Why Car Insurance Rates Are So High Right Now
Car insurance premiums surged 46% between 2022 and 2024, driven by inflation, rising repair costs, more severe accidents, and increased vehicle theft. While rates dropped about 6% in 2025, they're projected to rise again by roughly 1% in 2026. The national average for full-coverage car insurance is now approximately $2,158 per year.
But here's the good news: your rate isn't set in stone. Insurance companies evaluate dozens of factors when pricing your policy, and many of those factors are within your control. Even small changes — like bundling policies or raising your deductible — can reduce your premium by hundreds of dollars per year.
Data point: Drivers who comparison-shop save a median of $461 per year, according to Consumer Reports. Some save over $1,000 by switching carriers.
Compare Quotes From Multiple Carriers
This is the single most effective way to lower your rate. Insurance companies use different underwriting models, so the same driver with the same coverage can get wildly different quotes. Price spreads between the cheapest and most expensive insurers often exceed $1,200 per year for drivers with clean records.
Get quotes from at least 3–5 carriers, including national insurers (GEICO, State Farm, Progressive, Allstate), regional carriers (Erie, Auto-Owners, Amica), and online comparison tools that pull rates from multiple companies at once.
Pro tip: Compare quotes at least once a year — ideally before your renewal date. Rates change constantly, and loyalty rarely pays off in insurance.
Bundle Home and Auto Insurance
Bundling your home (or renters) and auto insurance with the same carrier is one of the easiest ways to save. Most insurers offer 10–30% off your auto premium when you bundle, averaging around $350 per year for most drivers.
But don't assume bundling is always the cheapest option. Sometimes buying separate policies from different carriers results in a lower combined cost. Always compare bundled quotes against separate quotes to find the best deal.
Increase Your Deductibles
Your deductible is the amount you pay out of pocket before insurance covers a claim. Raising your deductible from $500 to $1,000 can reduce your collision and comprehensive premiums by 20–25%, saving around $100–$150 per year.
This strategy works best if you have an emergency fund that can cover the higher deductible if you need to file a claim. If you drive a newer or more expensive vehicle, you'll see bigger savings.
Important: Only raise your deductible if you can afford to pay it. If you file a claim, you'll need to cover the deductible before insurance kicks in.
Stop overpaying — compare quotes and find your best rate.
Compare Quotes From Multiple CarriersAsk About All Available Discounts
Most drivers qualify for at least 2–3 discounts but never ask about them. Here are the most common ones:
- Multi-policy bundling: 10–30% off when you bundle home and auto
- Safe driver: 5–30% off for 3+ years without accidents or violations
- Low mileage: Varies by carrier; typically applies if you drive less than 10,000 miles per year
- Telematics/usage-based: Up to 30% off for safe driving monitored via app or device
- Good student: 5–25% off for students under 25 with a B average or better
- Defensive driving course: 5–10% off in most states
- Homeowner: 5–10% off if you own a home, even if you don't bundle
- Good credit: Automatic discount in most states; better credit = lower premium
- Military/veteran: 5–15% off at carriers like USAA, GEICO, and Armed Forces Insurance
- Paperless billing + autopay: 2–10% off for electronic documents and automatic payments
Insurers don't always volunteer every discount. When requesting quotes, explicitly ask about all discounts you might qualify for.
Improve Your Credit Score
In most states, your insurance-based credit score is one of the biggest factors in your premium. Drivers with poor credit pay an average of 76% more than those with excellent credit. Improving your credit can reduce your premium by 20–50%.
To improve your credit:
- Pay bills on time — payment history is 35% of your credit score
- Reduce credit card balances — aim to use less than 30% of your available credit
- Don't close old credit accounts — credit history length matters
- Check your credit report for errors — dispute any inaccuracies
Note: California, Hawaii, Massachusetts, and Michigan prohibit or restrict the use of credit scores in auto insurance pricing.
Drop Unnecessary Coverages on Older Vehicles
If your car is old and worth less than a few thousand dollars, it may not make financial sense to carry collision and comprehensive coverage. A general rule of thumb: if your annual premium for these coverages exceeds 10% of your car's value, consider dropping them.
