Guest Post by James Oronoz Generally, everyone is aware that car insurance is a necessity when driving on the road. You could even say that we’ve all seen at least one commercial telling us about how much money we can save. However, the question remains — how can you actually optimize your car insurance? It’s best to approach this with a pay-now-save-later mindset that doesn’t require removing the necessary coverage or only signing up for a basic policy. Instead, it calls for a more strategic approach that balances your needs and budget. With that in mind, let’s dive in! 1. Make sure your coverage reflects your needs. It’s easy to take your car insurance for granted; after all, it’s not something you think about every day. Still, you should assess your current policy to ensure you have the coverage that’s right for you. Think about it: do you have a rising young driver with a learner’s permit? Are you biking to work? Have you recently transitioned to working from home full-time? Maybe you are a driver who reduced your coverage because you weren’t driving much during the COVID lockdown and now that more Americans are hitting the open road, you need to revisit your policy. Whatever your situation, be sure you have enough coverage. 2. Avoid minimum insurance coverage since it could max out your finances. Some drivers think they are saving money when they carry the minimum insurance required, but the truth is this type of policy might cost you more if you are in a serious auto accident. Most states require drivers to either carry bare-bones coverage (usually for bodily injury, personal injury protection, and property damage) or prove they can pay out of pocket if they're in an accident. If you, your passengers, or the other driver is seriously injured and you only have the minimum insurance, you could easily exhaust the small amount of coverage available to you. Unfortunately, this would add unnecessary strain to your budget, so it’s wise to avoid it. Instead, follow your state’s requirements and add other protections based on your driving habits. For example, if you'd need a car to drive while your vehicle was being repaired, rental car coverage would be wise to add to your insurance policy. 3. It may be time to see other agents. Many people get comfortable with their insurance company, especially if the customer service is great and they’ve never had to file a claim. However, those details don't necessarily mean you’re getting the best deal. National Insurance Awareness Day, which is June 28th of each year, serves as a gentle reminder to see if you are really getting the most from your auto insurance. Even though you may be satisfied with your current plan, it’s wise to compare policies from time to time. Thankfully, you don’t have to do it manually! You can use a free insurance comparison tool online. Or, if you prefer, you can get quotes online from several companies. If you do find a cheaper rate for comparable coverage but don’t want the hassle of switching carriers, ask your current insurance provider if they will match the premium. Also, remember to ask about discounts, like safe driving records, defensive driving course certification, or bundling options if you also have property or renter’s insurance with the same company. 4. Consider uninsured motorist protection. Of course, we’d like to think that everyone who drives has insurance coverage, but that is not the case. It’s important to proactively protect yourself and potential passengers with uninsured motorist coverage. Then, if you are in a hit-and-run accident, or hit by an uninsured driver, your policy will cover your medical bills, lost pay, and other expenses. In fact, it also picks up the difference if you are severely injured by an underinsured driver. Basically, it is worth the investment in the long run. 5. Think about raising your deductible. As a reminder, your insurance deductible is the amount of money you’re responsible for paying out of pocket if an accident occurs. Depending on your driving record, the age of your vehicle, and how many drivers use one car, you could save money on premiums by raising it. It’s kind of a pay-now-or-pay-later situation, but if you have a long-term clean driving record, increasing your deductible (for example, from $500 to $1,000) can be a significant cost-saver on premiums. Remember, the key here is to raise your deductible to an amount you can comfortably afford. Overall, like automotive educator Chaya Milchtein says, it’s important to remember that "savings vary from person to person and insurer to insurer." Every individual has a unique budget, specific driving habits, and daily routines. You should always be honest about how these factors will impact your insurance preferences and check with a registered insurance agent before making any modifications to your coverage. James Oronoz is the founding shareholder of Oronoz & Ericsson Injury Lawyers, a Las Vegas law firm dedicated to helping individuals navigate life before and after a tragic accident. He uses the knowledge he’s gained over 20 years to educate others on their legal rights, specifically pertaining to criminal defense and personal injury matters.
