Affiliate links for the products on this page are from partners that compensate us (see our advertiser disclosure with our list of partners for more details). However, our opinions are our own. See how we rate insurance products to write unbiased product reviews.
- Car insurance isn't cheap. Since many people are driving less due to stay-at-home orders in the US, there's potential to save on car insurance.
- Cancelling your policy will only make it more expensive to renew when you need it again. Instead, start by asking your insurer to lower your premium because you're driving less.
- Next, take inventory of the coverage types you have, including things like rental reimbursement, travel coverage, and roadside assistance. You may not need them now, or have them covered other ways.
- Only consider dropping coverage to state minimums as a last resort, as it could mean more risk.
- Read more personal finance coverage »
Despite the fact that many people aren't driving much during the coronavirus pandemic due to stay-at-home orders, there are better ways to save money on car insurance than cancelling your car insurance policy all together.
In fact, cancelling your policy could cost more in the long run. Premium prices increase between 7% and 12% after a lapse in coverage, says Nicole Beck, a licensed insurance agent and Director of Communications at The Zebra. Additionally, keeping insurance could be necessary if you need to leave the house in a pinch, whether for an intermittent grocery run or an emergency.
Instead of cancelling coverage, the smarter move is to ask for a cheaper rate, pare down unnecessary coverage, and shop around for a new policy. Some insurers are already taking steps to help customers during the coronavirus pandemic. Allstate and American Family Insurance are giving rebates to car insurance customers. Additionally, some insurance companies are allowing flexible payments to help those who have lost income.
The actual amount you save could vary based on your insurer, policy, and more. Car insurance costs vary based on your personal information and driving history, as well as the state and area where you live. Not every policy has all the coverages listed, nor does every company have them available. Check the declarations page of your policy or ask your insurer to see what coverage types you have.
1. Ask for a rate reduction if you're not driving as much
How much it will save: About 6% per year, or as high as 32% in California
Beck says that simply asking your insurer is the best way to save during the coronavirus pandemic. "If you call your insurance company and tell them you're driving less, they should be able to give you some kind of a reduction," Beck says. "If you halve your mileage, you can save about 6% annually on your premium."
California residents can save even more. "Mileage plays a much bigger part in how they shake out their ratings," Beck says. Insurance companies in each state price their policies differently, generally according to state law. "You can save about 32%, or about $550 a year, just for reducing your mileage."
2. Eliminate your rental reimbursement coverage
How much it will save: Between $1 and $13 per month
Rental reimbursement lets you get a rental car if your car is in the shop or out of service after an accident. If you're not driving, you won't need a rental car, or this coverage.
According to data from ValuePenguin, prices range from $1.36 to $13 per month, depending on the insurer. If your rental reimbursement coverage is on the high end, getting rid of it for a few months could put a few dollars back in your pocket.
3. Consider eliminating travel coverage and rental coverage
How much it will save: $4 per month
Unlike rental reimbursement coverage, this covers you while traveling by car or renting a car. For example, State Farm's car rental and travel coverage pays for lodging if you're in an accident far from home, and covers you while driving a rental car. According to Insurance.com data, this coverage generally costs about $50 per year, or $4 per month.
Not every car insurance company offers it. Some companies simply allow liability policies to cover you, even when driving a rental. You may also have a credit card in your wallet that carries rental car coverage. It might be a coverage that you don't need, and you could save by nixing it if you have other coverage or aren't planning to travel soon.
4. Emergency roadside assistance
How much it will save: Between $1 and $6 per month
Emergency roadside assistance is exactly what it sounds like: This type of coverage will send someone to help for situations like locking your keys inside your car, a dead battery, or an empty gas tank. According to The Zebra, costs for this coverage ranges from $5 per policy period (generally six months) to $74 per year.
If you already have roadside assistance through your car's manufacturer, or an auto club like AAA, there's no need to have this coverage twice.
5. Raise your deductible
How much it will save: As much as 13% on your premium
If you've lost income and need to reduce your costs long term, you might want to consider raising your deductible, or the amount you'll be responsible for paying out of pocket if you're in an accident. To do this, you'll need to call your insurance company, and ask to raise the deductible. You'll be refunded the difference between your lower-deductible, higher-premium policy and your new higher-deductible, lower-premium policy.
According to data from The Zebra's State of Auto Insurance 2020 report, raising your deductible from $500 to $1,000 could save 13%. However, if you won't have the money on hand to cover the higher deductible, this probably isn't a good idea.
6. Cut back to state minimum coverage
How much it will save: Varies depending on the price of your current policy and the coverage you have in place
Cutting back your coverage to the state minimum should be a last resort. If you really need to cut costs, and feel that you could benefit from it since you're not driving, it is possible. "It will definitely open you up for more risks, but it would definitely save you money," says Beck. This generally means getting rid of comprehensive coverage, which covers your car if damaged or stolen, and collision coverage, which covers your car if you accidentally hit another car or object.
In most states, the only requirement for car insurance is a liability policy, which covers damage you do to others. But if something happens, you could be risking expensive repairs or even a new car. If, for example, a tree falls on your car, it won't be covered since you no longer have comprehensive coverage.
According to The Zebra's data, the average state minimum policy with a $1,000 deductible for comprehensive and collision coverage costs $656 more than the average state minimum-only policy.
7. Shop around for a new policy
How much it will save: The amount you'll save varies. By one example, shopping around saved $110 for a six-month policy.
Shopping around for your next insurance policy is always a good idea. If you have some free time now, it's worth looking around to see if your insurance company is offering the best price for coverage. Get quotes from several different insurers, and compare them to find the policy with the most coverage types and highest limits for the least money.
- Read more on managing your money in this tumultuous time:
- 3 options for people struggling to pay their mortgage during the global health crisis
- 4 reasons to get disability insurance, even if you don't think you need it
- If you've been financially impacted by the coronavirus, you may be able to pause payments on these 8 bills
- How to get a stimulus check from the US government, which could pay up to $1,200 if you qualify
- In response to the coronavirus, credit card issuers like Amex and Capital One are letting customers skip payments without interest and more
Editorial Note: Any opinions, analyses, reviews, or recommendations expressed in this article are the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any card issuer. Read our editorial standards.
Please note: While the offers mentioned above are accurate at the time of publication, they're subject to change at any time and may have changed, or may no longer be available.
**Enrollment required.