How to get cheap car insurance without being underinsured

Why cheap car insurance and enough coverage pull in different directions

Every car insurance policy is a trade. You pay a known amount now (the premium) so that an insurer pays an unknown and possibly huge amount later. The less you pay, the more of that later risk you usually keep for yourself. Saving money is easy if you are willing to keep a lot of risk. The skill is cutting the cost without keeping risks you could not survive.

Some cuts are almost free. Getting a lower price for the same coverage from a different insurer, or a discount you already qualify for, saves money without changing what the policy pays. Other cuts move risk back to you. A higher deductible means you pay more of each repair. Dropping collision means you pay for all of the damage to your own car. Lower liability limits mean you may be sued for whatever the policy does not pay.

That last kind of risk is the one that can do lasting damage. Repairs alone are expensive: the average collision claim was $7,191 in 2022, according to the NAIC. Injury claims can cost far more. And you cannot count on the other driver to cover you, because 33.4% of drivers were uninsured or underinsured in 2023, according to the Insurance Research Council.

So the plan below starts with the cuts that cost you nothing in protection, and leaves the ones that shift risk to you until last.

A prioritized plan to lower your car insurance bill

1. Read your current declarations page. Write down each coverage, its limit, each deductible, every driver and car listed, the discounts already applied and the total cost for the term. You cannot compare prices until you know exactly what you are paying for now.
2. Decide the coverage you need before you look at prices. Pick liability limits that protect what you own and earn, decide whether the car still needs collision and comprehensive, and decide whether you want extras such as rental reimbursement or roadside assistance. Our coverage checklist walks through each choice.
3. Get quotes for identical coverage from several insurers. Ask each one for the same limits, deductibles and drivers, and get the quotes in writing. The NAIC notes that insurers charge different prices for the same coverage.
4. Ask every insurer about every discount. Multi-policy, multi-car, good driver, good student, safety and anti-theft equipment, defensive driving courses and group membership are common. Read our guide to car insurance discounts.
5. Compare a bundle with separate policies. A home or renters policy plus auto from one company often earns a discount, but separate policies from two companies are sometimes cheaper. See bundling.
6. Set deductibles you could pay out of savings. A higher collision and comprehensive deductible lowers the premium, but only if you could cover it after a crash. Our deductible guide shows how to find the break-even point.
7. Choose the cheapest way to pay. Paying the whole term at once often avoids installment fees, and autopay can help you avoid late payments that may lead to cancellation. See payment options.
8. Remove coverage you no longer need. On an older car, collision and comprehensive may cost more than they could ever pay out, and roadside or rental cover may duplicate something you already have. See reviewing your coverage.
9. Check whether a state program fits your situation. California and New Jersey run special low-cost policies for drivers with limited income. See low-cost state programs.
10. Repeat the comparison at every renewal. Prices change, your life changes and new discounts may apply. See shopping at renewal.

What saves the most and what saves the least

There is no single number that tells you how much a strategy will save. Each insurer sets its own discounts and prices, and the same move can be worth a lot to one driver and almost nothing to another. What follows is a general guide, with figures only where an official or industry source gives them.

Usually the biggest savings

Comparing quotes for the same coverage. Because companies price the same risk differently, shopping is the move most likely to produce a large saving with no loss of protection. The Insurance Information Institute (Triple-I) suggests getting at least 3 quotes, and state regulators such as the California Department of Insurance and the Texas Department of Insurance also tell drivers to compare several.

Raising collision and comprehensive deductibles. Triple-I says moving from a $200 deductible to $500 could reduce the cost of those two coverages by 15% to 30%, and a $1,000 deductible can save 40% or more. The saving applies only to collision and comprehensive, not to liability.

Dropping collision and comprehensive on a low-value car. Triple-I's rule of thumb is that if the car is worth less than 10 times the premium for that coverage, the coverage may not be cost effective. This can be a big saving, but it means you pay for your own car's damage.