Once you've determined whether your family will get another car and what kind, the next step is figuring out insurance. (Learn more about important considerations when making this decision.) We'll cover important factors to consider when buying insurance and ways to save on auto insurance premiums. When you add your teen to your policy, be prepared for higher premiums. "Teenagers/new drivers have a higher rate of accidents on the road, which means they may need to file more claims when compared to the average driver. This higher risk can increase your rates, which can be frustrating to grapple with," says David Adler, Adler Insurance Group president. Mike Wall of Next Century Insurance, offers additional insight on what kind of rate increases to anticipate: "According to the Insurance Information Institute, adding a teen girl can increase insurance rates by 50 percent, while adding a teen boy can increase rates by 100 percent." With such a large rate increase, you'll want to choose an insurer with the best rates and find as many discounts as you can. Choosing a good insurer Saving on insurance Choosing a good insurer Taking time to compare coverage options and rates will help you save on premiums while ensuring you and your teen have the coverage you need. "I advise families in this situation to contact a couple of the majors and then a few local providers and have them all present some coverage options for you to weigh against one another as closely as possible with an apples-to-apples approach, where possible," says Brent Thurman, Keystone Insurance Services president. As you consider which insurers to work with, insurance research specialists and customer reviews can help you narrow down your choices. "Opt for a company that offers the best car insurance for teens. Based on in-depth industry research, Liberty Mutual, State Farm, USAA, GEICO, Progressive and AAA offer the best rates for young drivers. Each of these insurers offers some of the highest discounts available for young drivers, as well as perks like accident forgiveness," recommends Cecilia Beard, auto insurance expert for Motor1.com. Customer reviews can also offer helpful insight on companies. By reading reviews, you can get a sense of the customer experience with an insurer and how well it treats its policyholders. Many of the companies Beard identifies are also highly rated by customers on Best Company. GEICO, Progressive, State Farm, AAA, and USAA are ranked in the top 10 insurers using an algorithm that weights customer reviews. Liberty Mutual is ranked 17th but has significantly fewer reviews than the others. Progressive Progressive is ranked first on BestCompany.com. Progressive has 349 reviews with a 4.2/5 average star rating. 5-star — 53 percent 4-star — 25 percent 3-star — 11 percent 2-star — 5 percent 1-star — 7 percent Progressive Auto Insurance Reviews Read customer reviews to learn more about Progressive auto insurance. Read Reviews GEICO GEICO ranks second. It has received 894 customer reviews with a 3.6/5 average rating. Its review breakdown is 5-star — 49 percent 4-star — 16 percent 3-star — 6 percent 2-star — 5 percent 1-star — 25 percent GEICO Auto Insurance Reviews Read customer reviews to learn more about GEICO auto insurance. Read Reviews State Farm State Farm comes in fourth with 554 reviews and a 4.3/5 average rating. 5-star — 56 percent 4-star — 24 percent 3-star — 11 percent 2-star — 4 percent 1-star — 5 percent State Farm Auto Insurance Reviews Read customer reviews to learn more about State Farm auto insurance. Read Reviews AAA AAA follows State Farm in the rankings. It has 473 reviews and an average rating of 4.2/5. Although these are good ratings, it's tricky to gauge the customer satisfaction with auto insurance since an overwhelming majority of the reviews focus on AAA roadside assistance. Below is AAA's review breakdown: 5-star — 63 percent 4-star — 17 percent 3-star — 4 percent 2-star — 2 percent 1-star — 14 percent AAA Auto Insurance Reviews Read customer reviews to learn more about AAA auto insurance. Read Reviews USAA USAA ranks sixth. The insurer has received 362 reviews and an impressive 4.7/5 average star rating. It has the highest percentage of 5-star reviews of the auto insurers mentioned in this section, which is an excellent sign if you are eligible for USAA membership. 