11 Ways to Lower Car Insurance Premiums
Updated September 2, 2020 . AmFam Team
Having auto coverage makes you feel safer on the road — at least when it comes to your financial protection. And though that peace of mind comes with a price tag, there are many ways you can save money on your car insurance premium.
Your premium for car insurance can vary by hundreds of dollars — and the more you know, the more ways you’ll know how you can save! There are a number of factors used to determine your car insurance rate, and though some of those factors are out of your control, we’ve highlighted some simple ways you can lower rates and save on your car insurance premiums.
What Affects Your Car Insurance Rates?
Before we dive in on how to save money on your car insurance, it’s important to understand what affects car insurance rates. Here are a few factors insurance companies use to determine your car insurance premium:
Age
Your age is taken into account, especially if you’re a young driver, since the younger you are the riskier a driver you’re deemed to be by insurance companies. If you’re an American Family Insurance customer, you can help your teen make better choices behind the wheel by enrolling them in our Teen Safe Driver Program. You may even get a discount on your policy for enrolling!
Driving history
Your driving history also affects your premium — sometimes for the better! If you have no tickets or violations, you can earn discounts for your good driving habits. In fact, at American Family, your good driving history makes you eligible for our good driver discount where you can earn a lowered premium in certain states. But if you have speeding tickets, reckless driving charges or other types of violations or tickets, you’ll see a hike in your premium since your insurer sees you as a higher risk.
Credit score
Your credit score is another common rating factor when determining your car insurance premium. Typically drivers who have a lower credit score file more claims than those with good credit. Paying less for car insurance is just one more reason to improve your credit!
Coverage level
To put it simply, the more coverage you have, the more expensive your premium will be. This is because, if you file a claim, your insurer will be paying out to meet the higher coverage limit. This shouldn’t deter you from getting the best level of coverage for what your vehicle needs! If you’re not sure what types of coverage you need or the appropriate level of coverage based on your vehicle, your American Family Insurance agent (Opens in a new tab) is happy to answer any of your questions to clear up any confusion.
Years of driving experience, where you live, insurance history, type of vehicle and many more factors are used to determine your premium. Being in the know and understanding how your price is calculated gives you great insight that’ll help you save money on your car insurance.
11 Tips to Lower Your Car Insurance Premium
Now that you have an understanding of how your car insurance premium is calculated, it’s time to make some moves to lower your car insurance premium! From auto insurance discounts to simply being savvy about your options, here are some simple ways you can save on your car insurance.
Ask about discounts
No matter where you purchase your car insurance coverage, you’ll want to ask about available discounts. Discounts are the easiest way for you to lower your insurance rate — and it’s really simple to get them! In fact, at American Family Insurance, we may be able to offer you a discount simply for switching providers and choosing us as your insurance company. Learn about the various car insurance discounts you can receive as an American Family Insurance customer. Here are a few to start you off:
- With our multi-vehicle discount, if you insure more than one vehicle with us, you may qualify for a reduced auto insurance premium on your cars and trucks.
- If you have an active policy with another carrier and receive a quote from us at least seven days before the policy goes into effect you could be eligible for our early-bird discount.
- If you’ve been a loyal American Family customer for a while, we think you deserve a discount. The amount you save will depend on how long you’ve been part of our family.
Bundle your policies and save
You may have heard the term “bundling” when it comes to insurance. But what is bundling? It’s actually one of the simplest ways you can reduce your insurance premium!
Bundling is when you buy multiple insurance products with the same provider, like your auto and home, auto and renters, or even your auto and life insurance. Bundling makes things simpler for you, since you can make one convenient payment to protect what matters most to you, and can help you lower your car insurance premium.
Want to find out more about bundling? Take a look at our insurance bundle FAQs to educate yourself on this smart move.
Get to know KnowYourDrive
Want to take control of how much you pay for car insurance and become a safer driver in the process? Good news — you can! American Family Insurance offers a usage-based insurance program called KnowYourDrive. How does it benefit you? Basically, you’ll get a discount on your insurance premium based on how safe of a driver you are.* When you sign up for the program, we’ll send you an exclusive invitation to download our KnowYourDrive app at no cost. The app monitors your driving behavior and helps you learn safer driving habits. Based on your safe driving behavior, you can save up to 20 percent. The better driving habits you have, the higher a discount you can receive!
Find out more about how KnowYourDrive helps you take control of your auto insurance and reduce car insurance premiums.. In fact, get started now and earn an introductory 10 percent discount on your car insurance!
Save with safety features
If your vehicle is equipped with safety features — like factory-installed airbags, dashboard cameras and more — you could get a discount on your policy. Just ask your agent to see if you’re eligible.
Take advantage of AutoPay
AutoPay is another effortless way for you to save on your car insurance premium — and it even helps you avoid late payment fees. With AutoPay, your payments will be automatically deducted from your checking or savings account. So not only can you earn a discount with AutoPay, but you can avoid late payment fees, too! Check and see if your insurance company offers a discount for enrolling in AutoPay — American Family insurance does!
