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Is your car insurance premium making it difficult to keep to your budget? The cost of auto insurance has increased sharply over the past few years — with a 19% price jump for the year ending in August 2023. That well outpaced the 3.7% overall rate of inflation.
But you don’t have to accept these higher rates. You can use several car insurance hacks to reduce your premiums — even with auto insurance prices spiking. Here are eight of the best tips for cheaper car insurance.
- The cost of auto insurance increased 19% for the year ending in August 2023.
- Many drivers may be eligible for discounts on their car insurance.
- Driving a used car and taking a defensive driving course can help lower your insurance costs.
The 8 Best Ways to Save on Car Insurance in 2023
Here’s the good news: the amount you pay for car insurance isn’t set in stone. Any of these small adjustments to your auto insurance policy, driving habits, or payment process can help you save money.
1. Check for discounts
The majority of car insurance companies offer discounts to eligible drivers. Some common discounts include:
- Continuous coverage discount: Your insurer may reward your loyalty if you maintain coverage with them when it’s time to renew. You can save money by doing nothing more than calling your insurance agent.
- Referral discount: If a friend refers you to their insurer, both you and your friend can save money.
- Affinity discount: Your employer, profession, membership to an organization, or military service might make you eligible for auto insurance discounts.
- Automatic payment discount: Enroll in auto pay and save.
2. Adjust your coverage levels
Your auto insurance premium is based on the coverage levels you choose for your vehicle. Opting for a lower coverage level instantly lowers your rates, so it’s smart to re-evaluate your coverage levels occasionally. But remember, you must have the minimum amount of coverage to meet your state-mandated requirements for coverage types and limits.
Adjusting your coverage levels saves you money in the short term, but be cautious about this car insurance hack. If you cause an accident where the damages exceed your coverage limits, you’ll be on the hook for the difference.
3. Raise your deductibles
A deductible is the amount of money you must pay before your insurer kicks in any payment for a claim. Raising your deductible from $200 to $500 could save you 15% to 30% in premium costs, while switching to a $1,000 deductible could save you 40% or more, according to the Insurance Information Institute (Triple-I).
The downside of increasing your deductible is that you’ll have to pay the increased amount if you file a claim. If paying the higher deductible would be hard, it may make more sense to keep a lower deductible until you can afford the higher out-of-pocket expense.
4. Bundle your auto and home insurance
Purchasing auto insurance and homeowners insurance from the same insurer — also known as “bundling” — can make you eligible for a multi-policy discount. That means you’ll save money on your home and auto insurance policies. The amount of money you can save varies, but it can range from 5% to an impressive 25%.
Homeowners insurance isn’t the only coverage you can bundle with your car insurance. You may also save money by bundling renters insurance, boat/motorcycle/RV insurance, life insurance, or umbrella insurance with your auto insurance policy.
5. Compare quotes every six months
Even if you haven’t filed a claim, your car insurance premiums can increase when you renew your policy. Factors that can lead to higher insurance rates include the number of crashes in your ZIP code, the cost of medical care, and even the unemployment rate.
Car insurance policies are generally for a six-month or 12-month period. Savvy drivers who opt for a six-month policy can compare quotes every six months. And while some car insurance companies offer loyalty discounts for maintaining your policy, the money you save by switching insurers might lead to more savings than the loyalty discount.
Compare the Best Rates from Top Companies
6. Pay your policy in full up front
Paying your auto insurance policy in full at the beginning of your new policy period could make you eligible for a paid-in-full discount. Instead of making payments in monthly installments, you would pay a lump sum at the beginning of your policy term. Insurance companies may offer a discount of 5% to 10% for making the full payment up front.
While paying in full can save you money, it may be difficult to afford this hack if you don’t have access to the amount of the lump sum. It might be easier to budget for monthly payments — even if you spend 5% to 10% more overall.
7. Buy a used car
Insuring a used car generally costs less than insuring a new one. Newer cars tend to have more technology, which makes them more expensive to repair. Also, lenders may require drivers who finance a new vehicle to purchase collision and comprehensive coverage.
While your car’s model year is an important factor in how your auto insurer calculates your premium costs, the specific make and model of your car can also affect how much you pay.
Learn more: The Cheapest Cars to Insure in 2023
8. Take a defensive driving course
A defensive driving course is a type of driver’s education program that focuses on helping you make better decisions behind the wheel — like anticipating another driver’s actions so you can avoid a car accident.
Depending on where you live, your insurance company may offer you a premium discount for successfully completing defensive driver training. Some states require drivers with suspended licenses to complete a defensive driver course to reinstate their driving privileges — but drivers in this situation may not receive a discount from their insurer.
Car Insurance Hacks FAQs
To determine which car insurance hacks will work best for you, get answers to the most common questions about saving money on auto insurance.
How can you lower your car insurance premiums?
You can lower your auto insurance rates in a few quick and easy ways. Start by shopping around to find the insurer with the best rates — and plan on comparing quotes every six months to find the best deal. Next, you can check your eligibility for discounts and bundle multiple policies with your insurer.
You can also consider adjusting your coverage levels, increasing your deductible, and paying your premium in full. Other ways to lower your car insurance premium include buying a used car and taking a defensive driving course.
What factors affect your car insurance rates?
Car insurance companies set their rates based on factors that may or may not be within your control.
Factors you can control include your car’s make, model, and year, the level of coverage and deductible you choose, your driving and claims history, and the number of miles you drive.
The factors outside your control include, the cost of repairs and medical care, your age and gender, and even weather trends in your area. Depending on which state you live in, your insurer may also use your credit score as a factor in determining your premiums.
What hidden car insurance fees can you avoid?
Car insurance companies generally don’t have many hidden fees that consumers need to work to avoid. The most common “hidden fees” among car insurance companies are discounts you may be unaware of. For example, your insurer may give you a discount for signing up for paperless statements or automatic payments.
You may also want to check your policy to see if you’re charged processing fees for various payment options and for exceeding mileage limits.
What are some other common car insurance discounts?
You may be eligible for a number of car insurance discounts, including the following:
- Affinity discounts because of your membership in an organization
- Multi-policy discounts if you bundle insurance policies with the same company
- Discounts for safety features on your car
- Good driving discounts that reward a clean driving record or successful completion of a defensive driving course
- Payment discounts for enrolling in auto pay or paying in full
- Bureau of Labor Statistics, Consumer Price Index – August 2023, accessed Sept. 14, 2023
- Insurance Information Institute, Nine ways to lower your auto insurance costs, accessed Sept. 14, 2023
- Insurance Information Institute, Why did my auto insurance costs go up even when I didn’t file a claim?, accessed Sept. 15, 2023
- NFCC, What to Consider Financially When Deciding to Purchase a New or Used Car, accessed Sept. 15, 2023
- Insurance Information Institute, What determines the price of an auto insurance policy?, accessed Sept. 15, 2023
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