5-star — 84 percent 4-star — 10 percent 3-star — 2 percent 2-star — 1 percent 1-star — 2 percent USAA Auto Insurance Reviews Read customer reviews to learn more about USAA auto insurance. Read Reviews Liberty Mutual Liberty Mutual ranked seventeenth on Best Company's list, although the insurer has received far fewer reviews by comparison to the above insurers. Liberty Mutual has received 61 customer reviews with an average rating of 3.8/5. Here's the review breakdown: 5-star — 43 percent 4-star — 25 percent 3-star — 13 percent 2-star — 5 percent 1-star — 15 percent Liberty Mutual Auto Insurance Reviews Read customer reviews to learn more about Liberty Mutual auto insurance. Read Reviews Saving on insurance Once you've found a good insurer, you'll want to check eligibility for discounts. Commonly offered discounts for teens include driver monitoring programs, good student discounts, and drivers education discounts. Driver monitoring programs The programs have become commonly offered by insurers. Using an app or a monitoring device provided by the insurance company, you'll get a rate based on your teen's personal driving habits. Driving monitoring programs are also available for adults. Some companies may offer an initial discount for participating in the program. Keep in mind that rates can be better or worse depending on driving. "Rather than predictive rates based on group trends, these programs allow for a rate based on your driving habits." Janet Ruiz, Insurance Information Institute strategic communications director. Through these apps, teens can also benefit from driving tips based on their habits. When it comes to your premium rate, good driving habits can result in lower costs. Good student With most insurers, teens who maintain good grades qualify for discounts. Typically a B average is required. However, this may vary depending on your insurance carrier. The discount percentage can also vary. For example, GEICO offers up to 15 percent off with its good student discount. In contrast, Progressive advertises that savings through its good student discounts average 10 percent. Speaking from personal experience, Ruiz notes the dual benefits good student discounts can offer parents: "It was a great incentive for my kids. To drive, they had to keep their grades up." Drivers education You can also find discounts for completing an approved drivers training. Some insurers offer discounts for drivers education classes. You can also find discounts for participating in a more specialized course like defensive driving. Typically, your insurer will have a list of approved courses. Once you provide documentation of completion, you can receive a discount. Mike Wall Car Insurance Expert Drivers education and insurance: Insurers frequently offer a 5 to 10 percent discount to teen drivers who complete a Driver's Ed course. Some insurance companies have their own defensive driving program. Others will accept course completion documentation from your teen's high school or from an online program. To encourage participation, driver's education courses are frequently offered for free or at a low cost.
With so many ways to find cheap car insurance, drivers throughout the United States shouldn’t have to overpay for coverage. Whether you have a good or bad driving history, a teen or college student driver on your policy, or multiple vehicles insured, lowering your premiums is nearly always possible. Car insurance is a regular line item on your monthly budget. Finding a more cost-effective option can help you save money or give you more flexibility with your budget. We'll review what affects premium rates as well as nine savings strategies. (Skip to the savings strategies.) What affects car insurance rates David Adler Insurance Expert Many factors affect underwriting: Insurance companies calculate auto insurance premiums based on a wealth of factors. Of course, they will take into consideration the age and type of your vehicle(s), but that's not all. Insurers will also use your age and gender, your credit score and claims history, and even your marital status when calculating your car insurance rates. In addition, your insurer will also take into account how much you drive, where you live, and any safety features that are included in your car. Insurers consider many things when issuing policies and determining rates. These factors can vary based on where you live. For example, California restricts the use of credit scores when underwriting car insurance policies. Since many things can affect your rate, determining which ones have the most impact will make it easier to find savings opportunities. "Basically it'll come down to: How old are you, where are you, how much do you drive, and what's your driving record? In other words, do insurers think you are more inclined to do something risky? Are you in a place with lots of accidents, and how much time are you spending on the road?” says Stuart Winchester, licensed insurance broker and Marble founder and CEO. How to lower your rate While understanding how insurers assess risk as Winchester mentions can help you identify ways to lower your overall risk, reducing your risk can take time. Striking a balance between lowering your risk and living your life also matters. You still need to get to work, and there may not be much you can do about your commute. We'll cover additional ways to save beyond lowering your risk below. 