Just because auto insurance is mandatory doesn't mean it can't be affordable

5 Simple Ways to Reduce Auto Insurance Bills

by Michael David


Auto insurance is a must. In almost every state across the US, at least some level of auto insurance is mandatory. But just because insurance is mandatory doesn't mean it can't be affordable. Since you will be paying for auto insurance for years to come, here are five simple ways to reduce those costs.

1. Increase Your Deductibles

You can't predict the future, but if you have a good driving record and are confident in your skills, you could consider increasing your deductible. A higher deductible means that in the event of an accident, you will bear more financial responsibility. Because you are willing to take on more responsibility, your monthly payment will be reduced. Make sure the amount is still something you can afford, but if you are a traditionally safe driver, it is likely that an increased deductible will save you money over time.

2. Choose the Right Car

There are many things to consider when purchasing a new car, including the handling, transmission, gas mileage, and maintenance costs. But don't forget to consider the price of insurance. Not all cars are created equal, even in the eyes of insurance providers. Cars that are more expensive to repair or models that are more commonly stolen will have higher premiums. Before you choose a Porsche over a Prius, make sure you can afford a higher insurance premium.

3. Ask About Discounts

Not all insurance providers offer discounts, but many do, so don't forget to ask about them. You can often get discounts if you insure your home and car through the same provider, if you are a member of the military, or if you take a defensive driving course. There are even discounts for teens with good grades. Ask your insurance agent what discounts they can find for you.

Related: Do You Know About These Auto Insurance Discounts?

4. Drive Less

Insurance providers consider many factors when determining your premium, but one large factor is how much you drive. The reasoning behind this is pretty simple. The more you drive, the more likely you are to be in an accident. If you commute from Edmonton to Red Deer, car insurance will cost much more if you drive every day than if you use public transit. Find ways to reduce your mileage by carpooling, working from home, or using public transportation. You will contribute to protecting the environment, decrease your chances of being injured in a traffic accident, and save yourself money on premiums.

5. Don't Pay for Things You Don't Need

You need insurance, but you don't need ALL the insurance. Assess your individual situation and choose the right insurance for your needs. You might not need to include personal injury protection if your regular health insurance covers the same things. If you already have roadside assistance through your credit card or manufacturer's warranty, you don't need to pay extra on your insurance premium. If you drive a $500 beater car, you probably don't need comprehensive coverage. Be smart about your specific situation and avoid duplicating coverage or paying for unnecessary services.

Insurance costs can add up, but doing these five things will help you keep the costs manageable.


Take the Next Step:

  • Are you part of the 50+ crowd? Here's what you need to know about stretching Boomer auto insurance dollars.
  • Want to pay off your car faster? Consider refinancing into a lower auto rate.
  • Use this handy cheat sheet from a 30-year veteran of the auto insurance industry to get the best auto insurance deal that you can.
  • Take a look at these homeowners insurance basics to see if you can cut other insurance costs.
  • Get control of your financial life. Subscribe to Financial Independence, a free daily email that provides you with the tools to help you gain that control and achieve financial independence. Subscribers get a copy of Are You Heading for Debt Trouble? A Simple Checklist for FREE!

Michael David is a freelance blogger who writes about a variety of subjects including finance.

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