If it felt like that seat belt around your waist was getting tighter and tighter last year, you can be forgiven. Drivers were squeezed by double-digit increases in car insurance rates as companies battled with higher payouts, increased litigation and catastrophe-related losses.
The consumer-price index for motor vehicle insurance was up an average of 14.2% year-over-year in December 2022, more than double the December YOY inflation rate of 6.5%. While 2023 isn’t expected to be quite as bad, drivers can still expect further pain.
Mark Friedlander, director of corporate communications for the Insurance Information Institute, says the organization anticipates high single-digit percentage increases on average annual insurance rates in 2023. However, some states will again see double-digit increases.
Factors at play include increasing accident frequency, the severity of crashes and growing vehicle theft rates nationwide.
“Additionally, we are seeing higher costs of repairs due to supply chain disruption, leading to more expensive replacement parts and higher costs of labor,” Friedlander says.
But fortunately, there are a few clever ways to lower your auto insurance costs.
- The easiest way to save on car insurance is to shop around at renewal time and get quotes from multiple companies.
- Insurers offer various discounts for students, good drivers, anti-theft devices and bundling.
- Choosing a higher deductible can significantly lower your rate.
How to save money on car insurance in 2023
Getting cheaper car insurance will require a little work, but the savings can make it worthwhile.
Here are 10 ways to unlock the best deals on car insurance:
- Shop around and compare car insurance quotes
- Bundle your policies
- Raise your deductible
- Save with teen and student drivers
- Compare insurance rates when buying a vehicle
- Improve driving record by avoiding tickets and accidents
- Drop coverage you don’t need
- Buy only state-required minimum liability coverage
- Go for pay-per-mile insurance
- Ask about group insurance or an affinity discount
1. Shop around and compare car insurance quotes
The best place to start is by determining where you can get the cheapest car insurance. It might sound obvious, but comparison shopping and gathering quotes from many different insurers is the top way to save.
You may already have a pretty good deal with your current insurer, but the only way to know is by comparing regularly.
Comparison shopping can help you find cheap car insurance companies in your area and may even make you aware of deals from lesser-known insurers. It makes sense to get a comparison quote whenever your policy comes up for renewal.
In April 2023, CarInsurance.com surveyed drivers nationwide about car insurance. The survey found that 49% of drivers shopped for a new car insurer in the past 12 months. Of people who switched insurers, 26% of drivers saved 10% on a new policy, and 29% of people saved 15% on a new insurance policy.
Compare car insurance quotes from 25+ companies with a rate calculator
2. Bundle your policies
One of the best strategies for lowering your rates is to look for insurers who offer discounts for bundling policies – such as auto and home or renters and car insurance.
For example, purchasing homeowners insurance from the same company that provides your car insurance can earn you a deep discount. In some instances, multi-policy discounts can be more than 25%.
Similarly, you can save as much as 25% by taking advantage of multi-car discounts when you insure two or more vehicles with the same company.
But you don’t always save by bundling. It’s essential to compare what it would cost to purchase your policies separately to the price break you get on a bundle. It’s possible, for example, that you would do better to buy a home policy on its own and get your auto coverage from a company that offers one of the cheapest rates.
National averages for multi-policy discounts are:
- 17% for auto and homeowners insurance
- 9.6% for auto and condo insurance
- 5% for auto and renters
- 2% for auto and life
3. Raise your deductible
Raising your collision and comprehensive deductibles from $250 to $500 can significantly impact rates. Nationwide, for example, says you might save 15% to 30%.
Increase your deductibles to $1,000; the savings could be as high as 40%.
Remember that a higher deductible means you’ll pay more out of pocket if you do get in an accident and need to repair your vehicle. Any savings you made on the front end could easily be surpassed by an expensive repair bill.
Learn more on why raising deductibles saves you money
4. Save even with teen and student drivers, and ask about discounts
Insurers typically offer a range of other discounts based on such factors as driving habits and school performance.
