Automobile insurance has become one of the expenses that pressures drivers’ budgets in the United States. Inflation, supply chain problems, labor shortages, and the rise of natural disasters have increased the costs faced by insurers and, consequently, the premiums paid by consumers.
Currently, the average premium for a broad-collision policy is around $1,897 per year. Additionally, data from the United States Bureau of Labor Statistics show that the cost of auto insurance rose 12.7% between November 2023 and November 2024.
The good news is that there are different strategies to try to reduce the price of coverage without leaving yourself unprotected. Comparing insurers, adjusting the deductible, bundling policies, and reviewing available discounts are some of the options that can make a meaningful difference.
Comparing insurers can yield substantial savings
One of the most effective methods to reduce insurance costs is simply to shop for new quotes.
Companies do not necessarily charge the same for similar coverage. For that reason, remaining with the same insurer for years does not always mean you are getting the best price.
According to JD Power, 49% of drivers say they actively compare auto insurance prices. Competition between national and regional companies can work in the consumer’s favor who is willing to review different options.
An analysis conducted with full-coverage policies showed considerable differences among insurers. For the exercise, 40-year-old drivers who owned a 2023 Honda Accord LX with a good record and no violations were used, along with liability limits of $100,000 per person for bodily injury, $300,000 per accident, and $100,000 for property damage, according to Fox Money.
In some states, switching carriers could represent a reduction of 50% or more on the premium.
The case of Massachusetts is particularly striking: one annual quote reached $4,092, while the most economical average option stood at $528 per year. The difference would represent a saving of nearly 87%.
Naturally, actual rates depend on the state, driving history, vehicle, age, coverage, and other personal factors.
A higher deductible can reduce the premium
The deductible is the amount the insured must pay out of pocket before the company covers a claim.
In general, choosing a low deductible means paying a higher premium. If the driver agrees to shoulder a larger portion of the cost in the event of an accident, the insurer may offer a lower premium.
For example, raising the deductible from $500 to $1,000 reduced the annual cost of the policy by about $170.
This option can be helpful, but it is wise to ensure you have enough money available to cover the deductible if an accident occurs.
Bundling insurance can unlock discounts
Another strategy is to purchase multiple policies with the same company.
The so-called bundling usually applies when a client combines auto insurance with a homeowners policy. There may also be options for renters.
Discounts depend on each insurer, but they can typically range from about 4% to 13%.
Before accepting a bundle, it’s wise to compare the final price with the cost of purchasing each policy separately. A discount does not necessarily mean the bundled option is the cheapest overall.
Review whether you really need all the add-ons
Auto policies can include additional coverages that not every driver needs.
Roadside assistance is an example. If you already have an independent service that offers towing and assistance, you could be paying twice for similar protection.
There is also rental car coverage. It can be convenient if you rely on the vehicle every day and have no alternative transportation. However, someone who has a second car or can temporarily turn to family, friends, or coworkers might decide to skip it.
Another add-on is coverage for customized equipment, intended for modifications such as sound systems, accessories, or certain non-original parts. If you no longer have those modifications or you changed vehicles, reviewing this protection can help you avoid unnecessary expenses.
Driving less can also help you pay less
The number of miles driven can influence the price of a policy.
The Federal Highway Administration estimates that Americans drive, on average, 13,476 miles per year. However, those who use their car sparingly may have access to low-mileage discounts.
Some companies consider as low-mileage drivers those who travel less than 7,500 miles per year, though the threshold varies among insurers.
discounts can be approximately between 5% and 15%, depending on the company and the program.
To maintain this advantage, the insurer may request information or proofs of mileage at renewal time.
Telematics can reward good driving habits
Usage-based insurance (UBI) programs use technology to analyze certain driving patterns.
Depending on the program, a mobile app or a device installed in the vehicle can record aspects such as mileage and certain driving habits.
Stephen Crewdson, Senior Director of Global Insurance Business Intelligence at JD Power, notes that drivers who improve their habits may have higher chances of obtaining discounts through these programs.
Some initiatives can offer savings of up to 40%, though conditions vary considerably between companies.
