With prices spiking, I take a look at a few common (and uncommon) ways to pay less for your car insurance.
Everything about cars is going up in price these days.
The average list price of a used car in the U.S. went from a little under $24,000 in 2019 to a little over $32,000 in 2026. Repair costs associated with cars have jumped 60% since 2019.
Whatever is happening with inflation, these prices are going way beyond that.
Car insurance is up too. Between 2020 and 2025, the average car insurance premium increased by almost 30%.
And while you can’t cancel your your car insurance bill (unless you stop driving), there’s not nothing you can do.
So here are a few ways that you can reduce your car insurance bill.
1. Raise your deductible
Your deductible is the amount that you pay when you make an insurance claim, even when you’re in a situation where it wasn’t your fault. (Annoying, I know.)
If you raise this amount, your premium will come down, mainly because the amount that the insurance company will have to dole out to you is likely to be less.
This is an easy change to make, but it’s risky. Don’t raise your deductible unless you can comfortably cover it if you’re in an accident.
Moving from a $500 deductible to a $1,000 deductible may lower your bill, but if you can’t “self-insure” to the tune of $1,000, then don’t bother.
Luckily, there are even better options.
2. Pay yearly
Most car insurances will give you a significant discount if you pay the full year (or the full six months). You can sometimes save hundreds of dollars this way.
Now, you may not have that amount of money right now. That’s okay. The way to get on the yearly train is that you put a little extra money away now in a savings account, and over time, you can build up that full cost. Once you have the full amount, you can switch over to a yearly bill and pay it in full.
And remember this “full cost” is going to be less than what you’re paying now. So it’s not like you need to save up exactly what you’re paying for a whole year now.
And here’s where the benefit begins. Now that you’re paying in full, you put a little money away for the following year, such that after 12 months, you have your full yearly bill ready to be paid, so you never have to have a big car insurance bill.
Here’s an example. Let’s say your car insurance is $150 a month if you pay monthly, but $1,500 if you pay in full. In this case, you can put away $125 a month for 12 months, and when switch over, you can pay the $1,500 bill in one go. And you’ve saved hundreds of dollars!
Don’t sleep on this option. I avoided switching over for years, and I feel foolish about that now, because it saves me so much money for the exact same benefit.
3. Switch car insurance providers
If you’ve been with your car insurance for a while, they’ve probably raised their rates on you higher than what the market can support.
As I’ve written about before, car insurance works on the “boiling frog” method, but unlike services with a lock-in effect that keep you from moving, there is absolutely no penalty for switching your car insurance.
You’ll even get a refund for the months you haven’t used! There’s no downside that I can see.
You can do your own research, but you also might have better luck with an independent insurance broker. In my case, I did lots of research on my own, but my broker found me an even better deal in the end.
Don’t settle for high(er) prices
Cars are really expensive these days, and there’s nothing to be done about it, other than keep the car you have for as long as possible.
But you can pay less for car insurance, and it doesn’t need to come with significant downsides. I think we could use more of that these days.
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