Will My Car Insurance Go Down After a Year?

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Updated May 25, 2022
Woman researching if her car insurance rates will go down after 1 year

It’s true that your car insurance premiums can decrease over time, but there are many factors that determine whether your rates will go up or down. If you’re hoping that your car insurance will decrease after a year, you might be lucky, or your rates could go in the opposite direction. Understanding all of the elements that affect your rates can give you a better idea of when you might see your auto insurance premium decrease. 

In the meantime, you can use other strategies to lower your monthly car insurance premiums. 

Will My Car Insurance Go Down After a Year? 

Your car insurance rates can decrease with time, but there is no guarantee that you’ll see a change at the one year mark. Instead, factors like your age and driving record affect your rates much more than how long you’ve had your plan. Here are some common reasons why your rates might go down. 

Common Reasons Why Car Insurance Rates Decrease

The timing of your premium decreases will depend on several different factors. 

Your Age

One of the most common reasons for your car insurance to decrease is because of your age. Teen drivers naturally have higher insurance premiums than older drivers, because they’re less experienced and therefore have an increased risk of being in an accident. 

As teen drivers age, particularly once they get to age 18 or 19, their rates begin to go down as long as they’ve maintained a clean driving record. Those rate declines continue, and once these drivers are 25 years old, there’s often another significant decline. 

Keep in mind, when you hit 65+ you’re likely to see your rates increase again.  

Your Driving Record

Your driving record can significantly affect your rates. Traffic violations or a history of at-fault accidents can drive your premiums up, especially if you have multiple tickets or accidents on your record. 

These negative events remain on your record for about three years. Insurance companies view these events as a sign that you are a higher risk driver, so they increase your rates to make up for that increased risk. After three years, the events are removed from your record, so you may see your insurance premiums decrease. 

Life Changes

Major life events, such as getting married or moving to a new location, can also help to decrease your insurance rates. Many insurance providers offer married couples lower premiums than drivers who are single. If you get married, be sure to contact your insurance company so you can put both of your vehicles and both drivers on the same policy, which can save you additional money. 

If you move to a new state or town, that relocation may also reduce your rates. Some states have higher car insurance costs than others, and the average insurance rates in different towns can vary. For example, if you move from a city with a high crime rate and lots of traffic to a rural town with minimal traffic and a low crime rate, your insurance company may lower your policy because of the reduced risk of vehicle vandalism or car accidents. 

Additional Ways to Save On Your Car Insurance

friends driving in the car

If your auto insurance policy rates are higher than you’d like to pay, you don’t necessarily have to wait for them to go down with time. Instead, there are multiple ways that you can get lower car insurance rates. 

Pay for Your Premium All at Once

If possible, try to pay for your yearly premium in one lump installment. Many insurance providers offer a discount for this annual payment option, compared to making monthly payments. 

While you’re at it, consider signing up for paperless billing, which might get you an additional discount. 

Focus on Developing Good Driving Habits

If you’re able to maintain a good driving record, you may be eligible for a safe driver discount. Focus on staying accident free and obeying traffic laws to avoid tickets. Negative events stay on your driving record for about three years, so keeping your record clean can potentially save you from years of higher insurance premiums. 

Minimize Your Driving

If possible, minimize the amount of time that you spend on the road. Consider taking public transportation, and see if your insurance company offers an app that tracks your driving usage. Also, if you already spend minimal time behind the wheel, you might be eligible for a low mileage discount, or a per-mile insurance policy that could save you money. 

Change Your Coverage

Take a look at your current insurance coverage and see if you might want to reduce it. Keep in mind that you will still need to meet your state minimums, but lowering your policy limits or changing your policies could potentially save you money. For example, you might have had comprehensive coverage on your vehicle for years, but if it’s now older and would cost little to replace or repair, maintaining that coverage might not be worth the investment. 

Remember that reducing your coverage or lowering your limits comes with a risk. If you ever need to file a claim, you might not have the coverage needed to cover the event or you could find yourself paying a lot more out of pocket than expected. Be sure to think carefully about whether changing your coverage is the right decision for you. 

Increase Your Deductible

You might want to consider increasing your deductible to lower your monthly premium. With a higher deductible, you will be responsible for paying more in the event of a claim. But, that higher deductible means that you will see a reduction in your payments, since you’re now assuming more risk. 

