Easy Ways to Lower Your Car Insurance Costs

Michael Collins
Sep 20, 2020

While it can be expensive and a hassle to pay, insurance should plan an important part in your finances. In terms of your personal life, it is always important to minimize your risk, especially if you have a family that relies on you. Insurance is one of the most effective ways to do this. With insurance, you pay money to the insurance agency and if something goes wrong , the insurance agency will help pay for the losses you incurred. 

For example, if you live in a place that has a high risk of flooding you could pay for flood insurance. If your house was to flood and be completely ruined, the insurance agency that provided you with flood insurance would then pay a large chunk of the damages you incurred. While you may pay for flood insurance for the entire life of your home and never have a flood, you will be protected just in case. If you had no flood insurance and your house was ruined by a flood, you would be out of luck and would need to pay for the damages out of pocket. While flood insurance could cost you thousands of dollars a year, having to pay for repairs to your home could cost tens or even hundreds of thousands of dollars. 

One of the most common forms of insurance is car insurance. There are around 274 million cars that are registered in the United States. With this many cars, there are bound to be a huge amount of accidents. In fact, around 16,000 car crashes happen every single day in the United States. Chances are you have even been in a car accident yourself! If so, you know how expensive repairs to cars can be. This is why car insurance is extremely important. It’s so important that every state but two has required car insurance policies that are in place to ensure drivers are insured to some extent. 

While car insurance is extremely important and in most states is mandatory, it can still cost you a lot of money. Unfortunately, car insurance rates are on the rise because of cars getting more expensive. Let’s look at some of the ways you can lower your car insurance so you can be on your way to being protected at a fair cost!

Shop Around

An insurance company is a business. Plain and simple. As a business, insurance agencies like to have as many customers as they can. This means that they compete with other insurance agencies for customers like yourself. How do these agencies compete for you to buy their insurance you may ask? Well, they charge lower prices so you choose them over your competitors.  

What does this mean for you and your car insurance? If you have yet to get car insurance, you should shop around and get a car insurance quote from a few insurance agencies. You will likely find one option that is cheaper than the rest. You can go with the cheapest option or you can go back to the more expensive options and try to convince them to give you a lower rate. It never hurts to ask. Worst case scenario they say no, but there is a chance they offer you an even lower price for car insurance. 

Likewise, you may be able to negotiate with your current car insurance company. If you shop around and find a better deal somewhere else, you can come to your current car insurance provider and ask if they can lower your insurance. They may be worried about losing you as a customer and give you a better deal. If not, you can choose to leave them and go with the best option you found. 

While it is important to find the cheapest option for your car insurance, you should try not to sacrifice any quality for your car insurance. Also, shop around for the best insurance company for you! Just because one option is cheaper than the next, they could still offer a much worse service. Look up comments and reviews online and ask your friends and family members for recommendations. Shop around so you can be as informed as you can about your car insurance. 

Ask for Higher Deductibles 

An insurance deductible is the cost you pay upfront before your insurance policy actually begins taking effect. Think of it as a security deposit for your home or apartment. You put up a specific sum of money and if there are any accidents or damage, it is subtracted out of your deductible. You are spending money upfront so not all of the costs from your accident are paid for by the insurer. Only after you pay this deductible can you start being protected by the insurance. 

If deductibles are something you must pay, why would you want to ask your insurer for higher deductibles? Wouldn’t that just cost more money and not lower your car insurance at all? What is the point of insurance if I am paying so much in deductibles? Well, paying a higher deductible will actually lower your overall costs. 

If you currently have a deductible of $400 on your auto insurance, any higher deductible will lower your auto insurance premium for a collision. Let’s say you were to raise your deductible to $900 or $1,000 your insurance policy will begin to be less costly. The more you can raise your deductible the more you will save. However, you have to be able to have the money for a deductible. Make sure you are comfortable with raising your deductible before you ask your insurer to raise it.

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Lower Coverage on Old Cars

A good car can last you hundreds of thousands of miles and can even hold sentimental value for you too. However, sometimes you just need to know when to let go. To save more on car insurance costs, you should lower collision coverage on some of your older cars that might be towards the end of their life cycle. That means having less protection for your beloved car should it be in an accident. 

