When it comes to car insurance, we all know that lowering our rates depends on raising our deductible, dropping unnecessary coverage, and keeping our driving records clean. However, there are other ways to save on car insurance—methods that might not occur to the average driver. Here are five surprising ways to lower your car insurance costs. How many do you know?
1. Switch the drivers around. This doesn’t work in every state, but there could be a big price difference by switching which driver drives which car. For example, I had a ding on my driving history from too many tickets in 2009. This negatively affected the cost of my husband and my insurance even three years after the tickets. One thing that helped save us about $15 per month was to simply switch which driver drove what car with the insurance company. Since I was considered the “bad driver,” sticking me with the older car that was paid off ended up costing a little less. This small change saved us about $150 a year.
Simply call your car insurance company to make sure you are getting all of the discounts necessary. Just ask them to see if your price goes down if you switch the driver’s main car. You might be surprised. Even a few dollars’ difference can add up over time.
2. Drive a bigger car. It’s no surprise that insurance companies determine your rates depending on what kind of car you drive. After all, it will cost a great deal more to insure a brand new SUV than it will a 15-year-old sub-compact car. However, if both of those cars are brand new, you will actually find that the SUV is generally cheaper to insure. The reason is that the underwriting departments of car insurance companies take into account the insurance accident statistics of various models of cars. Since more young drivers are likely to be behind the wheel of a sub-compact car, and since more damage will occur in the event of an accident in that car, insurance companies will want more in premiums for that over the SUV.
If you’re in the market for a car, don’t immediately assume that purchasing a fuel-efficient compact car will necessarily save you more money overall. The difference in insurance premiums could more than eat up the difference in gas.
3. Driving a manual transmission could save you money. Cars with a stick shift are not only cheaper and more fuel-efficient, but they could potentially save you some money on your insurance premiums. For example, according to anecdotal evidence, manual transmission cars are less likely to be stolen, since so few thieves know how to drive them. While insurance companies do not track car thefts based on the type of transmission, police do report that theft of manual transmission cars only makes up a tiny percentage of stolen cars.
In addition, driving a manual means that you are more in control of the car. Similarly, drivers dealing with three pedals and the shifter have to focus more on driving, which is the reasoning behind some parents insisting that their teen learn to drive a stick. It’s next to impossible to text while driving if both of your hands are taken up with driving.
While none of these factors are necessarily part of how an insurance company decides its rates, you can make the case to your agent. Furthermore, if you drive a manual transmission and the rest of your household does not, you can get yourself a separate policy for the manual.
4. Where you live matters. While this may not surprise anybody, not many people realize how specific companies are with pricing policies based on where you live. I moved a year ago, and my policy dropped 5%. The difference isn’t much, but I only moved 3 miles away from where I live. In fact, I’m still going to the same shopping plazas, the same restaurants, and driving on the same road every day in the same car.
For those who are moving and have some freedom with picking places, say if they were looking for a new apartment to rent, it’s probably wise to include a car insurance quote while comparing prices.
5. Your occupation can affect your rates. One of the many factors that go into determining auto insurance is the profession of the driver. This is because some stressful jobs, such as business owner, executive, or lawyer, are more likely to require working more than the normal 9-to-5, including making phone calls on the road. But librarians, teachers, pilots, and engineers enjoy lower premiums for a variety of reasons, including the fact that more meticulous and detail-oriented individuals are likely to go into those professions, which also means that they are likely to have good driving habits. In addition, pilots and navigators are more likely to be excellent drivers because a poor driving record could ground their careers.
6. It’s not just the size of the car. You may even get a better rate driving a sports car. While I’ve grown to accept it by now, I still shake my head from time to time when my insurance premiums are due because it cost me a similar amount to insure my pickup truck than my sports car. This is partly because I thought people who drive sports cars surely get into more fender benders. But it’s also because I always thought that the price of the vehicle would surely make the biggest difference in the price of monthly premiums. I was wrong. Both cars are quite a few years old now, but the blue book value of the sports car is about three times as expensive as the truck. Fixing the car would surely cost more than fixing the truck in an accident. Still, I switched car insurance companies over the years and different car insurance companies offer the same conclusion – pay pretty much the same to insure the pickup truck as the sports car.
