The typical American driver spends hundreds of dollars—possibly even more than $1,000—a year on auto insurance. But what if we told you that it’s possible to reduce auto insurance premiums without a lot of effort?
Sound too good to be true? It’s not, actually. You just need to investigate some of the often-overlooked ways to reduce auto insurance premiums.
16 Tips to Reduce Your Auto Insurance Premiums
- Shop for a policy online.
- Bundle your coverage.
- Insure more than one vehicle.
- Set up auto pay.
- Pay all at once.
- Drive safely.
- Monitor your behind-the-wheel behavior.
- Earn good grades.
- Drive a new car.
- Install anti-theft devices.
- Serve in the military.
- Be part of a group.
- Pledge your loyalty.
- Own a home.
- Maintain good credit.
- Shop around.
Here’s the detail on 16 money-saving insurance tips you should know.
1. Shop for a policy online.
Some insurers offer a discount in the range of 5% to 8% for signing up for auto insurance online. You might even qualify for the discount if you simply get an online quote but then complete the process at an agent’s office.
Luckily, Major Insurance has made it easy (and free!) for you with our Free Auto Insurance Quote Tool.
2. Bundle your coverage.
Many insurers will reduce auto insurance premiums if you have more than one type of coverage with them, such as an auto insurance policy and a homeowner’s policy. This practice is known as “bundling,” or multi-policy coverage. A typical multi-policy discount could be up to 20%.
3. Insure more than one car.
Many auto insurers will slash your premium by as much as 25% if you’ve got more than one of your cars covered by them. The more vehicles the lower your premium could be.
4. Set up auto-pay.
If you have your premium automatically deducted from your bank account, you might score a discount.
5. Pay all at once.
Paying your annual premium in full might result in a discount.
6. Drive safely.
Most auto insurers will discount your premium if you’ve gone a certain period, such as three years, without an accident or a traffic violation. You might save more than 30% for having a clean driving record.
7. Monitor your behind-the-wheel behavior.
Several insurers reduce auto insurance premiums if you let them electronically track your driving habits. This is known as usage-based insurance or pay-as-you-drive insurance.
Insurers with these programs offer in the range of 5% to 10% just for enrolling. If the monitoring shows you don’t drive much, you’re driving safely or both, you’ll be in line for an even deeper discount.
8. Earn good grades.
Teen drivers can qualify for discounts if they receive good grades. Many insurers offer “good student” discounts of 15% or 20%.
“Keep track of this. You want to check your policy every six months to verify that the discount remains in place if the grades are still good,” says Lynne McChristian, a spokeswoman for the nonprofit Insurance Information Institute.
9. Drive a new car.
In many cases, auto insurers reward you for having a newer (and presumably safer) car. You could save about 15% if your car is from the current model year or the previous model year, and no one owned the car before you.
10. Install anti-theft devices.
Your car may already come equipped with a bunch of anti-theft features. So make sure your premium reflects that.
If your car lacks anti-theft devices, you might consider adding them. “You may find that the investment to thwart thieves is worth it,” McChristian says.
11. Serve in the military.
A number of auto insurers provide discounts in the range of 10% to 15% for drivers who are active-duty or retired service members.
12. Be part of a group.
If you’re a member of an alumni association or any other so-called “affinity” group, you might be eligible for an auto insurance discount and not even realize it.
13. Pledge your loyalty.
Sticking with your auto insurer for a certain number of years can produce what’s called a “customer loyalty” discount.
14. Own a home.
Even if your home isn’t covered by your auto insurance company, you still might get credit for owning a home. Many insurers discount your policy by 10%, regardless of which company covers your home.
15. Maintain good credit.
In most states, auto insurers can take your credit history into account when setting your rates. So, if you’re paying your bills on time and you’re otherwise being financially responsible, you can likely see a lower auto insurance premium.
“Research shows that people who effectively manage their credit make fewer [insurance] claims,” according to the Insurance Information Institute.
16. Shop around.
Perhaps the smartest way to reduce auto insurance premiums is to shop around — don’t look at just one insurance provider. Get quotes from several insurers, and then compare the costs and benefits.