If you want to set up AutoPay with American Family, simply enroll in My Account, register your account(s) and set up your payments. What’s My Account? It’s all about making your busy life a little simpler. When you enroll, you’ll get easy access to your policies, bills and claims. You can even use My Account to contact emergency roadside assistance if your car is stranded on the road.
Go paperless
Want to help save a few trees along with saving some money? Opt for paperless billing. Ask your agent if you qualify, and if so, you’ll need to set up paperless billing within 10 days of setting up your policy. The steps are simple to follow and it only take a few minutes. Here’s how paperless billing works.
Pay in full
Want to shave some major bucks off your car insurance premium? American Family offers a full-pay discount when you pay your policy in full at the time of purchase.
Know what you need
You might not need particular coverages once your car reaches a certain age and value. For instance, do you need collision insurance on an older car that’s not worth much? Probably not. Your insurance agent can work with you to help you determine the best coverages for your needs. Taking the time to do some research, asking your agent questions and knowing what you’re paying for on your policy can help lower how much you pay for car insurance.
Raise your deductible
Your deductible is the amount you’ll pay out of pocket before your insurance company covers comprehensive or collision claims. When you set your car insurance deductible, you’ll choose either a high or low deductible. A lower deductible means you’ll pay less out of pocket after filing a claim, but your premium rate will be a little higher per pay period. On the other hand, a higher deductible means you’ll pay more out of pocket if you file a claim, but your premium will be less per pay period. So to lower how much you pay for your car insurance, consider raising your deductible.
Compare insurance costs before you buy a car
One of the factors taken into account when determining a car insurance premium is the value of your car, the cost to repair it, the likelihood of theft and its safety record. So think about how the type of car you buy could impact your car insurance rate.
Shop around, research and ask questions
Take your time looking for car insurance. Shop around, get car insurance quotes and don’t be afraid to call up the companies and ask what kind of discounts you could receive. The best way to save money on your auto insurance premium is by being informed and asking questions.
At American Family Insurance, we want to help you understand your coverage and your options to reduce your premium and save on your car insurance. Take control of your insurance by connecting with an American Family agent (Opens in a new tab)today to learn how you can get quality protection, discounts and peace of mind.
*Program discounts will vary based on driving behavior. The KnowYourDrive discount applies only to the following variable coverages, which are typical for most auto policies: bodily injury liability, property damage liability, collision and comprehensive, medical expense, underinsured and uninsured and personal injury protection. Additionally, the discount does not apply to fixed fees that are part of your policy.
Related Articles
- Why Bundle Your Insurance?
Having insurance is an easy decision — after all, it protects the things you work so hard for in life. Another easy decision? Bundling your insurance. From your car, home and even your family's financial well-being, you have a lot to protect. Make things simple and take control what you pay for by making the smart choice to bundle.
How Much Do You Save By Bundling Insurance?
At American Family Insurance, there are many ways you can save by bundling insurance, including:
Home and auto insurance bundle
Our most common insurance bundle, combining your home and auto coverage can save you up to 23% on both policies together.*
Auto and renters insurance bundle
Protecting your valuables and your car can lead to big savings. When bundling, you can save up to 5% on your auto and renters policy.**
Car and motorcycle insurance bundle
You can score steep discounts when you bundle insurance for your different vehicles. Learn more by checking out our auto insurance and motorcycle insurance pages.
Take a look at what it means to bundle and all the benefits you’ll enjoy when you bundle your insurance with American Family Insurance.
- What Is Umbrella Insurance?
Umbrella coverage offers additional financial protection over and above the personal liability limits of other currently active insurance policies you have. Think of umbrella insurance as a powerful financial shield that can help protect your savings and future earnings under certain situations.
Whether you’re found at fault for a multi-vehicle crash on the interstate, or a guest slips and falls down the icy steps outside your home — the added coverage in an umbrella policy can kick in and help cover any remaining costs should the liability limits on your underlying car or homeowners max out.
And umbrella insurance coverage doesn’t stop there. Liability lawsuits can come in many forms and the hefty financial judgements that frequently accompany them can also drain your savings. Today, let’s take a closer look at umbrella insurance to help you understand how this coverage can help protect your financial dreams and everything you’ve worked so hard for.
- Tax Identity Theft
You’ve probably heard the saying, “the early bird gets the worm.” But what does that mean for Americans who file their tax returns early?
To most of us, it usually means quicker refunds. But early filing could also mean significantly reducing your chances of falling victim to a growing trend in identity theft. It’s called tax return identity theft and it’s affecting Americans at an alarming rate. In fact, per the Taxpayer Advocate Service (TAS), an independent organization within the IRS, 5.2 million tax returns were tagged as fraudulent in 2020. Not to fret! We’ll help you understand tax related identity theft, the signs to look out for, and what to do if it happens to you.
What Is Tax Identity Theft?
Tax return identity theft is the act of filing a return using a stolen identity and taking the victim’s refund.
Equipped with three simple ingredients — a name, birthdate and Social Security number — the thief can commit tax fraud resulting in delayed or stolen refunds. And while a swiped refund may seem like a worst-case scenario, thieves may also use your stolen identity to obtain employment, an act with even greater impact.
