One of the most important things people overlook when they are about to buy a fancy European automobile is how much car insurance will cost. Auto insurance discounts can save you a lot of money over time.
I should know. I'm a recovering car fanatic who has literally bought and sold 8 different cars in the past 10 years. I've come to appreciate the intricacies of getting a good deal. And getting car insurance discounts is a big part of that.
On an absolute dollar level, driving a $50,000 car could cost anywhere between $2,000-$3,000 a year, depending on your record. At 4-6% of the annual cost of your car, car insurance is a big deal!
This post will go through the various tips and tricks to getting auto insurance discounts. Owning a car isn't just about the purchase price. It's also about paying ongoing maintenance and insurance expenses.
These other costs of owning a car is why I recommend you follow the best car buying ruling, my 1/10th rule. It states to spend no more than 10% of your gross income on a car.
Cost Of Auto Insurance Vs The Car Itself
The irony is, the cheaper the car you buy, generally the higher car insurance is as a percentage of your total cost.
Take my dear Moose SUV, for example. He's worth maybe $5,000 on a good day if the electrical gremlins aren't flashing on the dashboard. Without going into details of what my car insurance plan entails, I pay roughly $80 a month or $960 a year.
$960 is much cheaper than $2-3,000 in the $50,000 example above, but $960 is a whopping 19.3% of the total value of my car every year! In just 5.5 years, I'll have paid more insurance than the value of the car itself!
Hence, the great irony is that driving an expensive car is better value for your insurance dollar money. What my point also illustrates to you is that driving a car has many more expenses than just gas and maintenance.
Car insurance is a big one. This is why it's important to try and save as much money as possible and get auto insurance discounts.
How To Find Auto Insurance Discounts
Here are 13 tips on how to find the best auto insurance discounts. Make the most of them so you can use the savings to grow your wealth.
1. Be a good driver
A clean driving record is the best way to keep your insurance premiums low.
2. Choose a safe vehicle
Many insurance companies offer discounts to policyholders who drive cars with good safety records.
3. Drive less
Joining a car pool or taking public transportation can reduce the number of miles you drive each year and reduce your rate significantly.
4. Study hard
A Good Student Discount reduces rates for full-time students with a “B” average or better. There are also auto insurance discounts for continuing education or defensive driving classes.
5. Insure all your cars on the same policy
Most companies will apply a multi-car discount to each and every car you insure.
6. Equip your vehicle with safety features
When you choose optional safety features on a new car – or add them to a used vehicle — you can reduce your premium. Auto insurance discounts are offered for anti-theft devices, anti-lock brakes, automatic seat belts, air bags and car alarms.
7. Use your garage
Clean out your garage and move your car in. Or, if you live in the city, rent a garage. You rates will be lower because your vehicle will have less exposure to both the elements and crime.
8. Insure your home and your car with the same company
You can get a discount on both your car and your home insurance by insuring them with the same company.
9. Check with your employer
Some employers offer group auto insurance to workers. These often come with a lower group rates. Talk to your benefits coordinator.
10. Look for professional discounts
The work you do may entitle you to a discount car insurance rate. Many companies offer auto insurance discounts to those drivers who tend to have fewer accidents.
Engineers, scientists, teachers and doctors are among them. If your insurance company doesn’t offer this discount, look at professional associations. Many sponsor auto insurance programs for members.
11. See if your company offers a renewal discount
Many car insurance companies offer a discount to drivers who stay with them for an extended period of time. See if yours is one of them.
12. Check your payment plan
Some companies offer auto insurance discounts for paying in a lump sum or by automatic deductions from your checking account.
13. Don’t forget to ask
Don’t assume your insurance company will automatically apply all the discounts which you are entitled. Sometimes you need to ask.
Take a look at the Declarations Page that came with your car insurance policy to see which discounts have been applied to your policy. Call your company or go online to see if others are available.
Key Takeaways
So there you have it, 13 tips for saving you money on auto insurance. Like buying a car, it's always worth shopping around and comparing quotes. At the end of the day, you want to at least protect yourself from disaster scenarios and have liability coverage. Safe driving!
Keep Your Car Expense To A Minimum
The cheaper your car, the less you will have to pay for auto insurance. If you want to achieve financial independence, your goal is to keep your car expenses as low as possible.
Follow my House-To-Car Ratio guide for fiscal responsibility. Cars are guaranteed to depreciate in value, houses tend to appreciate in value.
As the father of the modern-day FIRE movement, I want all of you to have more wealth and more freedom. No car can match the joy you will experience once you are financially free.
Buy Real Estate Instead Of A Nice Car
Keep your car expenses to a minimum. Instead of buying a new car, use the money to invest in real estate instead. This way, you can build more wealth and achieve financial freedom, which provides way more value than driving a nice car.
To invest in real estate without all the hassle and unexpected costs, check out Fundrise. Fundrise offers funds that mainly invest in residential and industrial properties in the Sunbelt, where valuations are lower and yields are higher. The firm manages over $3.5 billion in assets for over 500,000 investors looking to diversify and earn more passive income. The minimum investment amount is only $10.