There is also a risk the driver should be aware of: not all programs function solely as a reward. Mark Friedlander, Corporate Communications Director at the Insurance Information Institute, warns that some insurers could use the data obtained to adjust rates if they detect driving habits deemed risky.
That is why, before accepting a telematics program, it is important to review how the company uses the data and what consequences a negative evaluation could have.
Maintaining continuous coverage can work in your favor
Cancelling a policy and remaining uninsured for a period can end up making a future purchase more expensive.
Insurers tend to review applicants’ coverage history, and in certain circumstances, a lapse can cause the driver to be considered higher risk.
Therefore, if you are thinking of changing companies, it is preferable to arrange the new policy before canceling the old one. Some insurers even offer discounts to those who secure coverage in advance.
Moving to digital communications can also yield a small discount
Although the savings are usually smaller than those achieved by comparing insurers, some companies offer discounts for using electronic communications.
Instead of receiving invoices, renewals, and other documents by postal mail, the customer can receive them via email or through the insurer’s digital portal.
The discount depends on each company, but it can be another simple way to slightly reduce the total cost.
Ask about discounts that might be available
Not all discounts are automatically applied. Therefore, speaking with an agent or contacting customer service can reveal options that do not appear initially on the quote.
Among the benefits some drivers may find are discounts for completing defensive driving courses.
Students may also have options. A son or daughter who maintains good grades in high school or college could meet the requirements for a good-student discount; some companies use a grade point average equivalent to a B or higher as a reference.
There may also be loyalty benefits, multi-policy discounts, or certain housing-related circumstances.
Availability and requirements depend on the state and on each insurer.
Older vehicles may require a different strategy
Maintaining broad and collision coverage on an older, high-mileage car does not always prove economically advantageous.
When the vehicle’s value has fallen significantly, the cost of those coverages can represent a sizable proportion of what the car is actually worth.
In certain circumstances, a driver might consider keeping only the civil liability coverage required by law and personally bearing the cost of repairing or replacing the vehicle.
However, this decision should be weighed carefully, especially if the car still has substantial value or there is an outstanding loan.
Personal decisions can also change what you pay
The price of insurance does not necessarily stay stable over a lifetime. Certain events can considerably modify the premium.
Moving is one of them. Insurers take location-related factors into account, such as congestion, accident rates, vehicle thefts, and the number of uninsured drivers.
An accident in which the driver is deemed responsible can also lead to a premium increase.
Credit history is another element that can influence premiums in certain states. Rules are not the same across the United States, and there are states, such as California and Massachusetts, where insurers have specific restrictions on using credit information to set rates.
Buying a new car can also raise the cost of the policy because the vehicle has a higher value and, potentially, higher repair or replacement costs.
Paying upfront can be another way to save
The frequency of payment also deserves attention.
Some insurers offer discounts to customers who pay the premium upfront rather than dividing the cost into monthly or semiannual installments.
Companies like Progressive and Liberty Mutual have offered this kind of incentive, though conditions can change and not all customers qualify.
Before choosing this option, it is wise to compare the total cost of each alternative and not just the amount of each payment.
Can you negotiate the price of insurance directly?
In general, auto insurance premiums do not function like the price of a product that can be freely negotiated. Insurers operate within a regulatory framework and their rates must comply with the applicable rules.
That doesn’t mean the consumer can’t try to reduce their bill.
Contacting an agent or customer service can help uncover discounts, modify coverages, change the deductible, or review whether the current policy features still match the driver’s needs.
What to do before renewing the policy
The rise in auto insurance costs has made renewal a key moment to review personal finances.
Rather than automatically accepting the new premium, the driver can request quotes from several companies, check their coverages, analyze the deductible, and ask about discounts.
It is also wise to consider how much you drive, whether certain add-ons are truly needed, and whether a usage-based program could be beneficial.
There is no one-size-fits-all formula for drivers. The best strategy will depend on the vehicle, history, location, the desired level of coverage, and the financial ability to take on a higher deductible.
In a market where premiums have risen sharply, comparing options before renewing can be one of the simplest financial decisions to try to reduce annual car-related expenses.