1. Only get what you need Most states require a set amount of coverage for drivers to carry. These rules vary by state and typically include liability, medical payments or personal injury protection, or uninsured/underinsured motorist coverage. Obviously, carrying the minimum required coverage is usually the cheapest option. However, it may not meet your coverage needs and increase your risk of being sued. If you're a high-income earner, you'll want to have much higher liability coverage limits. Higher limits generally result in a higher cost. Auto insurers offer other types of coverage including collision and comprehensive coverage. Collision coverage helps pay for repair costs for your car in a collision. Comprehensive coverage also helps pay for other types of damage to your car like hail, fire, vandalism, flood, or a collision with an animal. In some cases, it may be worthwhile to drop collision and comprehensive coverage. For example, cars that are worth less than the deductible or would cost more to fix than the car's worth are good candidates for not getting collision or comprehensive coverage. You can put the savings on the premium towards your savings for a new car. If you're leasing or have a loan on your car, you'll likely be required to carry this coverage so you can keep covering monthly payments. Nestor Hugo Solari Car Insurance Expert Note coverage options and drivers on auto policy: One of the most effective ways to lower the cost of your car insurance premium is by modifying the coverage options in your policy. Determine if you need coverage that you have never used before and consider the people who are registered on your policy. For example, if you live with someone who will not be driving your car, you have the option of excluding them from the policy. 2. Comparison shop Car insurance is like any other product or service — the drivers who shop around and compare reviews and prices always get the best deals. This starts with the fact that you should never assume one company is cheaper or better than another. Most providers spend hundreds of millions of dollars a year convincing consumers they offer the lowest rates or the best coverage. However, the only way to know for sure is to get an insurance quote online and compare policies, coverage, premiums, and service. Just remember you don’t absolutely need to switch insurers if you find a lower price elsewhere — you can simply use the competing bid as a negotiating tool to bring down the rate at your current company. Kirsten Reneau Car Expert Compare rates regularly: It can be overwhelming to get car insurance, and tempting to stick with one provider after you’ve found someone that works. However, you should be getting quotes from other insurers at least every two years, just in case there is a lower rate out there. But remember: cheaper isn't always better. If rates seem too good to be true, they may be. You should always check an insurer's financial strength ratings, brand reputation, and responses to claims. Financial strength ratings show how financially stable an insurer is. You don't want a policy from an insurance provider that may go bankrupt and be unable to pay your claim. You can check a company's brand reputation to get a sense of customer satisfaction levels. You can learn more about formal complaints by checking NAIC's complaint index. Customer reviews are also a helpful, informal read on how well an insurer treats its customers. (Reviews on Best Company must pass a seven-point verification process before publication, so you can trust reviews on our site.) Working with a trusted and independent insurance agent can also help you identify trusted insurers. They'll have a good sense of an insurer's reputation with claim payments and understand the market, so you'll have a sense of whether you're choosing a good insurer and if your rate is competitive. As you compare costs, be sure to understand the typical rates in your area. Drivers may be tempted to compare their current premiums to the overall national average or family and friends who live in different states. Unfortunately, car insurance rates are hyper-local, meaning where you live plays a huge role in your cost of coverage. For instance, different states have different levels of required coverage mandated by state regulations and laws. Similarly, different states, cities, and zip codes can have vastly different insurance risks. To determine whether you are paying too much for your policy, you’ll need to compare average car insurance rates by state. 3. Ask about discounts Some insurance companies won’t automatically apply all the discounts you qualify for. In some cases, you may need to request the discounts and possibly prove that you meet the requirements. Here are some discounts to look for: Multiple policies — companies offer lower rates to policyholders who have more than one type of coverage with them. Multiple vehicles — if you’re insuring more than one car on the policy, you’ll likely get a price break. Clean driving record — although insurers will apply this automatically, your driving history may have discrepancies. If you don’t currently have it applied, verify the claims for accuracy. Pay upfront — if you can afford it, pay your premium for 6 or 12 months upfront to earn about 5 percent off your total cost of coverage for the year. Autopay — if you can't afford to pay in full, many insurers offer discounts for setting up autopay. Safety features — companies will often charge lower premiums to insure cars with safety features, including anti-theft devices, airbags, traction control systems, etc. Professional organizations — if you’re part of a professional or affiliate group that has a relationship with the insurer, make sure it is noted on your account. Safety course — some insurers offer discounts to policyholders who complete an approved safety course. Grades — good students in high school or college will receive a discount for a “B” average or better. Just note that your provider may ask to see a transcript for proof. A long list of discounts won’t necessarily yield the cheapest insurance, so always compare the final price. 