20 Tips for a More Affordable Auto Insurance Policy

What does it take to get affordable auto insurance? As I mentioned earlier when I shared my story of getting more affordable auto insurance with GEICO, there are two main ways to go about lowering your auto insurance premiums: (1) reduce the cost of your current policy, or (2) get a new auto insurance policy. Today I’m going to walk you through both of those ways, plus introduce some more drastic steps you can take to lower your auto insurance.

Affordable Auto Insurance

Consider these tips for getting more affordable auto insurance.

Review Your Current Policy

1. Ensure Your Policy is Accurate – The very first thing you need to do is make sure that your current policy accurately reflects your situation. This includes all your vehicle information, like age and make. Also, make sure your yearly estimated mileage is properly stated. If you work at home or have a very short commute, make sure that your policy reflects that for that vehicle.

2. Be Aware of State Minimums – The state you live in will have a minimum set of auto insurance liability coverage requirements. You can find these at your state’s insurance commissioners website. You can also visit this page to see the full list of state’s insurance requirements. The minimums will be expressed in bodily injury liability limits and property damage liability insurance. Just make sure you know the minimums you have to maintain.

3. Be Aware of Financing Requirements – If you currently finance your vehicle, the financing company may have additional requirements of their own for you to maintain in insurance coverage. This usually affects your deductible, so be sure you know your required limit before you raise your deductible.

4. Consider Raising Your Deductible – Now that you know your requirements, it’s time to consider raising your deductible. If you raise your deductible, keep in mind that you will be responsible for that amount if you get into an accident and it’s your fault. If you’ve set up a nice emergency fund, you’ve already self-insured to a degree. So, raising your deductible wouldn’t be a bad idea. To my knowledge, raising your deductible has the biggest impact on your auto insurance rates. Read more about car insurance deductibles.

5. Consider Dropping Certain Coverage Items – Each insurance policy will have different levels of coverage. Some are required, some are recommended, and some just aren’t needed for your situation. I’m not going to tackle each type of coverage here today, but I will discuss the main three and when you could consider lowering the coverage.

  • Liability – This type of coverage pays for personal injury to others, including medical expenses and lost wages. It also includes property damage, which covers the damage you do to their vehicle or other property. Liability is the baseline of insurance coverage and most states, as mentioned above, have minimum requirements. If you’ve got a decent car and a few assets to protect, you should consider getting 100/300/100 level coverage here. There’s no reason to skimp in this area.
  • Collision – This type of coverage pays for the damage to your vehicle. How much is your car worth? If only a couple thousand, it may be a good idea to drop this coverage, since you’ll only need a couple thousand to replace it.
  • Comprehensive – This type of coverage pays for any loss or damage to you vehicle for anything other than an accident. For example, if your car is stolen or damaged in a flood. Similar to collision, factor in the value of your vehicle and how much the insurance premiums are.

Those are the three main types of coverage, but here are some more add-on types you can consider lowering or dropping all together: Medical Coverage, Personal Injury Protection (PIP), Uninsured Motorist, Under-insured Motorist, Rental Reimbursement

The bottom line: meet your requirements, get plenty of liability insurance, and factor in the value of your vehicle when deciding on collision and comprehensive.

6. Consider Dropping Extras – Many insurance policies will have little extras that you simply don’t need. Emergency road side assistance is one that comes to mind for me. I just don’t need this and so I make sure I’m not paying for it on my policy. Have a discussion with your agent or insurance company and know exactly what extras you are paying for. Evaluate which one’s you want to drop.

7. Get Every Discount You Can – The quickest way I’ve found to do this is to call your insurance company or agent and ask them for a list of all their discounts. Write them all down and them systematically work through the list to ensure you’re getting the full discount. One that I have on my list right now is the defensive driving discount. I just need to find a place to take the course. Consider more ways to save on car insurance.

8. Combine Policies if Newly Married – If you just got married, and have the same insurer, call them up to have your policies combined. This will save a great deal because of the multi-car discount.

9. Consider Paying in Full – You may be paying an extra fee for paying your policy month-to-month. Start saving now and pay your auto insurance premium in full next time.

Consider a New Policy

Let’s say you’ve looked over your bill and you’ve exhausted all the tactics above. You should still check to see if there is a more affordable auto insurance policy available from another insurance company.

10. Shop Online for Quotes Through Insureme.com – A website like insureme.com will allow you to run one check and get back several auto insurance quotes. This way you can see who is offering you the best deal.

11. Shop Direct for Auto Insurance Quotes – You can also go straight to the source, as some insurers aren’t included in the multi-quoting process above. Get direct quotes from Allstate, Hartford, GEICO, etc..

Here’s a video on buying auto insurance:

12. Consider a Multi-Policy Discount – If you are considering a new policy, it might be a good idea to check with your home insurer to see if they have a discount for multi-policies. Most of the companies above insure both home and autos, so it’s worth a try to see if you can pay less by bundling insurance policies.

13. Take Advantage of Multi-Car Discounts – If you’re getting a new policy, consider going with the insurer that your spouse uses, if you aren’t already. There are big savings for keeping all the cars under your roof within one policy.

