What car insurance costs and how to lower your rate

Car insurance rates vary widely depending on your age, driving history, location, the car you drive, and the coverage you choose. There is no single "right" price — what you pay depends on which company you use and what protection you select. The best way to find a rate that fits your budget is to get quotes from at least three insurers, compare what each one covers, and then decide which combination of price and protection makes sense for you.

Once you have insurance, you can lower your rate by bundling policies (home and auto together), asking about discounts for low mileage or safe driving, paying your premium in full rather than monthly, and raising your deductible if you have savings to cover a claim. Some insurers also offer discounts if you let them monitor your driving through an app or device. Ask your agent or call the company directly — discounts are not always advertised on the website.

Key Takeaways

  • Get quotes from at least three different insurers before choosing a policy, because rates for the same coverage can differ by hundreds of dollars.
  • Bundling home and auto insurance, paying in full, and raising your deductible are the most common ways to lower your monthly cost.
  • Your state requires a minimum amount of liability coverage, but that minimum often leaves you underprotected if you cause a serious accident.
  • Review your policy once a year and shop around every two to three years, because rates change and new discounts appear regularly.
  • If you have a clean driving record and own your car outright, you may be able to drop collision and comprehensive coverage to save money.

Understanding the types of coverage

Liability coverage pays for damage or injury you cause to someone else. Your state sets a minimum amount you must carry — often $25,000 per person and $50,000 per accident for bodily injury, plus $25,000 for property damage, though these numbers vary by state. That minimum is usually not enough. If you cause a serious accident, medical bills and vehicle repairs can easily exceed those limits, and the injured person can sue you for the difference. Most insurance agents recommend carrying higher limits, such as $100,000 per person and $300,000 per accident.

Collision coverage pays to repair or replace your car if you hit another vehicle or object. Comprehensive coverage pays for damage from theft, weather, vandalism, or hitting an animal. If you have a loan or lease on your car, your lender will require both. If you own the car outright and it is older or worth less than $5,000, you may decide the monthly cost of these coverages is not worth it — but if you cannot afford to replace the car out of pocket, keep them.

Uninsured and underinsured motorist coverage protects you if the other driver has no insurance or not enough insurance. This is often overlooked but can save you thousands if you are hit by someone who cannot pay. Medical payments coverage pays your medical bills regardless of who caused the accident, up to a limit you choose.

How to get quotes and compare them fairly

When you call or visit an insurer's website to get a quote, you will need your driver's license, vehicle identification number (VIN), current insurance information if you have it, and a list of any accidents or violations in the past three to five years. Have this information ready before you start, because it speeds up the process.

Get quotes for the same coverage limits from each company so you can compare apples to apples. For example, ask all three for $100,000 per person liability, $300,000 per accident, $25,000 property damage, and a $500 deductible on collision and comprehensive. Write down the total monthly or annual cost for each. Then ask about discounts — bundling, low mileage, safety features in your car, good driving record, paying in full, and paperless billing are common ones. Some discounts stack, so the final price after discounts may be much lower than the initial quote.

Do not choose based on price alone. Check the company's customer service rating through the National Association of Insurance Commissioners (NAIC) or your state's insurance department, and read recent reviews on independent sites. A slightly higher premium from a company known for fast claims handling may be worth it.

Discounts that can reduce your premium

Most insurers offer a discount if you bundle auto insurance with homeowners or renters insurance — this is often 15 to 25 percent off your auto rate. If you drive fewer than 7,500 miles per year, ask about low-mileage discounts. Some companies offer discounts for completing a defensive driving course, which also may lower your rate if you have a minor violation on your record.

Safety features in your car — anti-theft devices, automatic emergency braking, lane-keeping information — can earn you a discount. Ask your insurer which features they recognize. Paying your premium in full rather than monthly sometimes saves you a small amount. Some companies offer usage-based discounts if you install their app or device, which tracks your driving and rewards safe habits with a lower rate.