Keeping a clean record. Some states set a floor for this. In California, insurers must offer Good Driver rates that are at least 20% lower than the rates for drivers who do not qualify. Elsewhere, a clean record still tends to mean lower prices, although each company sets its own rules. See how your driving record affects price.

Usually moderate savings

Defensive driving and accident prevention courses. Some states require insurers to give a discount for an approved course. New York's program gives at least 10% off certain premiums for 3 years, and Pennsylvania gives drivers 55 and older at least 5% after an approved course. Details are in our defensive driving course guide.

Bundling and multi-car discounts. Insuring several cars, or your home and car, with one company is one of the most widely offered discounts. Whether it beats separate policies depends on the prices.

Usage-based (telematics) programs. An NAIC shopping guide notes that insurers usually give a small discount just for joining, and the rest depends on how you drive. Read about telematics before you sign up, because program terms vary.

Usually smaller savings

Paperless, autopay and pay-in-full discounts. These are easy to get but are typically small. Their main value is avoiding installment fees and missed payments.

Anti-theft and safety equipment discounts. In New York, for example, anti-theft discounts apply only to the comprehensive part of the premium, so the saving is limited to that coverage.

Strategies compared

Cuts that can leave you underinsured

Some ways of lowering the bill look sensible on paper but leave you exposed. Knowing them helps you decide where to stop.

• Choosing state-minimum liability. The minimum is a legal floor, not a recommendation. If you cause a crash with costs above your limits, the injured people can come after you for the difference. Read more about liability coverage.
• Dropping uninsured motorist coverage. With so many drivers uninsured or underinsured, this coverage protects you when the other driver cannot pay. See uninsured motorist coverage.
• Setting a deductible you cannot afford. A deductible you cannot pay leaves the car unrepaired, or forces you onto a high-interest card.
• Dropping physical damage cover on a financed car. Lenders usually require collision and comprehensive until the loan is paid off. If you owe more than the car is worth, gap insurance may also matter.
• Letting the policy lapse between insurers. An NAIC shopping guide notes that rates are lower for people who keep a car insured than for those with a gap, and driving uninsured breaks the law in almost every state.
• Leaving drivers off the application or misstating facts. The NAIC warns that your final premium can change if the information you gave was wrong, and the California Department of Insurance lists fraud or material misrepresentation among the few reasons a policy can be canceled.

What you can and cannot change about your price

Insurers price each driver using many factors. Some you can change quickly, some slowly and some not at all. Knowing which is which keeps you from spending effort where it will not pay off.

You can change your coverage choices, deductibles, discounts, payment method and insurer at almost any time. Your car choice matters at the next purchase: Triple-I notes that a car's price, repair costs, safety record and likelihood of theft all affect premiums, so checking insurance costs before you buy a car is worthwhile. See how the vehicle you drive affects price.

Your driving record, claims history and, in states that allow it, your credit-based insurance score improve over time. Your age and ZIP code are largely outside your control in the short term, although moving or annual mileage changes should be reported, because they can lower the price as well as raise it. Our premium factors tool explains how each one works.

Help for drivers on a tight budget

If the price is out of reach even after shopping, a few routes are worth knowing. Some states run their own low-cost policies. California's Low Cost Automobile Insurance Program sells basic liability coverage to income-eligible drivers with good records, and New Jersey's Special Automobile Insurance Policy gives drivers enrolled in federal Medicaid with hospitalization a medical-only policy at a low annual cost. Our page on low-cost state programs explains who qualifies and what each covers.

Paying in installments spreads the cost, although it may add fees. If you have been turned down by several insurers, many states have a plan for drivers who cannot find coverage, often called an assigned risk plan. Examples include the Texas Automobile Insurance Plan Association and the New York Automobile Insurance Plan. A licensed agent or your state insurance department can explain the options where you live. Drivers with a DUI or many tickets can find more help in our guides for high risk drivers after a DUI and SR-22 filings, and young drivers can read about car insurance for young drivers.