You can save more than 40% on your car insurance in just 10 minutes

The average annual car insurance premium in 2023 was $3,017, and this figure will be higher in 2024. Things like keeping a clean driving record and shopping around can help keep costs down, but they’re not enough.

Fortunately, there is another way to keep your car insurance premiums manageable. It works with all insurance companies and takes approximately 10 to 15 minutes. However, this may not be the right move for everyone.

Pay Now vs. Pay Later

Drivers face two major costs when purchasing car insurance. Insurance premium is the amount a driver pays to maintain an insurance policy. Drivers can pay in advance either monthly or for the entire policy period (usually six months). There is often a small discount if you pay in full. Drivers must pay insurance premiums during the policy period, regardless of whether or not they file a claim.

If the driver needs to file an insurance claim, he or she will also pay the deductible. This is a set dollar amount that drivers decide upon when purchasing an insurance policy. Options typically range from $100 to $2,000.

Low deductibles may seem attractive because they reduce your out-of-pocket costs after an accident, but they also increase the risk that your insurance company will have to pay more to cover your claim. So they compensate for this by charging higher insurance premiums.

This means that choosing a higher deductible is a quick and effective way to get cheaper car insurance. The Insurance Information Institute found that increasing your insurance deductible from $200 to $500 reduces premiums by 15% to 30%. And if you take out a $1,000 deductible, your premiums will be reduced by more than 40%. To put this in perspective, a 40% reduction lowers the average monthly premium of $251 to $151.

Progressive also reported similar results in its own study. Interestingly, the lower the premium increase, the larger the premium reduction. For example, increasing the deductible from $100 to $250 lowered premiums by 29%, while increasing the deductible from $1,000 to $2,000 lowered premiums by only 17%. But either way, it’s still a significant decline.

How to increase your car insurance deductible

Increasing the deductible on your insurance is very simple. But first, evaluate the financial consequences to decide if it’s the right decision. Drivers who can’t afford the higher deductible may end up in debt when they have to file a claim. It may be possible to avoid this by saving the deductible in an emergency fund. But if this isn’t possible, it may be safer to choose a lower deductible.

Drivers who want a higher deductible can contact their insurance company and request a change. Many companies also allow drivers to make these changes through their online accounts or mobile apps.

If it is not clearly stated in your online account, you may want to check with your insurer to find out when this change will take effect. It may not be until next month’s payment or until your next insurance period. Any claims filed before this change takes effect will be subject to the existing deductible.

Drivers should be able to immediately see how these changes affect their premiums. If you don’t save that much, you may want to consider looking for another car insurance company. Every insurance company assesses risk differently, and some insurance deductibles increase more than others.

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