How to Lower Your Car Insurance Rate: Step-by-Step Guide

Car insurance rates have skyrocketed. According to our analysis, the average cost of car insurance has increased 59% since 2020. The biggest opportunity to lower your car insurance rate for most people is switching insurers. But switching is just the start of tactics you can take to lower your auto insurance cost. Stack discounts, bundle your policies to save on both policies, and optimize your coverage to unlock $250–$1,500+ in total annual savings. Here's exactly how to do it.

Different tactics lower your car insurance by different amounts and require different levels of effort. The most effective way to lower your car insurance rates is to stack these reduction tactics. Here's the strategies that every driver can take to lower their car insurance rate:

The table below highlights strategies to lower your car insurance will work for different buyer profiles and needs, but not for every driver.  For example, drivers with a low credit score will have incremental opportunities to lower their auto insurance rate.

Car insurers don't reward loyalty. They reward new customers with lower prices. Your current insurer has no incentive to give you their lowest rate, so switching car insurance companies is a high confidence strategy to get you the cheapest car insurance company.

How to do it 

1. Gather your current policy details (coverage type, deductible, vehicle information)
2. Get quotes from at least 5 competitors on the same day
3. Use identical coverage and deductible levels across all quotes
4. Use our car insurance calculator to compare all at once
5. Pick the cheapest option and switch.  The process take 30 minutes up to a day.

How much will you lower your rate: Savings from switching a full coverage policy: $520–$890/year. 82% of drivers could save money by switching insurers

Most drivers qualify for multiple discounts but only use one or two. Insurers don't always apply discounts automatically and you have to ask. Many of these discounts are available to everyone and are easy to add.

How to do it

1. Call your insurer and ask: "What discounts do I currently have applied?"
2. Review the list of common discounts below
3. For each discount you qualify for but don't have, ask them to add it
4. Some discounts may require documentation (good student GPA, defensive driving certificate, etc.)
5. This can be done in one call and takes about 15 minutes.

Common discounts to ask about

• Safe driver (10–20% off for 3+ years without violations)
• Good student (10–15% off for GPA 3.0+)
• Paperless billing (3–5% off)
• Paid-in-full (5–10% off)
• Low mileage (5–15% off for <10,000 miles/year)
• Professional associations or alumni groups
• Military service or veteran status

How much will you lower your rate: $285–$520/year by stacking 3–5 discounts. Each discount typically saves 5–15%, and they compound.

This tactic doesn't require switching your insurer to lower your rate and you can do this with one phone call. Raising your deductible from $500 to $1,000 typically saves 15–20% on collision and comprehensive coverage. You pay more out of pocket if you file a claim, but you pay less in monthly premiums.

How to do it

1. Call your current insurer
2. Ask them to quote your policy at a $1,000 or $1,500 deductible (instead of $500)
3. Compare the rate reduction and confirm in 15 minute or less

Does it makes sense for you?

Yes if:

• You have $1,500+ in emergency savings
• You have a clean driving record
• You have low accident risk

No if:

• You have limited emergency funds
• You have a high accident history
• Your car is financed or leased (may be required to keep lower deductible)

How much will you lower your rate: $150–$400/year by raising your deductible from $500 to $1,000.

You can save money by adjusting your coverage to match what you actually need. This breaks into two parts: your liability limits and your comprehensive/collision coverage.

Most drivers have liability limits that don't match their assets. If you have few assets to protect, you're overpaying for coverage you don't need. Once your car is paid off and worth less than $5,000 comprehensive and collision coverage stops making financial sense.

How to do it in less than 30 minutes

Step 1: Review your liability limits

1. Check your current policy (typically 100/300/100)
2. If you have fewer assets to protect than your current limits, ask your insurer for a quote at lower limits
3. Make sure to keep your liability limits above your state's requirements

Step 2: Decide about full coverage

1. If you are financing your car, full coverage is required by the lender
2. Check your car's current value (Kelley Blue Book or NADA Guides)
3. Look at your current comp/collision premium
4. Calculate if the annual premium exceeds 10–15% of your car's value
5. If yes and you have emergency savings, call your insurer for a liability-only quote

If your household has 2 or more vehicles, insuring them all under one policy with the same insurer gives you multi-car discounts that reduce each vehicle's policy cost. Multi-car discounts are up to 48% at some insurers. The savings compound: Each additional vehicle gets the discount applied, so a household with 3 cars saves more than a household with 2 cars.

How to do it today

1. When shopping for car insurance, mention how many vehicles your household owns
2. Get bundled quotes that include all vehicles under one policy
3. Compare the multi-car rate vs. separate policies
4. Switch to the insurer with the lowest multi-car rate in about 1 hour depending on how many car insurance companies you compare

How much will you lower your rate: Most consumers save between $680–$945/year by consolidating multiple vehicles under one policy.

This is a long-term play, not a quick win, but will have a big impact on lowering your car insurance rate. Violations and accidents temporarily increase your rates, but they drop off your record in 3 to 5 years depending on your state. Once the incident ages off, expect significant rate drops.

How to do it

1. Avoid new violations and accidents, easier said then done, we get it
2. If you do get in an accident and your rate increases, this is a good time to compare quotes from other insurers to lower your rate because they each rate your risk differently

How much will you lower your rate: $200–$800/year through driving record improvements.  See the lowest rates after an accident.

Your credit score affects your insurance rate in most states. Higher credit scores lead to lower premiums, so a great way to lower your car insurance rate is to increase your credit score.  This is high effort to lower your car insurance rate, but it also helps in other financial aspects of your life.

How to do it

1. Pay bills on time (35% of your credit score)
2. Reduce credit card balances (30% of score)
3. Request credit limit increases (helps ratio)
4. Keep old accounts open (15% of score)

How much will you lower your rate: $80–$900/year depending on how much you increase your credit score and how low your score was to start. See our guide to best rates with a low credit score.

Bundling you home and auto will lower your rate on both policies.  Bundling will decrease your cost but only if you're switching to bundle with a company that offers good bundling rates. If you bundle with your current overpriced insurer, you're just bundling at a bad rate.

How to do it

1. When you shop for car insurance quotes (Tactic #1), ask each company for bundled quotes that include your home insurance
2. Compare bundled rates side-by-side with other insurers
3. Switch to the insurer with the lowest bundled rate all in about an hour.

How much will you lower your rate: The best bundling discounts come from the largest insurers. State Farm's 25% bundle discount means a $847/year savings on average in savings compared to separate policies.  Our user data shows consumers lower their combined rates by $124 to $1,889 per year.

Online car insurance shopping leads to lower rates. Insurance agents earn 5–15% commissions on policies they sell. Insurance companies that rely heavily on agents build those commissions into their rates. When you shop online directly with insurers, you get lower car insurance rates.

When you work with an agent, you're limited to the insurers they represent which tend to be more expensive because they've factored agent commissions into their rates. When you shop online, you access the full market of direct-sales insurers, including the lowest-priced options.

You can lower your car insurance with pay-per-mile, but only if you drive a minimal amount of miles per month.  Most consumers don't want to log their miles or be tracked by GPS that are required by these programs, but see our guide to pay-per-mile to see if you can save.

Finding ways to lower car insurance feels overwhelming when every insurer claims to offer the best rates. We analyzed 529,578 insurance quotes from 67 companies across 897 ZIP codes to cut through the marketing noise and identify which cost-reduction strategies actually save money. Our research reveals the concrete dollar amounts you can expect to save through each tactic.  See our full methodology.