If you’re American, own a car, and don’t live in New Hampshire, car insurance is about as unavoidable as taxes. Auto insurance is compulsory in 49 states, and drivers who get behind the wheel without coverage risk heavy penalties.
Americans paid an average of $1,427 per vehicle for car insurance last year, according to The Zebra’s State of Auto Insurance Report 2018. If that seems like too much to pay for auto coverage, the good news is there are many ways to save. A person with a good driving record living in North Carolina or Virginia and owning a Honda CR-V might pay only a few hundred dollars for coverage. On the other hand, a Michigan family with a poor driving record and teen drivers on their policy could pay thousands.
Read on for our top nine ways to lower your car insurance costs.
1. Live in a Cheap Insurance State
Average auto insurance costs vary wildly from state to state, with North Carolina the cheapest at $865. Michigan is the most expensive state at an average of $2,610, more than double neighboring Indiana and three times more than North Carolina.
Insurance premiums also fluctuate between urban areas, with residents of major cities like New York, Miami, and Philadelphia paying more than people in surrounding areas. Detroit, Michigan, is the most expensive city for car insurance in the U.S. The penalty for living in the “Motor City” is an average vehicle insurance cost of $5,414 per year, 5.5 times more than people living 400 miles away in Madison, Wisconsin.
2. Choose the Right Vehicle
Most people won’t move state to save on car insurance, even if it reduces their premium substantially. Choosing the right vehicle is an easier decision, and can lead to hundreds of dollars in savings. Van owners pay the least for car insurance, at an average of $1,484, according to The Zebra. Trucks are next cheapest, followed by SUVs, and hybrid and electric cars. Luxury cars are the most expensive to insure.
The cheapest model to insure is the Honda CR-V, at an average of $1,317, followed by the Honda Odyssey, and Jeep Wrangler, Renegade, Patriot, Compass, and Cherokee, all of which cost $1,333 to $1,366 to insure. If you’re intent on buying a hybrid or electric, then it’s worth knowing there’s very little variation between models. The Nissan Leaf is the most expensive green car to insure, at an average of $1,675, while the cheapest, the Ford C-Max, will save you $58.
3. Get Married
Married couples typically pay less for mortgages and groceries and, as it turns out, car insurance. According to The Zebra, married people pay about $80 less than unmarried people for vehicle insurance.
One reason for this is that married drivers are overall less likely to file a claim than a single driver. Another contributing factor could be the higher rates of home ownership among married couples. According to The Zebra, homeowners pay 2.4% less for auto coverage than people who rent.
4. Be Financially Responsible
All types of insurers reward people who are financially responsible, and auto insurers are no different. Drivers with credit scores in the 800-850 range pay around half of drivers with credit of 300-579. Unemployed people pay higher premiums than the employed, while active military servicepeople pay the least.
If your credit is hurting your ability to get cheap car insurance, the good news is there are many ways to improve your credit score. Examples include paying off any outstanding debts and setting up payment reminders for mortgages, loans, and credit cards.
5. Drive Safely
Not surprisingly, drivers with a clean record pay less for insurance than drivers with recent traffic violations. Most traffic violations affect your insurance rate for three years, although at-fault accidents can have you paying higher premiums for five years.
Some traffic violations are more costly than others, according to The Zebra study. For example, driving without lights incurs an additional 4% insurance cost. Leaving the scene of a hit-and-run accident inflates a driver’s premium by an average of 85% nationwide and 400% in some states.
6. Take Advantage of Driver Discounts and Rewards
Even after receiving a few quotes, it’s easy to reduce your actual insurance premium without too much trouble. Most insurers offer a range of driver discounts and rewards based on your personal profile and attitude to driving.
Military servicepeople, students, and members of certain professions, such as teaching, can easily find discounts. All types of drivers can earn discounts for doing things like uploading documents online, paying their annual premium in one instalment, or agreeing to auto-pay their monthly payments. In order to encourage safe driving, insurers reward drivers for things like taking a safe driving course, installing a GPS tracking device in their vehicle, or taking a safety pledge.
7. Pay a Higher Deductible
Just like other types of insurance, increasing your deductible is one way of lowering your car insurance premium. If you’re confident in your ability avoid accidents, a higher deductible is a no-brainer.
According to a 2016 report from InsuranceQuotes.com and Quadrant Information Services, increasing your auto insurance deductible from $500 to $1,000 reduces premiums by an average of about 8.5% across the United States. Increasing your deductible from $500 to $2,000 can save 15%.
8. Bundle Together Insurance Policies
“Buy one, get one free”, or “buy one, get the second half-price” is a common sales tactic across all types of industries. In insurance, this type of sales tactic is referred to as bundling, and involves rewarding people for purchasing multiple types of insurance.
Many auto insurers are part of larger insurance groups that also offer other forms of coverage such as property insurance and life insurance. Many of these insurers offer substantial discounts for bundling together different types of insurance and putting them all under one name.
9. Shop Around
State Farm, Geico, Progressive, and Allstate account for more than 50% of car insurance premiums, but thankfully there are dozens of other smaller car insurance companies that make this a competitive industry.
The good thing about there being so many providers is that insurers are forced to lower their premiums to compete for customers. As a general rule of thumb, it’s always a good idea to compare multiple insurance companies before making a decision. Each insurer caters to different types of drivers, so the insurer that’s cheapest for your friend might not necessarily be the cheapest for you. Shopping around can help you get the right car insurance deal for your needs.