4. Use driver monitoring programs Many insurers offer driver monitoring programs, typically through an app. When you participate in this program, you may receive a small discount initially just for participating. Once the initial period has passed, you'll receive a rate customized to your driving habits. If you're a safe driver, these programs can save you lots of money. If your driving habits aren't as good, you may end up with a higher rate. These programs are designed to reward safe drivers, and most offer helpful suggestions for improving your driving. 5. Adjust the deductible If you’re a good driver and don’t file many small claims, opting for a higher deductible makes sense. Or, if you simply want to save money on your annual cost of car insurance, then you should consider raising your deductible. Your deductible may be increasing your premiums substantially if you’ve opted for a $250 deductible or have a low amount set for your comprehensive and collision coverage. A change from $250 to $500 can save you money. "Insurance companies generally offer different rates based on deductible amounts, so a higher deductible can actually lower the cost of your auto insurance premium," advises Solari, Sigo co-founder and CEO. Be careful when increasing your deductible because it puts more financial responsibility on you in the event of a claim. Make sure your deductible is affordable. 6. Check insurance costs before purchasing a car Most Americans may not think about it in advance, but car insurance is a monthly or annual expense of car ownership. If you’re considering an auto loan and are leaning towards one that’s on the edge of your budget, then insurance costs may push you outside of your comfort zone. "One big factor is how much your car costs to begin with. More expensive cars will be more expensive to replace and therefore more expensive to insure. The cost of repairs is another factor to consider," advises Jake McKenzie, Auto Accessories Garage content manager. As you're looking at cars, pay attention to repair costs and compare insurance rates on different new cars before arriving at the dealership, especially if you want to purchase a sports car or luxury vehicle. Beyond replacement and repair costs, a car's safety ratings and features also have an effect: "The cost of your car is a major factor in the cost to insure it, but other variables are taken into consideration. These include the likelihood of theft (where you keep it overnight), the cost of repairs, its engine size, and the overall safety record of the car. Cars with high-quality safety equipment might qualify for premium discounts, so always mention any features your car has," says John Peterson, Safe Drive Gear editor. Thoroughly researching car safety ratings, features, insurance costs, and more will help you make a smart purchase decision that meets your transportation and financial needs. 7. Improve your credit score While some states prohibit the use of your credit score as a car insurance rating factor, most states allow companies to factor this variable in. The logic behind the idea is that individuals who are financially responsible tend to be safer drivers. If you have bad credit, be cognizant that it may be affecting more than just your ability to get a home loan from the bank. Similarly, if you’ve recently taken steps to significantly improve your credit score, make sure your insurance company is using your updated record. It may be possible to ask them to pull a fresh report to demonstrate that you’ve fixed your credit history. 8. Drive safely Perhaps this strategy goes without saying. However, you can always improve your driving, especially if you don't have a great driving record. Avoid speeding. Follow road signs and traffic lights. Over time, you'll show you're a lower-risk driver and qualify for lower rates. 9. Be cautious when making claims Insurers check your claims history when deciding whether or not to insure you and at what cost. Be careful about the claims you file. In some cases, too many claims can mean that an insurer won't issue a policy. Knowing how insurers assess risk by looking at the car and driver and using the strategies above will help ensure savings when you buy car insurance. Don't get so caught up in savings that you compromise on coverage. Get the coverage you need so you have financial peace of mind while you're on the road.