How to Cut Your Car Insurance CostsIf you're looking for clues about what impacts your car insurance rates, check in the mirror -- it's mostly about you.

"When it comes to car insurance, there's hardly anything that isn't personal," says Carroll Lachnit, consumer advice editor for, an online resource for automotive information.

Here's a look at what matters most.

You Can't Escape History

What's your driving history? How many tickets and accidents do you have on your driving record, particularly in the past three years? Insurance carriers will also look at the number of miles you drive each year.

"The less you drive, the less risk of an accident and a claim. Safer driving, meaning a history free of accidents and moving violations, also points to someone who's less likely to file a claim," says Lachnit.

How much you pay is directly related to how long you've had your license. "Get your driver's license as soon as possible, because this is the largest factor affecting your auto insurance rates," says Deane Silke, vice president of Fiesta Auto Insurance Center. "Even if you don't have a car or don't plan to drive, get your driver's license so that the clock starts ticking on the number of years you've had a license," he adds.

Born This Way

There are things that effect your rates that you can't control -- like gender and age. "Women's car insurance rates are lower, because they tend to have fewer accidents and tickets," says Chris Kissell, a spokesperson for Youth also is a disadvantage. "Drivers who are very young pay higher rates, particularly males, because they tend to have more accidents and tickets," he adds.

Insurance companies base their rates on actuarial information, and they look for patterns of claims activity among people like you. For example, a teenage boy is likely to have a higher insurance rate than a middle-aged woman because statistically, teenage boys have more accidents than do 40-year-old women, says Lachnit.

How You Can Change the Equation

The average American driver spends about $850 a year on car insurance, according to the Insurance Information Institute. While that's not an insignificant amount, no one is suggesting you make dramatic life changes simply to lower your premiums. Still, there are a number of factors based on life choices that come into play.

For starters, there's marital status. It's not a reason for running to the justice of the peace, but a married person may pay less than a single person with an identical driving record.
Your zip code counts too. Insurers use those location codes to break down their assessments of trends like accidents, car thefts, lawsuits, and the cost of medical care and car repairs, according to the Insurance Information Institute. Is it worth moving to a "safer" area? Maybe, maybe not.

What you do for a living isn't only of interest to the people you meet socially: Insurers want to know the answer as well. If you're stuck behind your computer all day, you'll likely pay less than the outside salesperson who hits the road regularly for work. "More miles driving, statistically speaking, equals more risk of an accident," says Lachnit.

Be ready to shell out cash if you insist on flash. It costs more to insure cars that are expensive to repair. If you drive a luxury vehicle or sports car, you'll pay more than if you drive a family sedan.

"Repairs from a fender-bender will be much more expensive to fix if you drive a brand-new Mercedes than if you drive a used Yaris," points out Richard McGrath of McGrath Insurance.

Another Time When Credit Scores Count

Everyone knows that a poor credit score makes you less qualified for the lowest interest rates offered by lenders. And many people are now aware that bad credit can scare off potential employers. But your credit score is also a huge factor in how much insurers decide to charge you.

"Right now, almost all carriers are relying on credit scores as a way to predict whether a client will have claims or not," says Celia Santana, president of Personal Risk Management Solutions.

Insurance companies have analyzed a lot of data, and determined that people who do a better job of managing their finances are less likely to have claims, she adds.

Choose Your Coverage Carefully

It's obvious, but worth repeating: The more coverage you elect and the lower deductible you set, the more you'll pay.

"Don't go for every bell and whistle," says Lachnit. "If you're willing to pay a little higher deductible, you can wind up saving big on your rates. Going from a $250 to $1000 deductible could save you 25% to 40% on your policy."

Set aside a portion of what you save to cover that higher deductible cost in case you ever do have a claim, and you should come out ahead.

Dig for Discounts

There are plenty of less obvious ways to pay less for car insurance.

It's a paradox, but the more personal you get with some insurance carriers, the better your rates might be. A relatively new product, pay-as-you-drive insurance, offers better rates because the policies are tailored to how you personally drive, as opposed to how people like you drive, explains Lachnit.

For example, she says, a teenage boy who is an excellent driver, doesn't speed, drive at night or drive many miles, can get a better rate than the average teenage boy whose actuarial profile pegs him as a greater risk, based on the accident history for people his age. The requirements for pay-as-you-drive plans vary. Some carriers will have you install a telematic device that transmits information about your actual driving -- speed, distance, braking patterns -- to the insurance company. Others base their profile on how many miles you drive, not how you drive.

Be sure to explore discounts for being a senior citizen, a member of certain organizations, having safety devices or bundling policies (having home and auto insurance with the same carrier), among others.

You can also do some cleaning of your records. Take actions to boost your credit score, such as paying your bills on time and otherwise being a good debtor. You can even buff up your driving record. If you do get a ticket, ask about traffic school, which will keep the ticket off your driving record with many insurance companies, says Fiesta Auto Insurance's Silke. "Better to spend one day in traffic school than to pay higher auto insurance rates for three years," he adds.

VIN registration is a great deterrent for thieves. Get the VIN etched in your car window. It's free, disrupts theft and can cut the cost of comprehensive insurance by up to 5%, says Mark Carrasquillo, an agent with insurance broker E.G. Bowman.
When car shopping, you can also look for a model with a historically lower rate of insurance losses. Check out
Though it may not always feel like it, when it comes to car insurance, you are very much in the driver's seat.

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Sandra Tsai

The best way to reduce insurance costs it to only insure what you can not afford to replace.

I have two cars, a 2002 BMW X5 and a 1999 M Roadster. They are both in great shape (the latter having only 40K on the clock). I pay $15 a month with 4AutoInsuranceQuote for liability insurance, for each car. If I want collision, it is another $15 a month. Each car is worth maybe $10,000 on a good day. I don't worry about them being wrecked, stolen, or scratched.

