11 Ways to Save on Car Insurance

Posted by Madison on October 6, 2008

As you work to build your net worth, protecting your nest egg is a critical part of your total financial picture. While we often view car insurance as being able to fix or replace our own damaged vehicle, even more important is protecting your other assets in the event of a large liability lawsuit.

Of course, the cost of car insurance can get out of hand. Be sure that you are doing everything you can to educate yourself about insurance and obtain the right coverage. Here are some tips to save money on your insurance. In addition, there are some tips to protect your car and the occupants, often services offered by insurance companies.

Tips to Save Money on Your Car Insurance

1. Etch Your VIN. I just received a postcard from my agent offering free VIN etching. It makes your vehicle 64% less likely to get stolen. Avoid a stolen car and you’ll avoid a claim.

2. Install In-car Cameras for Teens. Two studies examining teen driving with the use of in-car cameras saw a 70% reduction in teens risky driving behavior. Our insurance company offers these cameras free to policyholders with 16-year-olds. You can be sure that my tots will have these installed 14 years from now!

3. Check All the Discounts. Check the list of discounts that your insurance company offers. Be sure you are taking advantage of all the ones you qualify for. Here are some common ones to look for:

  • Car safety features: Air bags, automatic seat belts, anti-theft devices, and anti-lock breaks.
  • Good students: Teens with good grades.
  • Accident free: Multiple years with a clean record.
  • Senior citizens: Discounts for older policyholders.
  • Driving habits: Low mileage or a short commute.
  • Renewal discounts: Rewards customers who have stayed with the same insurance company for a long time.
  • Multiple cars: Discount for insuring all your cars with one carrier.
  • Training classes: Defensive driving and driver training classes.

4. Shop Around. We saved $500 per year on one policy, just by getting quotes from multiple companies. Just make sure you stick with a company that is financially stable.

5. Consolidate Your Policies. Many companies offer you a discount on your car insurance to insure your house or other policies.

6. Keep a Healthy Credit Score. Find out when your credit report is ordered. I prefer to have a great score when my insurance company checks my credit. You can call your agent to ask when it will be ordered and how often.

7. Drive a Low Risk Car. When you are in the market for a new car, check the crash test ratings for safety. In addition, see the insurance loss data by make and model to get an idea of which cars are the least and most expensive to insure based on industry data.

8. Take on More Risk. You read everywhere that you should get a higher deductible, but why? Your ultimate goal is not to insure against scratches and dents. Rather your goal should be to insure against something that you cannot afford to happen. Save money each month to cover the cost of a $750 brush with a pole. Use insurance to cover the cost of a $400,000 accident.

9. Partially Insure Yourself. This is for collision only. Avoid collision insurance on a really old car worth less than $2,000. Chances are you’ll end up paying more in premiums than the car is worth. Just make sure before you drop the coverage that you have the money in the bank to replace it if it is totaled.

10. Understand the Laws. You’ll need different coverage based on where you live. Most states have a traditional tort liability system. Negligence determines who will pay. However, if you live in a no-fault state, you need to understand how it works and why you’ll need different insurance coverage.

11. Buy an Extra Car. You’re never going to believe this, but when my husband was younger, we actually saved money by purchasing a third car. It was a junker that was probably only worth a few hundred dollars. The premium on our other cars dropped significantly and the cost to insure the junker was dirt cheap. Bottom line: we came out ahead. It pays to think creatively!

Feel free to add your own tips in the comments.

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Comments to 11 Ways to Save on Car Insurance

  1. One thing I’ll add about taking on additional risk… High deductibles are a great way to lower the cost of insurance, but be sure to take a higher level of liability coverage as well. Taking only state minimum coverage is not a great place to save money. If you have $40,000 of liability coverage and are responsible for a $100,000 accident, you are responsible for the $60,000 that is over your coverage maximum.

    Matt – Dollartamer

  2. Excellent suggestions. I second Matt’s comment on opting for higher deductibles as this helped us a lot. Also, in Canada, if you drive your car to work then you pay more for insurance. It seems counter intuitive to not drive your car to work, but this saves huge dollars. My husband and I bike or bus to work daily, so the car is used quite minimally. (Saves on gas tooooo) 😀


  3. Great article. I like the last recommendation of buying an extra older car. Funny how that works, isn’t it.

    Another thing that lowers the cost in some countries, like Australia, is to pay your premium annually. You get a better rate than if you make payments.

    Auto Insurance Helper

  4. Thanks for the great tips – I am picking up new car insurance next week so this will be a big help!

    sue bette

  5. This is probably obvious, but I don’t understand – how does adding a third car reduce your insurance costs?

    Lexie G

  6. @ Lexie G: Some insurance companies assess the risk on how much you drive the cars. If you have two drivers and three cars, they may lower your rates (on the first two) assuming you will drive those cars less. If the additional premium on the third car (a junker) is less, you come out ahead.

    It doesn’t work all the time like that. For a young, unmarried male, with a new car and the right company, it worked for us.


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