If you are over 55, ask whether your insurer has a mature driver discount. Some do, and some offer it only if you complete a course. Discounts change, so call your insurer every year and ask what new ones are available.

When to review or switch your insurance

Your rate can go up for reasons outside your control — your zip code changes, your car ages, your state's rates rise — or for reasons you can control, like a ticket or accident. Review your policy once a year, especially after a major life change like retirement, moving, or paying off your car loan. When you pay off a loan, you may be able to drop collision and comprehensive coverage if you choose, which can cut your premium significantly.

Shop around every two to three years even if you are happy with your current insurer. Rates change, new companies enter your market, and discounts shift. You may find a better deal elsewhere. When you switch, make sure your new policy starts before your old one ends so you are never without coverage.

If you have had an accident or violation, your rate will likely go up with your current insurer. Get quotes from other companies anyway — some specialize in drivers with accidents or tickets and may offer a better rate than your current company.

Special situations: Low income, high risk, and limited driving

If you have a poor driving record or have been without insurance, some standard insurers will not take you on. High-risk or assigned risk pools exist in every state to may support that even high-risk drivers can get coverage. These are more expensive, but they are legal and legitimate. Ask your state's insurance department how to find the assigned risk pool in your state.

If you drive very little — only to the grocery store or doctor — ask your insurer about usage-based or pay-per-mile insurance. Some companies charge based on the number of miles you drive rather than a flat monthly rate, which can save money if you drive fewer than 5,000 miles per year. This type of insurance is not available everywhere, so call around.

If cost is your main concern, raising your deductible is the fastest way to lower your premium. A $1,000 deductible costs less than a $500 deductible, but you pay more out of pocket if you have a claim. Only raise your deductible if you have savings set aside to cover it.

Understanding your policy documents

When you buy a policy, you will receive a declarations page, which lists your coverage limits, deductibles, premium, and the dates your coverage starts and ends. Read this carefully and make sure everything is correct — your name, address, vehicle information, and coverage choices. If something is wrong, call your agent or the company right away to fix it.

You will also receive a policy booklet that explains what is and is not covered, what you have to do if you have an accident, and how to file a claim. Keep this somewhere safe. If you have an accident, your first step is to call your insurer's claims line — the number is on your insurance card and in the policy booklet. They will tell you what to do next, whether you need a police report, and how to get your car repaired.

Frequently Asked Questions

Do I have to buy insurance from AARP?

No. AARP does not sell insurance directly. AARP has partnerships with insurance companies that offer discounts to AARP members, but you can buy insurance from any licensed insurer in your state. Getting quotes from multiple companies, including AARP-partnered ones, helps you find the best rate for your situation.

What happens if I let my insurance lapse?

Driving without insurance is illegal in every state. If you are caught, you face fines, license suspension, and a mark on your driving record that will raise your rates for years. If you have a loan or lease on your car, your lender can buy insurance on your behalf and charge you for it. If you cannot afford your current premium, call your insurer and ask about payment plans or lower-cost options before your coverage ends.

Can I get a discount if I have not had an accident in many years?

Yes. A clean driving record is one of the biggest factors in your rate. Some insurers offer a "safe driver" or "accident-free" discount after a certain number of years without a claim. Ask your insurer what their policy is. If you have an old accident or ticket, ask when it will stop affecting your rate — most fall off after three to five years.

Should I drop collision and comprehensive if my car is paid off?

It depends on your car's value and your savings. If your car is worth less than $5,000 and you have enough savings to replace it, dropping these coverages can save money. If your car is worth more or you could not afford to replace it, keep them. Run the numbers: compare the monthly savings against what you would lose if your car were stolen or damaged.

How do I file a claim?

Call your insurer's claims line as soon as possible after an accident or damage. Have your policy number and insurance card ready. They will ask what happened, take your statement, and tell you whether you need a police report. For accidents, get the other driver's name, phone number, address, insurance company, and policy number. Take photos of the damage if it is safe to do so. Your insurer will guide you through the rest.