Another great private real estate investing platform is Crowdstreet. Crowdstreet offers accredited investors individual deals run by sponsors that have been pre-vetted for strong track records. Many of their deals are in 18-hour cities where there is potentially greater upside due to higher growth rates. You can build your own select real estate portfolio with Fundrise.
I've personally invested $954,000 in private real estate since 2016 to diversify my holdings, take advantage of demographic shifts toward lower-cost areas of the country, and earn more passive income. We're in a multi-decade trend of relocating to the Sunbelt region thanks to technology.
Both platforms are sponsors of Financial Samurai and Financial Samurai is an investor in Fundrise funds.
I loved that you mentioned a clean driving record will help you to get a great price when looking for car insurance. My wife and I are thinking about buying our first car, and we are looking for advice. I will make sure to contact an insurance company to help us choose the best coverage.
It’s great that you mentioned that one way I can lower my auto insurance premium is by installing safety features in my new car. I’ve been saving for my own car for two years now, and I’ve finally saved enough money to buy one just in time for the holiday season. I’ll keep your tip in mind so I would be able to get auto insurance discounts. Thanks!
I had no idea that auto insurance discounts are offered for anti-theft device and anti-lock brakes. I want to save as much money as possible on my insurance. I’ll see if I can find an insurance company that will give lower my price for having things like that.
I had always thought of getting auto insurance since both my son and I share a car, but I wondered if there were things I could do to get the most out of it. I never knew that having something as simple as a garage could be used to a discount as I have a large garage that I regularly maintain with help from my son. We use it to make sure nothing happens to our car as much as possible and reduce the damage done to it by weather conditions. If ever I decide to consult with an auto insurance agent, I’ll be sure to bring these tips up to see which ones are applicable to my son and I. Thank you!
My brother is thinking about buying his first car but he does not know what other expenses he will have besides gasoline. I like how you recommend checking for professional discounts for drivers that are engineers or scientists. Since my brother works for an important engineering company, I will tell him to ask for these discounts.
I never knew that some insurance companies will offer discounts if you drive a car with good safety records. My brother is thinking about buying his first car, and we are looking for advice to help him find the best insurance. I will let him know about your recommendations to help him choose the best car insurance for him.
Last week, my daughter started learning to drive so now my husband and I need to find insurance coverage for her. I agree that you want to look at your payment plan and make sure they accept the type of payment you like the best. Doing so would probably make it easier to not miss a payment or anything.
I am planning on getting my first car this spring. I will need to get insurance for it but I don’t want to go over budget with it. Thanks for explaining that getting a car with safety features can help me lower my auto insurance rates.
I like the advice you gave to check the payment plans from insurance service before you hire them. My youngest cousin wants to change the auto insurance company. I will inform him about these so he can make the change and hire a better company.
I found it interesting when you said that a clean driving record is the best way to keep your insurance premiums low. My wife and I would like to buy a car for our daughter so she can commute to school every day. I will request several auto insurance quotes for the car that we want to give her and see if it’s reliable or not.
I found interesting when you said that a clean driving record is the best way to keep your insurance premiums low. My wife and I want to buy a new car and we want to save some money to have enough for a better car. Thanks for the tip on choosing a safe vehicle to also get a better price for the insurance.
I like the tip that you gave to check the payment plans of an insurance service before you hire them. My wife and I have been talking about finding insurance for our car, and it would be important for us to know that we could find one who we could trust in. If we decide to find insurance, I will be sure to check their payment plans.
Thank you for talking about how you can get insurance discounts based on the safety of your vehicle. It makes sense that doing your homework on this and consulting with several companies can help you find the best coverage for you. I can see how anyone looking into this would want to make sure they take their time to go over any coverage agreement to understand it and avoid any problems in the future.
First things first; no insurance companies can “magically” make your rate cheaper. If they run you through a “new” system, and suddenly come back and your rate is cut in half – they’ve cut your coverages in half, or removed comprehensive or collision, or even screwed with your PIP (personal injury protection) in applicable states. The thing that most people don’t realize is that state-by-state, the rates are governed by a State Insurance Commission, and if they mandate certain things – then in order for the company to survive, they have to reflect the rates to do so. One of the major reasons I feel sorry for people who live in Michigan.
Second of all, I can’t stress this enough – the longer that you’re with a company, the more savings you’re going to get. Underwriting loves people who stay with the company, even if their driving record is less than desirable. Same goes with multiple policies. I’ve seen them bend certain rating rules just to write a guy who had several different policies. Switching from company to company is sketchy in the insurance industry. A majority of drivers out there will pay to get legal, and get that card for one month – and then cancel the policies. I know, it’s retarded, but that’s an unfortunate reality.
Third of all, this has already been brought up in a different discussion, but this is a huge one as well: Just because you save a few bucks using a non-big name company, does not mean that you’re saving in the long run. It’s important to have good coverages (I usually recommend 100/300/100 with a PLUP), because if you don’t – guess who’s paying for the rest out of pocket in case of an at-fault accident? And if you don’t have the money, I’ve seen wage garnishments, property levies, etc. Plus those “small, local companies” are going to minimize their expenses by fighting claims. The big-companies are going to be more apt to pay a claim, as not only is it good publicity, but it retains you as a customer.