For example, if your 2012 sedan is worth $3,000 and collision + comprehensive costs $600 per year, you're paying 20% of the car's value for coverage. Over two years, you'd pay more in premiums than the car is worth.
Important: Never drop liability coverage. It protects you from lawsuits and financial ruin if you cause an accident. Only drop collision and comprehensive on low-value vehicles.
Enroll in a Telematics Program
Telematics (or usage-based insurance) programs monitor your driving via a smartphone app or plug-in device. They track factors like hard braking, rapid acceleration, speeding, and time of day you drive. Safe drivers can save 10–30% on their premiums.
Popular telematics programs include:
- State Farm Drive Safe & Save
- Progressive Snapshot
- GEICO DriveEasy
- Allstate Drivewise
- Nationwide SmartRide
Most programs offer an initial discount just for signing up (often 5–10%), with additional savings based on your driving behavior. If you're a safe driver, telematics is one of the best ways to lower your rate.
Additional Ways to Lower Your Rate
Drive less. Lower annual mileage often qualifies you for a low-mileage discount. If you work from home or use public transit, tell your insurer.
Choose a safer, cheaper-to-insure vehicle. Cars with high safety ratings, low theft rates, and inexpensive parts cost less to insure. Sports cars, luxury vehicles, and trucks are typically more expensive.
Maintain continuous coverage. Gaps in insurance history signal higher risk to insurers. Maintain coverage even if you temporarily don't own a car by purchasing a non-owner policy.
Pay your premium in full. Paying every 6 or 12 months in full (vs. monthly installments) can save $5–$10 per month in installment fees.
Review your coverage annually. Life changes like paying off a loan, moving, or adding a driver can affect your rate. Update your policy to reflect your current situation.
Move to a lower-risk ZIP code. Urban areas with high accident rates, theft, and vandalism cost more to insure. If you're planning a move, consider insurance costs as part of your decision.
Take a defensive driving course. Many states and insurers offer discounts of 5–10% for completing an approved course. These typically cost $20–$50 and take 4–8 hours.
Common Mistakes That Keep Your Rates High
Staying with the same carrier for years. Loyalty rarely pays off in insurance. Rates change constantly, and your current insurer won't notify you if a competitor offers a better deal.
Buying minimum coverage to save money. State minimums are often too low to protect your assets. If you cause a serious accident, inadequate liability coverage can lead to financial ruin.
Not asking about discounts. Insurers don't always volunteer every discount. You need to ask.
Accepting the first quote you get. The difference between the cheapest and most expensive quote for identical coverage can exceed $1,200 per year.
Filing small claims. Filing frequent small claims can raise your rates more than paying out of pocket. Use insurance for significant losses, not minor repairs.
Frequently Asked Questions
Comparing quotes from multiple carriers is the fastest way to lower your rate. Drivers who comparison-shop save an average of $461 per year. You can compare quotes from multiple carriers here.
Bundling home and auto insurance typically saves 10–30% on your auto premium, averaging around $350 per year for most drivers. However, always compare bundled quotes against separate policies to ensure you're getting the best deal.
Yes, in most states. Better credit can reduce premiums by 20–50%. Drivers with poor credit pay an average of 76% more than those with excellent credit. California, Hawaii, Massachusetts, and Michigan prohibit or restrict the use of credit scores in auto insurance pricing.
Yes. Raising your deductible from $500 to $1,000 can reduce collision and comprehensive premiums by 20–25%, saving around $100–$150 per year. Just make sure you can afford the higher deductible if you need to file a claim.
Safe drivers enrolled in telematics programs can save up to 30% on their premiums, with average savings of 10–15%. Most programs offer an initial discount of 5–10% just for signing up.
The most common discounts include multi-policy bundling (10–30%), safe driver (5–30%), low mileage (varies), paperless billing (2–5%), and autopay (2–5%). Most drivers qualify for at least 2–3 of these. Always ask your insurer about all available discounts.