This is a decision that you need to make carefully. You’ll want to be sure that you have money set aside to pay for that deductible if you ever have to make a claim. You’ll also need to consider how much risk you’re comfortable assuming. 

Drive a Cheaper Vehicle

If you’re considering buying a new vehicle, think about how the car you choose will impact your rates. For example, if you’re coming to the end of a lease period, you might be able to save money by buying an older vehicle that holds less value than your newer lease vehicle. 

Even if you want to avoid older cars, the type of new vehicle that you buy will impact your insurance rates. To save on insurance, avoid expensive new cars, high-end trims, and imported vehicles that are costly to repair. You will also want to avoid new vehicles outfitted with highly desirable features, like luxury sound systems, which thieves might attempt to steal out of the vehicle. 

Instead, look for a car that’s more economically priced. A new car with a lower price point will be less expensive for an insurance company to replace or repair after an accident, so it will be more affordable to insure. 

Bundle Your Car Insurance Policy

If you have multiple types of insurance policies, like renters insurance, homeowners insurance, or even multiple vehicle policies, look into whether you can bundle them. Transferring your policies so they are all insured by the same provider may make you eligible for a multi-policy discount. If you insure multiple vehicles with the same provider, then you may be able to get a multi-vehicle discount, too. 

Improve Your Credit Score

Some car insurance companies consider your credit history when calculating your rates. If you have a low credit rating, the insurance provider might classify you as a high-risk driver, which means you will pay higher rates. 

Focus on improving your credit score to lower your car insurance rates. Consider scheduling automatic payments for items like your credit cards and your mortgage, so you know you will make all of your payments on time. Make sure you pay your monthly minimums on all of your accounts, and try to minimize the amount of debt you take out compared to your income. 

If you’re considering closing out credit accounts, avoid closing your oldest account, which can reduce the length of your credit history and negatively impact your credit score. 

Building good credit takes time, but it can pay off in better car insurance premiums.

Study Hard in School

Some insurance companies may offer a good student discount if you earn and maintain stellar grades in school. Keep in mind that getting a higher education degree may also help to lower your rates, since some insurance companies see drivers with higher education degrees as being lower risk drivers. 

Invest in Accident Forgiveness

While adding accident forgiveness onto your policy might increase that policy cost slightly, it can pay off in the long run. With accident forgiveness, you can be at fault for an accident without seeing a premium increase. Since premium increases that result from an accident can last for about three years, you could save a substantial amount of money by investing in this extra protection. 

Ask About Additional Discounts

Car insurance providers offer many different discounts, so call up your insurance company and ask about any that you might not be aware of. You might be able to get a discount for taking a driver safety course or for agreeing to use the insurance company’s app to track your driving habits. 

If how you use your vehicle has changed, like you’re now working from home instead of commuting, contact your insurance company to see if that change might make you eligible for a discount as well.  

Shop for New Car Insurance

It’s a good idea to periodically shop around for new car insurance. You may be able to find cheaper car insurance rates with a different insurance provider, or you could find a provider that offers more discounts leading to lower rates. 

To determine which insurance company can offer the best rates you want to get quotes from several companies. At Compare.com we make that easy. All you need to do is fill out a quote request form, which takes about five minutes. Then, behind the scenes, we’ll compare quotes from 65+ insurance companies and present you with the most affordable options on the market that give you the coverage you need. 

Compare.com users save an average of $720/year on car insurance – you could be next!

Car Increase Rate Decrease FAQs 

How Long Does It Take for Car Insurance to Decrease? 

Car insurance tends to decrease over time, but there is no set formula for when you might see cheaper rates. Instead, factors like your driving record and your age will play a more important role in prompting those decreases. 

Does Car Insurance Go Down Every Year? 

Car insurance often goes down yearly for teens, but other drivers might not see an annual decrease. If you’re looking for a lower rate, consider shopping around for a different policy to see if you can save money. 

Can You Negotiate Car Insurance Rates? 

While you can’t actually negotiate your rate down, you can call your car insurance company and see if there are any discounts available that you could take advantage of. Bundling policies, taking a defensive driving course, and even outfitting your vehicle with additional safety equipment can all help to lower your rates. 

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