60s, when rates begin climbing again. If a young driver is listed on your policy, their age will raise the overall premium even if they are not the primary driver.

If you have a poor driving record, your options are more limited. Standard insurers may refuse to cover you, and you may need to use a high-risk or non-standard insurer, which charges 50 to 100 percent more than standard rates. Some states run assigned risk pools that force insurers to take high-risk drivers at regulated rates, though these are still expensive. Your state's insurance commissioner can tell you which insurers serve high-risk drivers in your state.

Choosing the Right Coverage for Your Situation

The coverage you need depends on whether you own your car outright or have a loan. If you own it outright and it is worth less than $5,000, carrying only liability coverage (the minimum your state requires) might make sense, because collision and comprehensive coverage would cost almost as much as the car is worth. If your car is worth $10,000 or more, or if you could not afford to replace it, collision and comprehensive coverage protects you if you cause an accident or your car is damaged by weather, theft, or vandalism.

Liability coverage has two parts: bodily injury (which pays medical bills and lost wages for people you injure) and property damage (which pays to fix or replace their vehicle or property). Most states require minimums like $25,000 per person and $50,000 per accident for bodily injury, and $25,000 for property damage. These minimums are often too low — if you cause a serious accident, you could be sued for more. Raising your limits to $100,000 per person and $300,000 per accident usually costs only $10 to $20 more per month and protects your assets if you are sued.

Uninsured and underinsured motorist coverage pays your medical bills and car repairs if you are hit by someone without insurance or without enough insurance. This is inexpensive (usually $5 to $15 per month) and protects you in a situation you cannot control, so most financial advisors recommend carrying it.

When to Switch Insurers and When to Stay

Loyalty to an insurer rarely pays off. Most people save money by switching every two to three years, because insurers often raise rates for existing customers while offering lower rates to new ones. After you have been with an insurer for three to five years, your rate may be 20 to 30 percent higher than what a new customer would pay for the same coverage. Getting quotes every two years takes an hour and often reveals savings of $300 to $600 per year.

When you find a lower rate and decide to switch, check the cancellation terms of your current policy. Most insurers let you cancel anytime, though some charge a small cancellation fee if you cancel mid-term. Do not cancel your old policy until your new one is active — there should be no gap in coverage. If you are mid-term with your current insurer and switching would save you money, the savings over the remaining months usually outweigh any cancellation fee.

Some life changes warrant getting new quotes when ready rather than waiting two years. Getting married, moving to a different state or neighborhood, buying a different car, or turning 25 (when rates typically drop) can all significantly change your rate. After any of these events, spend 30 minutes getting three new quotes to see if switching makes sense.

How Your Car Choice Affects Your Insurance Cost

The type of car you drive affects your insurance rate because insurers use data on repair costs, safety ratings, and theft rates for each model. A sports car or luxury sedan typically costs more to insure than a sedan or SUV of the same age, because repairs are more expensive and theft is more common. A car with a high safety rating and good crash test scores may may have access to for a discount. A car with anti-theft devices or passive safety features like automatic emergency braking may also cost less to insure.

If you are shopping for a car and insurance cost matters to you, ask your insurer for a quote on the specific models you are considering before you buy. The difference between two cars can be $200 to $400 per year. Used cars are generally cheaper to insure than new ones because they are worth less, so collision and comprehensive coverage costs less. A five-year-old Honda Civic might cost $100 to $200 per year less to insure than a new one.

Frequently Asked Questions

What is the cheapest type of car insurance?

Liability-only coverage (the minimum your state requires) is the cheapest, but it only pays for damage you cause to someone else — not damage to your own car. If you have a car loan or lease, your lender requires collision and comprehensive coverage, so you cannot choose liability-only. If you own your car outright and it is worth less than $5,000, liability-only may be the most cost-effective choice.

Do I have to get insurance quotes from every company?

No. Getting quotes from three to five insurers usually reveals the lowest price in your area without taking too much time. You do not need to contact every insurer — the major national companies and one or two regional carriers are usually enough to find competitive rates.

Will my rate go down if I pay my insurance in full instead of monthly?

Most insurers offer a 5 to 10 percent discount for paying your full premium upfront instead of in monthly installments. Some also offer small discounts for setting up automatic payments from your bank account. These discounts vary by insurer, so ask when you get a quote.

How long does a ticket or accident stay on my driving record?

Most insurers look back three to five years at your driving record, though some look back seven years for serious violations like DUI. After that time, the incident usually stops affecting your rate, though it may still appear on your record. The exact timeframe varies by insurer and by state.

Can I lower my insurance by taking a defensive driving course?

Yes. Most insurers offer a 5 to 10 percent discount for completing an approved defensive driving course, and the discount usually lasts three years. After that, you can retake the course to renew the discount. The course typically takes three to four hours and costs $20 to $50, so the savings usually pay for it within the first year.