When an identity thief uses your SSN for employment, all the income they earn under your identity must be reported. Meaning that when you go to file your taxes and the earned income numbers don’t match, the IRS will flag your return as suspicious. This can have significant financial impacts if taxes on the unclaimed earnings are imposed and can lead to prolonged stress with a request to audit your taxes.
The victims of fraudulent tax return identity theft can face stressful obstacles on their path to recovering from a stolen tax return and identity theft. One of the most significant steps in protecting your financial future from being compromised is education and understanding how this type of theft occurs, and what to do if you find yourself in this situation.
- Dog Liability Insurance for Homeowners
Whether you raised him from a pup or adopted her later in life, you don’t just view your dog as a pet: you consider them a member of your family. According to a survey by the American Pet Products Association, almost 90 million dogs are owned as pets in the United States — and while your dog offers a whole lot of love and laughter, they can also be a potential liability. Luckily, we offer dog-friendly homeowners insurance.
At American Family Insurance, we love pets and understand that they’re part of your household. That’s why we want to make sure you understand exactly how your dog affects your homeowners insurance and ensure that you have the proper protection in place not only for your home, but for your dog, too.
Is My Dog Covered by My Homeowners Insurance?
Whether or not your dog is covered by your homeowners insurance depends on who you have as an insurance provider. With American Family, your home, renters, manufactured home or condo policy will provide dog liability coverage — a form of financial protection against liability claims, including lawsuits for accidental bodily injury or damage to someone’s property. This includes paying for medical expenses if your dog injures someone or helping cover costs if your dog destroys someone else’s property.
It's important to note that your homeowners insurance won’t cover damage done by your pets to your own home, such as if your dog chews a hole in your sofa or scratches your doors or woodwork. And, keep in mind, your homeowners policy doesn’t cover injuries to you and the residents of your household. It only pays for injuries to others.
Need insurance for your dog? Consider pet insurance from an American Family Insurance agent to help you care for your pet through all stages of its life.
We also offer a special add-on pet coverage that provides up to $1,000 for veterinarian services, final expenses (like burial or disposal fees) or the cost to replace your dog if death occurs. This coverage is applicable after a covered property loss.
Does Homeowners Insurance Cover Dog Bites?
Whether you’re walking your dog through the park or at home playing in the yard, the liability portion of your homeowners insurance policy will help cover you if your dog bites someone or if they bite another dog.
Remember, a dog can bite out of fear, to protect their territory, to correct another dog’s behavior or for several other reasons. Because dog bites occur for a variety of reasons, keep these tips in mind to prevent your favorite family pet from biting:
- Keep your dog on a leash.
- Don’t leave your dog unattended with strangers or children.
- Make sure people respect your dog’s space.
- Spay or neuter your dog — this helps reduce their desire to roam and fight with other dogs. According to the National Canine Research Foundation, neutered dogs are three times less likely to bite.
- Socialize your dog. Introduce your dog to many people and situations so it isn’t nervous or frightened under normal social circumstances.
- Enroll your pooch in a dog training class. Not only does it help your pet learn better behaviors, but it teaches you to be a good pet owner, too.
And it’s not just bites that cause liability incidents — if your overly excited pup jumps on someone, knocks them over and breaks their wrist, you’ll be able to cover their medical expenses with the help of your liability coverage.
How Much Coverage Do I Need for My Dog?
Your homeowners policy has a liability “limit” that, in the event of a loss, will cover up to a certain dollar amount. Your liability limit is the amount available to cover anything from a dog bite to your neighbor slipping and falling on your icy steps. To understand your potential pet liability cost and the amount of coverage you need, think about the amount it may cost for medical expenses and if someone were to sue you. Sometimes this number is well into the six figures! For instance, if your liability amount is $300,000 but your dog bit someone and medical expenses and legal fees came to $500,000, you’ll be responsible to pay the remaining $200,000.
If you want to ensure you have adequate coverage in place, an umbrella policy is an added layer of protection which provides a much higher level of coverage to financially protect you from unexpected incidents with your dog.
Homeowners Insurance Dog Breed Restrictions
Unfortunately, not all dogs will meet the criteria to be included under a policy. While most dog breeds won’t impact your eligibility for homeowners coverage, there are some breeds that require additional considerations, such as whether your yard is fully and securely fenced. You must also provide certain documentation to be considered eligible, like evidence of up-to-date annual vaccines and proof that your dog has been spayed or neutered.
It’s also important to note that, depending on your dog’s prior history (e.g. history of biting, if they were trained or used as an attack or guard dog), they might be subject to a dangerous dog liability limit that reduces their liability coverage for losses to $25,000.
Your American Family Insurance agent can help you determine the specific requirements for insurability based on the breed of your dog.
At American Family, we want to help protect all the things that matter most to you. Connect with your agent and gain peace of mind that you have the right coverage in place for your four-legged friend.
This article is for informational purposes only and includes information widely available through different sources.
