7 Dave Ramsey Tips for Getting Cheaper Auto Insurance

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Is it possible to cut auto insurance premiums? Dave Ramsey offers some tips to reduce this expense.

Key points

  • Sometimes lowering costs is as easy as asking what discounts an insurer offers.
  • Certain choices you make, from what you drive to how you drive, can affect your rate.

Every driver needs good auto insurance coverage. Certain types of car insurance are required by law, but insurance can also help drivers avoid financial disaster in the event of a costly accident or incident.

While buying the right coverage is important, it can also be a financial burden. Premiums for comprehensive protection are sometimes fairly high. The good news is that most drivers can take advantage of ways to reduce auto insurance costs.

Personal finance expert Dave Ramsey suggests several tips for saving on car insurance costs.

1. Request a discount

Ramsey's blog offers this: Sometimes the best way to save money on coverage is simply to ask to pay less. A number of discounts may be available for things like affiliation with a group, good grades, age, or vehicle safety features. Often, motorists aren't aware of these opportunities until they ask.

2. Shop for coverage

"You're not married to your car insurance policy," Ramsey's blog says. It suggests shopping around regularly to compare prices. Drivers who discover a less expensive alternative can change coverage or ask their current insurer to match the lower price.

3. Switch to a larger deductible

A deductible is an amount an insured policyholder must pay out of pocket before insurance companies pay for covered losses.

As Ramsey explains, switching from a lower deductible to a higher one can reduce auto insurance premiums -- although it raises costs in the event of a collision. For those with an emergency fund to cover the cost of a deductible, it may be worth taking on this added risk. The premium reduction is guaranteed, and an accident that leads to a claim may not happen for years -- if ever.

4. Drop unnecessary coverage

Ramsey suggests getting rid of any insurance coverage that isn't really necessary. Examples include collision and comprehensive coverage on older cars. These types of insurance aren't required, and cover vehicles in the event of an accident, theft, or other loss.

If a car isn't worth very much and the insurer wouldn't pay out much to replace it, it may not be worth paying premiums for this kind of protection.

5. Shop for the right car

Savings can come from a vehicle that's insurance-friendly, which can include smaller cars and older, less expensive used vehicles. Ramsey's blog also suggests contacting car insurers before buying a new vehicle to find out how cars the driver is considering will impact insurance premiums.

6. Pay premiums differently

As Ramsey points out, paying premiums in full once per year rather than monthly can be cheaper with many insurers, as can setting up automatic payments. It's easy to switch to one of these payment approaches, but inquire to make sure the insurance company actually offers a discount for doing so.

7. Improve your driving habits

Moving violations and accidents increase the risk of covering drivers, so Ramsey suggests driving carefully to avoid black marks that can result in higher premiums. He also points out that there's often a discount for completing a defensive driving course.

Ramsey is right about these suggestions, and he offers some other tips for saving. These include bundling multiple policies with the same insurer to qualify for loyalty discounts, and keeping insurers updated on life changes that could affect insurance rates.

The more of these steps drivers take, the bigger the impact on premiums -- so it's well worth trying as many as possible to lower insurance costs and pocket the savings.

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