Tips for Saving Money on Car Insurance

There are lots of lists on how to save money on car insurance that at least cover the obvious ways. I haven't seen all these suggestions before so here are my tips on how to maximize your savings on car insurance.

Ways to Save Money on Car Insurance

  • Consider getting only liability insurance. Drop collision and comprehensive insurance and instead self insure. Make sure you understand the risk of course -if you drove a $35,000 car then the amount of risk your taking is more than if you are driving a $3,000 car and that risk is factored into your insurance premium.
  • If you purchase collison and/or comprehensive insurance get the highest deductible you can afford. Every year review your insurance coverage and raise these deductibles as you can afford to do so until you can remove the coverage all together.
  • Seek out no-name insurance companies. No-name companies may offer better prices than State Farm, Allstate, even Geico. I started with Allstate, but quickly switched to Farm Bureau when I found they were consistently cheaper. A few years later I then switched to Erie Insurance when we found them to be consistently cheaper than Farm Bureau. You can check with your state insurance agency to learn more the size of an insurer's business in your state and the complaints against them.
  • Take advantage of insurer discounts. All discounts at your insurance company are not always advertised so make sure your challenge your insurance agent to lower your premium regularly.
  • Price shop annually with insurance companies. Insurance companies always give you their best price to bring you on as a customer, but have little incentive to keep your premiums the lowest possible over time.
  • Combine home and auto policies with the same insurer if its the cheapest option for you. Insurance companies want both your policies and will typically offer a discount to get them.

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Comments (5)


2mil, price should not be your only consideration for auto/home insurance. Having an independent agent adds some value versus calling an 800#. The purpose of insurance is so that someone else pays when you have an accident or disaster. You need a stable company backing you, not some fly-by-night discount carrier. Also when you get in the inevitable accident that was your fault you want a carrier that will continue to cover you even if they charge you a bit more. You are young and maybe have a clean record, but you don't want to learn the hard way what happens when no one wants to cover you because they consider you a bad risk for only one mistake (e.g. maybe a minor moving violation). Finally it is a good idea to have an umbrella (aka excess liability) policy.

Great advice. Reducing our insurance outgoings is on the top of our list in 2011. I'm reviewing our life insurance, health insurance, home insurance, and car insurance. Going forward, we plan on doing this every year.

I work for an independent agency. We represent several companies and have no real loyalties to any of them. The only thing I somewhat disagree on with the post is the no name insurance company. Farm Bureau is a respected company, not sure about Erie. I would just say make sure you are really looking at the companies financials and rating like you said. There is a level I would not go below. A level at which price and quality cross paths. For auto insurance, you have more leeway. Homeowners is where it can get scary, especially if you live in a high hazard zone such as hurricane alley, tornado prone areas or forrest fire regions. I wouldn't go with a company who's business started after the last major disaster or the last couple disasters.

Little off topic towards the end, sorry. Just make sure you are getting what you pay for and don't pay for little extras like towing. Get a AAA card.

Also, look at the prices with different deductibles. Sometimes the difference in a $500 and $1000 deductibles only result in $50 dollar decrease each policy term. Not in every case but it's worth a look.

annnnd as i go to post this i see the first comment touches on a lot of what i just said. Sorry for the repeat. I'm posting. Deal with it.

Nice posts and comments. My rates just went up, so I'll heed this advice for my shopping.

I agree that you should seek no-names companies, I also started with Allstate with my car insurance but eventually I transferred to GMAC which is much cheaper and provide better services. One thing I read recently about getting cheaper car insurance is by putting an easy plug-in device that monitors your driving behavior. (I think it's better to share the article here, though.)

They call this pay-as-you-drive. Somehow it sounds good and harmless.

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A personal finance weblog of my journey to reach my goal of $2 million + the value of my primary residence.
Current Net Worth: $1,574,185

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