Sure, I could "afford" a fancier newer car, but why bother? I'd rather have the money in my 401(k) than parked in my driveway, depreciating.

The REAL HOLES people have in their insurance is the unnecessary coverage - they pile on uninsured motorists, replacement cost coverage, rental car coverage, towing coverage, etc. The real danger is that you bleed to death, slowly, over a 45 year working life, paying too much for insurance - an amount of money that could fund your retirement.

Some folks like to brag that when they got into a wreck, it was like an all-expenses-paid spa vacation, and that they "made out" in the deal.

Me, I don't think like that. An accident is something to be avoided, not something you look forward to. And no, you never "make out" in these deals, anyway.

April 06 2014 at 12:06 PM Report abuse rate up rate down Reply

Great article, here are several tips from me on how to get cheaper car insurance:
- Use insurance comparison site like: . That means once you register you'll receive a lot of offers from many insurance companies.
- Ask for group discount.Get as many insurances as you need from the same company.
- Stay insured.If you cancel your plan even for several days, some companies may consider you as high risk and you may need to pay more next time.
- Car Security Devices.Any extra security measures you take to deter thieves from stealing your car will further decrease the risks you pose to the insurance company.
- Good driving records.that will definitely lower your price.

October 09 2011 at 2:09 AM Report abuse rate up rate down Reply
Hussein Abdulrasul

pfjw, you'd be surprised to know most people don't know 3 out of these 6 tips... Smart Americans? If they were so smart, we wouldn't be in huge credit card debts

May 19 2011 at 10:46 PM Report abuse rate up rate down Reply
Hussein Abdulrasul

Here are some good tips on how to save money on Car insurance

i) Raise your Deductible - This is the amount you pay out of your own pocket before the car insurance company pays anything. As an example, raising your deductible from $100 to $500 will reduce your monthly car insurance premiums by 10% to 20%. This will also make you a more responsible driver knowing a lot of your own money is at stake; and over the long term, you will maintain a better driving record versus if you have no responsibility.

ii) Drop Collision & Comprehensive Coverage - If you have an older car, this makes sense. If your car is old & not worth much, why pay high premiums if you are going to replace it anyways if it gets in to an accident.

iii) Comparison Shop - Do not assume that all insurance companies charge the same rate. Search for the best insurance rates from multiple companies. Be sure to check out the rates at Tesco Car Insurance.

iv) Drive Safely - Do not speed, take unnecessary risks when driving & always maintain a safe driving distance from other cars. Accidents can greatly increase your car insurance premiums so be careful.

v) Avoid traffic tickets - From point iv) do not speed because you risk getting traffic tickets which would ultimately increase your car insurance premiums over a period of 3 years.

vi) Have a Good Credit Score - Insurance companies will use your credit score to qualify you for even more car insurance discounts & your risk level.

vii) Shop for Insurance before you buy a car - If you plan to buy a sports car, be prepared to pay a higher car insurance premiums than regular cars. Cars that are expensive to repair or heavy targets for thieves have higher insurance premiums.

May 19 2011 at 3:02 PM Report abuse rate up rate down Reply

Sure - reduce the scope of coverage - reduce the cost. No suprise there.

Drive less, pay less. No surprise there.

Don't have accidents, *eventually* pay less. No surprise there.

Drive a less expensive vehicle to replace/repair, pay less. No surprise there.

Where do they find these writers?

I guess HL Mencken rules in these cases. Nobody ever went broke underestimating the intelligence of the American Public. Apparently these writers make a living on that principle.

Oh, well. From some of the comments, that seems to be a valid approach.

May 06 2011 at 7:44 AM Report abuse rate up rate down Reply

bottom line, settle for less, sacrifice for the good of your government and elected officials.....they know better than you and are more entitled to your weath than you are....up,up...shoulder to the wheel, no slouchers...all as one and gov man for all!

May 06 2011 at 5:10 AM Report abuse rate up rate down Reply
Christopher Schoonov

I am sorry but did I miss the part about cutting insurance costs. The only thing I read is why it cost the way it does. Nothing told me what I could do to save money. Another useless article brought to you by AOL. s

May 06 2011 at 4:56 AM Report abuse rate up rate down Reply
K Teanteyepiromkul


May 06 2011 at 4:47 AM Report abuse rate up rate down Reply

The best way to reduce insurance costs it to only insure what you can not afford to replace. Carry only PL/PD, no collision, no theft, etc. If you have to, get a cheap used car and do it. You know the insurance companies make $$ on you, so insure yourself and save huge$$$

May 06 2011 at 12:41 AM Report abuse +1 rate up rate down Reply

The facts are this , your insurance is so high ,is because a the uninsured drivers on the rode. It makes sense, to have insurance built into the gas, that way everyone pays, and insurance will go down. When you make your insurance payment, you are paying for the guy without it.

May 05 2011 at 11:25 PM Report abuse rate up rate down Reply
1 reply to bigwave48's comment

interesting idea but how much do you think the costs per gallon and what about those driving the litle tin can glorified golf carts ? sure they get good mileage/per gallOn and would be paying less but are these light weight vehicles a kind of liability in the insurance business ???? coLLision damage etc---still wouldn't be equal--and yes i had a tiny mitsubishi back when that was totalled by a Lincoln town car---town car had a busted "driving" lite to show for his stupidity and my vehicle was a total loss--people were amazed that i walked away from it and said i should get a loiyuuh etc,but like i say---i walked away from it and was grateful.--but that is an interesting thought-

May 06 2011 at 12:14 AM Report abuse +1 rate up rate down Reply