Fourth; get an agent! Plain and simple. If the company you have for insurance doesn’t have local agents that only represent that company, you’re doing yourself a real disservice. I know they’re there to make a buck, and hound you about life polices, but when it comes down to the nitty-gritty; they are your advocate. They will go to bat for you. Especially when the common every-day person doesn’t speak insurance. They go through rigorous state-mandated training every couple of years in order to hold onto their licenses, and most of them wouldn’t risk their livelihood just to make a quick buck.
I know that I’m biased as I do sell insurance for a living, but one of the major advantageous of choosing this career is that I get to help people on a daily basis. It’s been an eye-opening experience going through the testing that I had to go through – because simply put; not everyone knows how helpful insurance and a good insurance company can by. I’ll be more than happy to answer any questions
I remember at one point paying over $100 more per month for insurance than I did for my car note! I guess it was about $4,500 a year for a car that was worth around 10-12k!
Having auto insurance discounts is one of the special privileges that guaranties financial reward. The tips you have provided are just perfect at ensuring a better savings. Research on various quotations will be a lot of help that will definitely brings positive financial gains for you.
Very good points. Our car insurance just renewed (today actually) and the original bill was $685 (for six months). They had incorrectly put an accident on my wife’s record (it wasn’t her fault..she got hit from behind). Our broker (with AAA) switched us to the same company as our home policy and that lowered it by about $40. On top of that we raised the deductible to $1,000. That brought it all the way down to $360! Plus, our home insurance went down by about 10% as well.
Nce! Well done being a hawkeye and saving money!
Thanks for sharing these great tips to save on auto insurance!
Another one, I’d add is to look into any special discount offers you may receive with organizations you are a part of like credit unions or college alumni associations. Sometimes you can receive a group discount on top of every other discount, which is nice. I received an additional $50 off of my policy just for being a member of my credit union.
Awesome tips Sam! I think one often-overlooked one is in choosing a safe car. Often people don’t think about insurance until AFTER they bought the car, but obviously the car itself can have a huge effet.
Good Stuff!
Save money on car insurance? Don’t get into accidents. That would take care of high costs in premiums. Don’t speed, don’t text or hold a phone while driving (I’m still sceptical of hands-free). But, as with anything in life, somethings can’t be avoided. Accidents happen.
Another way to save money … take a drivers safety course, and not because you are trying to get out of a ticket. Ins. Co’s (I hear) drop rates for taking such courses (I always seem to use it once a year for a speeding ticket). I know they do for motorcyclists even tho’ I pay only $100 year for that coverage (Liability w/extra coverage). Having an execellent driving record pays.
My primary vehicle may not be a high cost luxury car, but I’ll take the cheaper insurance premiums anyway. It still costs less (despite the higher %’s in cost per car value).
Another option? Hmmm, what if one owned a classic vehicle. Lets take the 1967 Corvette. There is a type of insurance one can buy that is comparely dirt cheap. It’s full coverage (and collision, if I’m correct), but the catch is that – because it’s a classic or antique – you can only drive it X amount of miles per year. A friend who owns the above ride one time told me they pay only $700/year. Of course, he’s married w/children and above 40 yrs. old. He would drive the car across country a few times a year (I’m calc’ing mileage) and on weekends around town. Devide that up into 52 weeks/year and (for some) that might be an option. Go back in time to get cheaper rates. This might ot be the “green” way to do it and gas isn’t cheap, but there are still plenty of semi-efficient cars/trucks (ex: Convertibles?)out there that might fit the bill for such.
We look for a new insurance company every 2 or 3 years (it’s a pain, but can save you a few hundred in the process).
I’ll have to look into #8. Insure your home and your car with the same company. on your list! The auto insurance company that I’m currently with didn’t offer home insurance when we went with them a few years back, but perhaps that has changed.
Very good tips. Will save this list for when/if I buy a car down the road – I’m still a public transit regular
Ahh – one thing I definitely loved about my very first car (’83 Buick Riviera) was the low car insurance costs even for a young driver. My wife hated that car but I used to love that thing haha – definitely not as fast as my car now but it just rode so smooth :) Also, here is a car insurance guide that I posted up a while ago on another site of mine with 25 money saving tips: https://www.carinsurancecomparison.com/car-insurance-guide
17. Check your limits. You can probably get by with $100,000/$300,000 liability coverage. Don’t get more property damage coverage than the price of any vehicle you might crash into. Forgo the uninsured property damage, which is usually a waste. If you plan on dying in an accident, get medical payments coverage.
$300,000 liability sounds low…. If you crush a rich rich person, they could sue you for millions. And if you have millions… 300K ain’t gonna do jack.. which is why you need an umbrella policy.
Tip: Don’t be a male between the ages of 16 and 25.
Interesting about having a college degree getting you a lower interest rate. Good to know, I’ve got some research to do!
I agree. When I was 16-25, I was thinking about having a sex change to reduce my rates.
But, I thought better. Best to just be on the family plan at that age actually!