UPDATED: Mar 13, 2020
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Let’s say you pay $150 per month for car insurance. Will you be stuck paying $150 per month for the rest of your life? Or can car insurance go down?
Car insurance can absolutely go down! Generally, car insurance premiums drop as you get older. They also drop with safe driving habits and a lack of claims. Some people pay less for car insurance after improving their credit score. Other people save hundreds of dollars on car insurance after getting married and bundling car insurance with a spouse.
How Does Car Insurance Go Down?
There are plenty of ways for car insurance to go down over time. Below, we’ll highlight some of the most common reasons why car insurance prices will drop.
A teenage driver is in the highest risk class for making an insurance claim. Inexperienced, teenaged drivers have the highest accident risk. Understandably, they pay the highest insurance prices. As you get older, however, insurance premiums will drop. Most drivers will see a noticeable drop after around age 25. By the time you’re in your 30s, you’ll be paying some of your lowest rates. Rates will continue dropping (slightly) into your 50s, assuming you maintain a clean driving record. This trend tends to reverse, however, when you get into your 70s and 80s.
Moving to a New Home or State
Car insurance companies calculate insurance premiums using your ZIP code. Some neighborhoods are associated with a high number of accidents or break-ins. Moving out of a crowded, dangerous big city into the safer suburbs, for example, can cause car insurance prices to drop significantly.
Similarly, moving to a new state can cause car insurance to go down. States have vastly difference car insurance requirements and rules. Car insurance is managed at the state level. The same driver who pays $300 per month in Michigan might pay $150 in North Carolina.
Maintaining a Safe Driving Record
If you cause an accident or make a claim, your car insurance rates will rise. If you get a speeding ticket or a DUI, then your insurance premiums should also rise. By maintaining a safe, claim-free driving record, you can pay less for car insurance over time. Many insurance companies offer a claims-free discount. You might save 5% on car insurance for every year you avoid making a claim or getting into an accident. Generally, car insurance will go down over time as long as you maintain a safe driving record.
Buying a Home and Bundling Insurance Policies
Buying a home for the first time can cause car insurance premiums to drop. You might buy home insurance and car insurance from the same insurance company, allowing you to enjoy a bundling discount. Bundling multiple insurance policies together can help you save money on each one.
Getting Married and Bundling Car Insurance Policies Together
Car insurance premiums can drop when you get married. If you and your spouse combine your car insurance policies into one policy, then you will likely pay less overall for car insurance. Your policies are bundled together, making it easier for you and your insurance company to manage. Expect to save a significant amount when bundling multiple car insurance policies together.
Switching to a New Car Insurance Company
America’s car insurance industry is very competitive. Wherever you’re located in the country, you should have plenty of car insurance providers from which to choose. Switching to a new car insurance company can cause rates to substantially drop over time. Some car insurance companies specialize in insuring younger or older drivers, for example. Other insurance companies might be willing to overlook one or two speeding tickets. Depending on your unique demographics and other characteristics, you may be able to save a considerable amount by switching to a new car insurance company.
Buying an Older Car
Older cars generally cost less to insure than newer cars. A 2019 high-end SUV is going to cost more to insure than a 2001 Honda Civic. Buying an older car can save you a lot of money on car insurance – especially if you choose to drop comprehensive and collision coverage from the vehicle.
When Tickets and Other Incidents Fall Off your Record
Most insurance companies will check your record back at least 5 years. Some check as far back as 7 years. If you have an at-fault collision or another incident on your driving record, then your car insurance premiums might drop simply by waiting. For every year your speeding ticket, DUI, or at-fault accident gets further into the past, your car insurance should drop.
Other Reasons Car Insurance Can Drop
Car insurance companies offer hundreds of other discounts that can lower car insurance premiums over time, including:
- Good student discounts, where student drivers are rewarded for maintaining a B+ or A average in high school or college
- Vehicle safety discounts, where you pay less for car insurance because your car has better or newer safety features (like passenger or side airbags, for example)
- Policy renewal discounts
- Changing the terms of your car insurance, say, by dropping comprehensive and collision coverage on an older vehicle
Ultimately, there are plenty of reasons why your car insurance rates can go down. Take advantage of the strategies above to ensure your car insurance goes down.