Here are a few standard discounts that might be available to you:
Good student. Many insurers offer a good student discount for high school and college students. A “good student” is typically someone who maintains a “B” (3.0) or better average and is under 25 years of age.
How much is it worth? The average good student discount is 14% based on a 2022 CarInsurance.com rate analysis, which can be considerable when you consider that is off what is typically a much higher rate for a young driver.
Homeschooled teen drivers may also be eligible, provided they achieve a certain score on standardized tests. The discount normally applies to bodily injury liability, property damage liability, medical payments, collision and comprehensive coverages.
Students away from home. Most insurance providers also offer discounts to good students who are away at college.
A wide array of variables affects the discount rate, including:
- Whether or not the student is taking a car to school and driving it regularly
- Whose name(s) is on the title
- Whether or not the student’s permanent address is still the parent(s)’ home
And be sure to look for loyalty, good driving and other discounts.
Loyalty. Have you stuck through thick and thin with your insurance provider? Your loyalty could equal savings. Several insurance companies offer this discount, which generally reduces rates by up to 10%.
Good driver. Good driver and safe driver discounts can get you between 5% and 25% in savings, depending on your carrier. Reducing how much you drive your vehicle can also garner a discount. More on both of these later.
Vehicle security. Do you have an alarm or security/anti-theft device installed in your vehicle? It could qualify you for a “safety-feature discount” of up to 30%.
Many insurance companies offer anti-theft discounts, but do your homework, as savings vary based on the state and type of device used.
Paid in full. Paying your annual bill in full can save you up to 10%, rather than the more common approach of paying in installments. Going paperless, too, can add a small discount.
Understand all the car insurance discounts you may qualify for to take advantage of additional reductions.
5. Compare insurance rates when buying a vehicle
Make sure to consider the insurance cost when shopping for a new ride. Cars that cost less to repair or replace generally have more affordable rates.
Don’t make the mistake of thinking that the “cheaper the car, the cheaper the insurance.” It doesn’t always work that way. Instead, compare car insurance rates by vehicle when shopping for a car.
Drive a car that’s cheaper to insure. Insurance rates depend on your vehicle’s make and model.
According to 2022 data from Quadrant Information Services, the top five cheapest cars to insure are the Subaru Forester 2.5I Wilderness, the Hyundai Venue SE, the Honda CR-V LX, the Mazda CX-30 S and the Toyota C-HR XLE.
Here’s a look at the top 20 cheapest cars to insure
| Rank | Make | Model | National Average Rate |
|---|---|---|---|
| 1 | Subaru | Forester 2.5I Wilderness | $1,353 |
| 2 | Hyundai | Venue SE | $1,360 |
| 3 | Honda | CR-V LX | $1,366 |
| 4 | Mazda | CX-30 S | $1,379 |
| 5 | Toyota | C-HR XLE | $1,384 |
| 6 | Toyota | C-HR NightShade | $1,387 |
| 7 | Mazda | CX-30 S Premium | $1,388 |
| 8 | Honda | CR-V EX | $1,391 |
| 9 | Kia | Seltos LX | $1,391 |
| 10 | Honda | HR-V EX | $1,398 |
| 11 | Hyundai | Venue SEL | $1,402 |
| 12 | Ford | Transit Connect XL | $1,405 |
| 13 | Volkswagen | Tiguan S | $1,406 |
| 14 | Mazda | CX-5 S Select | $1,407 |
| 15 | Subaru | Outback 2.5I | $1,407 |
| 16 | Honda | HR-V Sport | $1,408 |
| 17 | Subaru | Forester 2.5I Sport | $1,412 |
| 18 | Toyota | C-HR Limited | $1,412 |
| 19 | Chrysler | Voyager LX | $1,413 |
| 20 | Jeep | Wrangler Willys Sport | $1,415 |
6. Improve your driving record by avoiding tickets and accidents
There are steps you can take to avoid expensive tickets and accident claims. Pay attention to your speed, don’t try to run a red light, be more cautious and drive defensively.