Your insurance cost is dependent on the value of your car. Think about it; if a Lamborghini and a Honda Civic were to get in a crash, which one would cost more to repair? Obviously the Lamborghini. Similarly, if 2020 Honda Civic and a 2000 Honda Civic were in a crash, the newer Honda Civic would take much more to repair. This is why your insurance is more if your car is worth more.

On the flip side, as your car depreciates in value the smaller your auto insurance should be as well. Lowering your coverage on some of your older cars means you pay less on premiums and can save you some extra money. It is thought that if your car is worth less than 10 times the premium, you should not get coverage on that car. Similarly, Kelly Blue Book recommends dropping your coverage should your annual payment exceed 10% of the value of the car. 

The only caveat to having lower coverage on cars is that if you are to get in an accident, you will end up having to pay more money out of pocket. However, an accident to an older car might mean that you should get rid of your car anyway. If you smash a car that is worth $2,000 and it is going to cost you $5,000 to make repairs, it is not worth doing the repairs and your insurance ends up being slightly useless. Similarly, if you are planning on getting a new car, there is no need to spend money on covering your old car if you are not going to be using it anymore. 

Lowering your coverage and taking on more risk for your cars might not seem like the best move, but it can really help you lower your auto insurance and save you some money. 

Bundle your Home and Auto Insurance 

Many insurance agencies of more than one type of insurance, especially the large ones you always see on TV commercials. Because these companies want you to get as much of their coverage as they can, they will offer car insurance discounts to customers if they choose to get more than one type of insurance from the same insurance company. One of the most common ways this is done is by buying your homeowners insurance and your auto insurance at the same time, or “bundling” them. 

Bundling types of insurance together can save you a great deal of money depending on your insurer. For example, Progressive offers an average of a 12% auto insurance discount if you chose to bundle home and auto coverage with them. Since both of these insurances can be expensive, it can be a great deal to have that much shaved off the price every single year. 

While bundling will likely save you money, you should still shop around to make sure you are getting the best deal. Ask around and see if other insurers offer a better bundling discount. Also make sure to calculate whether bundling will save you more money than having your home and auto covered by two different insurers. 

Other Discounts 

While you will probably save more money by bundling your home and auto as well as lowering coverage on old cars, many insurance agencies offer many other smaller discounts to their customers. 

For example, if you have teen driver that is a good student you may be able to get a discount. If you can show proof that your teen is doing well in school, your insurer may be willing to lower some costs. Likewise, if your teen has taken a driver’s education course or is at college and not using their car, you also may be entitled to some discounts. It tends to cost more to cover younger drivers so ask your insurance provider about these discounts. 

Similarly, many providers like Allstate can award you with good driving discounts if you are a good driver. This means no accidents! If you have proven over time that you can be trusted not to crash your car when driving, your provider should be happy to give you a lower insurance rate. Good driving discounts can range anywhere from 10% to upwards of 30%. Good driving pays off! Be mindful of your surroundings when driving and you will not only save money but you will be safer when driving!

Have a Good Credit Record

Having good credit can actually save you a great deal of money. Aside from having better access to good loans, having good credit can actually reduce your car insurance as well. An auto insurance  company will oftentimes take a look at your credit to determine how much they should charge you for insurance coverage. If you have subpar credit, they will charge you higher rates and vice versa. 

Because having good credit can save you on car insurance, let’s look at our favorite way to build your credit. 

Building Credit with Possible

Here at Possible we offer installment loans and payday loans that are not like traditional payday lenders. We want to fight for financial fairness in an industry that is riddled with predatory practices. Because of this, we offer credit builder loans to our customers with poor credit scores. Here’s how they work; you get a small loan from us and pay it back over a scheduled period. If you are struggling to make your payments, you can extend your payment date up to 29 days right within our app. As you start successfully paying the loan back, we report your good payments to two major credit bureaus. After some time, you will see your credit score start to rise and you can be on your way to getting your credit back on track!

Building good credit is important, especially when it comes to saving money on your car insurance. Consider getting a credit building loan with Possible so you can work towards better credit and getting better deals on your insurance. Download our app today and get your money within minutes!

Michael Collins

Michael has a passion for writing and has since brought that passion to Possible. He enjoys reading everything there is to know about film, sports, and finance. His studies in college allow him to be on the forefront of business knowledge so he can better inform his readers.

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