Car insurance costs are still soaring — here's 6 ways to lower your rates

Car insurance premiums increased 20.6% in the 12 months ending February 2024, according to the latest Consumer Price Index, released March 12, 2024.

The reasons are many — from lingering inflation and the rising cost of repairs to an uptick in severe weather and the number and severity of accidents.

Even though rates are on the rise, you don't have to break the bank to pay your premiums. Below, CNBC Select shares six tips to get the best price on car insurance.  

If you already have homeowners or renters insurance, you can save by getting your car insurance from the same provider. Bundling home and auto insurance can help you save on your premiums.

Farmers Insurance offers home and auto as a bundle that can save customers 20% on average. The company scored above average in J.D. Power 2023 Auto Claim Satisfaction Study, which reviews both car insurance shopping and claims. And it received fewer customer complaints than other carriers its size, according to the National Association of Insurance Commissioners .

Many insurers charge a fee for dividing your premium into monthly payments. Paying it all up front could save you as much as 12%, according to car insurance comparison site The Zebra.

A high-yield savings account could help you save enough to cover the bill — and earn some interest in the process.

If paying your yearly premium all at once isn't feasible, look into whether your insurer has a discount for going paperless or enrolling in automatic payments. Geico customers who set up autopay, for example, can save up to $36 a year.

If you work remotely or otherwise don't drive often, a pay-per-mile policy could be a good fit. With this type of insurance, you're charged a flat daily rate with an added per-mile surcharge (typically a few cents per mile). There is a tradeoff in privacy, since most pay-per-mile programs require drivers to attach a device that tracks their vehicle's mileage, speed, acceleration and braking distance.

But someone driving just 500 miles a month could save about $38 a month with Nationwide's SmartMiles program, available in 44 states. The plan even has an exception for road trips, with only the first 250 miles counted per day.  

Metromile is another strong contender in the pay-per-mile space. It offers discounts of up to 15% for bundling auto with Lemonade home or renters insurance. Availability is limited to Arizona, California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia and Washington State.

In most states, your credit score affects the price you pay for car insurance. Only California, Hawaii, Massachusetts and Michigan prohibit insurers from linking your credit to your premiums.

Need to work on raising your credit score? Experian Boost™ is a free service that reports consistent payments that wouldn't normally be seen by credit reporting agencies — like rent, phone and subscription service payments.

Bundling home and auto isn't the only way to save: Insurance companies offer a variety of discounts, including for safe drivers, students and members of the U.S. military.

One of our top choices for car insurance, State Farm offers good drivers a discount of up to 30% when they use its Drive Safe & Save mobile app to track their driving habits — including braking, cornering and phone usage.

Offering competitive insurance coverage for service members, veterans and their families, USAA gets high marks for customer satisfaction. In addition to 10% off for bundling, USAA offers discounts for safe driving, autopay, good grades, legacy policyholders, multiple vehicles and for storing your vehicle on base.

If you're in school, Geico offers a good-student discount worth up to 15% on certain policies if you maintain a B average or higher. CNBC Select has praised Geico for its nationwide availability, low rates and inclusive coverage (including for high-risk drivers).

Your deductible, the amount you're responsible for before your insurance company starts chipping in, is tied to your premium. Typically, the higher the deductible, the lower the premium.

Increasing your deductible from $200 to $500 could reduce the cost of collision and comprehensive coverage by 15% to 30%, according to the Insurance Information Institute, while upping it to $1,000 could save you 40% or more.

You'll need to have more money on hand if you're involved in an accident, so if you don't think you can meet the deductible — or have a spotty driving record — this isn't the strategy for you.

Prices for car insurance are racing ahead, but you can put the brakes on rising premiums by bundling insurance, taking advantage of discounts and making other smart moves.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every insurance review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of insurance products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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