Poor driving history can disqualify you from getting the cheapest car insurance. Insurers will check your record to see if you present a high level of risk. Speeding tickets, accidents, and citations for driving under the influence can increase your insurance rates.
As we pointed out earlier, good-driver discounts can save you up to 25%. In addition, insurance companies usually require that you have a clean driving record for at least three years. That means no DUIs, no moving violations and no at-fault collisions.
Drive sensibly and cautiously, and you’ll get cheap car insurance by avoiding surcharges and receiving a good-driver discount.
7. Drop coverage you don’t need
You can get cheaper car insurance by dropping comprehensive and collision coverage if you have an older vehicle. But don’t drop that coverage without giving it some thought. Many experts say it’s time to drop these coverages when the actual cash value you’d receive for your vehicle doesn’t justify the insurance expense.
Another type of coverage that could be unnecessary is rental reimbursement coverage. You can skip that if you have an extra car in the household that you can use if yours is in the shop after an accident or if you have easy access to public transportation.
8. Consider buying only the state-required minimum liability coverage
One way to get the cheapest car insurance rate is to buy “bare-bones” coverage. This protection is liability insurance at the lowest legal limits required by your state to drive a car. If you cause an accident, it pays only for others’ property damage and medical bills up to the specified limits.
Be aware that if you go with the state minimum, you might be unable to cover serious claims. That could leave you on the hook for paying thousands or even hundreds of thousands of dollars in damages out of your own pocket.
But if you don’t drive much and are desperate to find a way to get cheaper car insurance, bare-bones coverage may be an option.
9. Pay only what you use: Consider usage-based or pay-per-mile insurance
People who drive less than a specified number of miles yearly, usually 7,500 to 10,000 miles, can get cheaper rates. The rate cut is applied to bodily injury liability, property damage liability and collision premiums, depending on the policy.
To monitor mileage, car insurance companies often require installing a small device in your vehicle that transmits data to the company. Keep it under a certain amount, and you score discounts. Usage-based programs may also monitor driving habits like braking and speed.
Actual pay-per-mile insurance allows you to pay based on the actual miles you drive, rather than just giving a discount for driving less and doesn’t consider driving habits.
10. Ask about group insurance or an affinity discount
Some companies offer lower rates to drivers who get insurance through a group plan from their employer or professional, business and alumni groups, and other associations or schools.
The Insurance Information Institute suggests checking with your affiliated organizations to see what they offer.
Employers often offer health insurance group plans, but a lesser-known option is group car insurance. Larger companies are more apt to provide this option to their employees because the sheer number of employees allows them to secure a group rate.
Large colleges or trade schools sometimes offer the benefit of buying into group insurance to their students and alums. Some insurance companies also offer members of certain groups a discount, called an affinity discount.
Final thoughts: How to save on car insurance
There are plenty of ways to lower your car insurance, but it requires you to take the wheel. The savings can be substantial by researching, comparing costs and taking advantage of all available discounts.
Resources & Methodology
Sources
J.D. Power. “Auto Insurance Rate Hikes Erode Price Satisfaction, Drive Surge in Value Shopping.” Accessed February 2023.
Insurance Information Institute. “How to save money on car insurance.” Accessed February 2023.
Methodology
CarInsurance.com commissioned Quadrant Information Services to calculate the average auto insurance average based on full coverage for a single 40-year-old male who commutes 12 miles to work each day, with policy limits of 100/300/50 ($100,000 for injury liability for one person, $300,000 for all injuries and $50,000 for property damage in an accident) and a $500 deductible on collision and comprehensive coverage. This hypothetical driver has a clean record and good credit. The rate includes uninsured motorist coverage.
“Despite significant rate increases, rates are not keeping up with accident loss costs paid out by auto insurers,” Friedlander says. “Several companies are reporting record-level private passenger auto underwriting losses for 2022, leading to the industry’s worst personal lines underwriting performance in a decade.”