14. Group or Organization Discounts – As a member of a trade organization or other group (i.e. your employer), you may be eligible for a discount. Check to see if you need to purchase through them to get the discount though.

Consider These Big Changes

Here are some more drastic changes you might could make to lower your rates and make your auto insurance more affordable:

15. Consider Going to One Car – Do you really need that extra car? If you’re married and one of you work from home, consider going with just one car. The savings on payment, maintenance, and insurance could be in the hundreds.

16. At Least Consider Lowering Your Commute – If you can’t drop to one car, consider working closer to home, working at home more, or taking alternative transportation to work. The lower your commute to work is, the lower your auto insurance policy will be.

17. Move to a Different City or State – Different states not only have different requirements, but they also have very different premiums. Read more about the most expensive places to insure a car in the US.

18. Improve your FICO Score – Insurers can use your FICO score to determine how safe a driver you are. Therefore, having a better FICO score will lower your insurance premiums. Check your FICO score and then review these ways to improve your FICO score.

19. Get a Different Car – Lastly, we saw last week how the type of car you drive can have an impact on the amount of insurance you pay. Consider driving a different vehicle. At least one that’s less likely to be stolen.

20. Do You Have Something to Add? – Help me think of the 20th tip. Let me hear from you in the comments below.

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Last Edited: January 20, 2012 @ 4:43 pm
About Philip Taylor

Philip Taylor, aka "PT", is a husband and father of two. He created PT Money back in 2007 to share his thoughts on money and to meet others passionate about managing their finances. All the content on this blog is original, and created or edited by PT. Read more about Philip Taylor, and be sure to connect with him on Twitter, Facebook, or view the Philip Taylor+ Google profile.

19 comments
Kath
Kath

I am a senior, my only income is SSDI, widows benifet . I have no assests and  basicilly drive my car  locally, am considering basic car insurance through the state, is this a wisedecision?

Philip Taylor
Philip Taylor moderator

Getting auto insurance is a wise decision, yes. I'm not sure what your State offers, but I would certainly compare it to what the open market can provide.

kody
kody

Nice tips! I just came across this site, and i love it already! You have made my day sooooo much easier :). Thanks!

Zatari
Zatari

Great tips about auto insurance on this articles , Add protection devices to auto alarm ... These procedures make the car less serious, leading to increased risk for lack of insurance

Jim
Jim

If involved in an accident, there are a few things that insurance companies expect drivers to do. Always notify the officials when an accident has occurred and never leave your vehicle or the scene of an accident. Drivers should always keep some form of a camera in their vehicle. Documenting all accidents with a photo can help officials and insurance companies determine the fault of the accident and avoid increasing the cost of your insurance policies.

Sam P
Sam P

Great tips here Philip. One more tip that won't necessarily apply to everyone, but some insurance companies do give discounts to students for receiving good grades.

Philip Taylor
Philip Taylor

@Don - Those tips are there to give perspective. Shorter commutes and different states mean lower premiums. Some people don't know those things. Obviously I'm not suggesting someone move or get a new job just to get lower insurance. Obviously your comment isn't jackassery.

Debtor
Debtor

Making sure your credit bureau report is accurate and reflects the best (true) picture of you possible is a good tip, but don't forget your CLUE reports (https://personalreports.lexisnexis.com/). You have one for auto and one for property. They show insurance claims made by you. If there's a duplicate or erroneous claim listed here, it could impact your rate. You can get these reports free once per year under the FACT Act just like your credit bureau reports. I just did this for the first time and cleared up a couple things on my auto report. Everyone should do this!

Don W
Don W

Running short on coming up with "20 reasons"??? Move, or get a new job (#16 & 17).

Philip Taylor
Philip Taylor

@Charles - Great point about safe driving rewards. Insurance companies are getting smarter at truly defining their risk with a customer. I look forward to the day when we can really get the rate we deserve.

@Jon - Good one. Hate those darn speeding tickets. I've had my share over the years.

Jon | Free Money Wisdom
Jon | Free Money Wisdom

Haha, I'm with Ninja, don't get into accidents! Also, don't get tickets, or at least don't get caught speeding ;)

Charles W. Singleton
Charles W. Singleton

Another good point is take notice of insurance carriers that reward safe driving - ie. no violations and no accidents. Progressive is one of the companies I represent (I'm an independent insurance agent) and they have something called "Snap shot discount". A device is attached to your vehicle and tracks your driving habits. If you drive safely you will be rewarded.

Enrique
Enrique

Add anti-theft devices and air cushions to your car. These normally get you lower car insurance premiums as your car is less risky now.

Monroe on a Budget
Monroe on a Budget

We just paid our upcoming six-month policy in full. We have not been able to do that on every renewal. But when we do, the savings is noticeable.

PT
PT

Thanks so much. I appreciate the bookmark. :)

Mrs. Accountability
Mrs. Accountability

I always pay in full, and I just paid for six months insurance. I am bookmarking on delicious and need to use this when I renew in six months. Can't hurt to look around.

PT
PT

@Ninja - Oh yeah, I didn't cover safe driving. Thanks.

Ninja
Ninja

I would add don't get in car accidents. Experience has proven rates go drastically up :)