7. Compare rates regularly. This is very common advice, but not many people know just how much the difference could be. Many of us get stuck with the same company for several years and just assume we are getting the best price. Car insurance companies will reward you for loyalty, but this discounted price might still be more expensive than other insurance companies. Right now, the insurance company we have been with for the past six years has given us the cheapest price. However, my husband recently totaled his car in May, so it will be best for us to compare prices once again after the premiums go up.
8. Stay in school for more savings. Some car insurances will give you a lower rate if you have a four-year college degree. The DMV said, “Having a higher level of education often comes with the benefit of lower car insurance rates. Again, this is based on the statistical averages. Someone with a 4-year degree or a graduate degree is statistically less likely to be in an accident.”
If you are under 25 and are in school, your grades could also help you earn a discount. It is an added step to fax over your grades, but doing so could save you up to 10 to 15 percent on premiums. Therefore, if your insurance costs $1,000 per year for just the student driver, then keeping a 3.0 GPA will save you $100 for the whole year.
9. Set up an automatic payment or pay in advance. Some insurance companies might even give you a discount for setting up an automatic payment or for paying the whole year upfront. This is worth looking into. Sure, $10 or $20 in savings isn’t a lot for paying the whole year upfront, but it is a nice bonus. You also won’t need to worry about a monthly bill either.
While the monthly bills make car insurance hard to be thankful for, it truly can save you money in the long run. After seeing how expensive one car accident is (and it wasn’t even a major accident), I am definitely thankful for insurance companies.
The Bottom Line
Making careful choices about what you drive and how (and where) you live can help you to lower your car insurance premiums. Don’t make any assumptions before you buy the car though. Countless advice has been given to car buyers to research the price of insurance premiums before you ever walk into the used car lot, but how many really follow that suggestion? With the ease of getting a quote online these days, there’s really no reason not to do your research. Don’t be lazy!
How do you save money on your car insurance bill?
{ read the comments below or add one }
It sure was helpful when you pointed out the need to compare rates regularly as people don’t know how much the difference could be. My husband is planning to shop for an insurance policy for his new car. He said that he would want to save money on premiums as he has other expenses to consider like his subscription fee to sports gyms. I will share your tips with him.
It was nice that you said that you must compare insurance rates regularly because of how much the difference could be. As you said, there are people who got stuck with the same policy for several years. I will consider sharing this with my brother who is interested in shopping for an insurance policy for all his cars because he wanted them to be protected during accidents and natural calamities. He mentioned that he has been accident-free for more than 3 years, so I will ask him to shop for discounts.
Your state’s Farm Bureau will have the lowest rates. And other benefits.
State farm wasn’t the cheapest for me but what other benefits do they offer? Maybe the perks will tip the scale next time I need to renew.
If you use GEICO and own Berkshire Hathaway stock, you should get a discount. Just tell GEICO you are a stockholder, worked for me. Berkshire owns GEICO. If you find a better quote when you shop, often your insurer will try compete if you tell them you’re terminating(just like cable companies!).
The Berkshire stock discount is a good tip. I almost forgot about that one. Is it still 8%?
6-8% looks about right. My policy final cost is about 450 for 6 months and the pre-cost discount is about 45. I get a total discount of about 300(multi-car, safe drivers course, etc.).
The 50+ safe drivers course helps too. I also play around with coverage amounts, for example, changing liability from 300K to 1M costs little, but under/uninsured motorist coverage costs more per dollar, so I only get 300K.
Being able to play around with options is the beauty of DIY websites I think. I used to do that all the time with Expedia on car rentals and hotel rooms because there is no way any customer service rep will sit there and help you out trying every single combination.
Good tip Ed!
do you recommend a particular insurer for young male drivers?
No insurer will be the cheapest for everyone. The best you can do is to call a few and compare quotes because every company calculates their premium differently. It’s a hassle but it’s worth the effort.
Regarding the first tip, my state unfortunately doesn’t let me “exclude” drivers from vehicles, so that doesn’t apply to many insurance consumers. And that would also mean the “excluded” driver would not be covered to operate that particular vehicle.