Insurance is necessary for protecting your car, home, health, and more—but that doesn’t mean you have to overpay. Whether you’re a first-time buyer or just looking to cut costs, you can save on insurance premiums without sacrificing coverage. Here’s how to do it with practical, fact-based tips.
What Affects Insurance Premiums?
Before figuring out how to save money, it helps to know what drives insurance costs. Insurers look at several factors when calculating your premium. Age is a big one—young drivers under 25 often pay up to 50% more for car insurance. Your credit score also matters, with poor credit potentially raising premiums by 20–40%. Location plays a role too. For example, living in a high-crime neighborhood could increase rates by 15–30%. Finally, claim history matters; people with multiple past claims can see their premiums climb by 10–25%.
The National Association of Insurance Commissioners reported in 2022 that drivers in cities pay an average of 22% more than those in rural areas. Understanding these factors helps you identify where you might have room to cut costs.
How to Compare Insurance Quotes Effectively
The easiest way to save on insurance premiums is by shopping around. A 2023 J.D. Power survey revealed that more than a third of people never compare quotes, and those who don’t often overpay. Experts recommend comparing quotes from at least three to five insurers such as Geico, State Farm, or Progressive.
When comparing, make sure the coverage amounts are identical so you’re making a true comparison. Always ask about discounts while getting quotes—companies don’t always volunteer that information. Switching insurers alone can save you up to $500 a year on car insurance, according to Policygenius.
What Discounts Can Help Reduce Premiums?
Many drivers and homeowners miss out on discounts that could save them hundreds. Common discounts include safe-driver discounts for people with no accidents, which can reduce costs by 10–20%. Multi-policy discounts (bundling home and auto) often save 15–25%. Good student discounts for those with a GPA of 3.0 or higher can cut 5–15%. Installing home safety features like smoke detectors or security alarms can reduce home insurance by 5–10%.
A 2021 study found that 42% of policyholders qualify for discounts they never claim. Always ask your insurer about every possible discount available to you.
How Does Bundling Policies Save Money?
Bundling policies—such as home and auto insurance—is one of the best ways to save on insurance premiums. Insurers reward loyalty by giving you lower rates when you keep multiple policies with them. According to the Insurance Information Institute, the average savings from bundling is about 12%. Some providers, such as Allstate, may offer discounts as high as 25%.
Think of bundling like buying in bulk: the more you purchase, the better the overall deal. For families, bundling health and auto coverage together may also unlock additional discounts.
What is the Impact of a Higher Deductible?
Raising your deductible—the amount you pay out-of-pocket before insurance starts paying—is another proven way to lower your premiums. For example, raising your car insurance deductible from $500 to $1,000 can lower premiums by 15–25%. With home insurance, a deductible of $1,000 or more can cut costs by up to 30%, according to FEMA data.
Just make sure you can afford the deductible if something happens. A higher deductible can save money monthly, but it means you’ll pay more upfront if you need to file a claim.
How to Review and Update Coverage Regularly
Life changes, and so should your insurance. A 2023 Bankrate survey showed that 27% of Americans are overinsured, wasting more than $300 a year on unnecessary coverage. Reviewing and updating your policies regularly ensures you only pay for what you need.
You might consider dropping collision coverage on an older car, updating your mileage if you now work from home, or removing drivers who no longer use a vehicle. Review your policies once a year and anytime your life circumstances change—such as marriage, retirement, or buying a new home.
Final Thoughts
Saving on insurance premiums is not about luck—it’s about being proactive. Here are the keys:
- Compare quotes regularly.
- Ask about discounts (insurers rarely bring them up first).
- Bundle policies to unlock bigger savings.
- Raise your deductible if you can afford it.
- Review and update coverage every year.
Even small adjustments can lead to big savings. Spending just 20 minutes checking quotes or asking, “How can I save on insurance premiums?” could save you hundreds of dollars a year.
