Auto and homeowners insurance premiums are among the biggest budget busters. But here’s the good news – there are clever hacks to cut costs.
Here’s your guide to saving on your auto and homeowners insurance premiums, which can help free up cash for your bigger money goals (we’re looking at you, debt payoff and investing).
PUTTING THE BRAKES ON HIGH AUTO PREMIUMS
Car insurance costs have jumped 55% in the last five years, according to the Bureau of Labor Statistics. But when it comes to cutting costs, you have options. Lots of them.
Tap into hidden discounts: Low-mileage driver? Clean record? Completed a defensive driving course? You could be leaving money on the table. Call your insurer and ask what you qualify for.
Student savings: Insuring a teen is…expensive. But did you know good grades can help? Students 16-25 often qualify for a discount if they maintain a B average or better. And if your student is away at college and their car is parked at home, you may snag a lower rate there, too.
Shop around: A recent survey shows 75% of U.S. drivers don’t shop for new auto insurance annually – and that’s a costly mistake. Comparing options can save you hundreds (if not thousands) a year. Here’s a great place to start.
Bundle up: Bundling auto with homeowners (or other policies) can score you lower rates. And, paying for the whole year up front may also unlock a discount. Think of it as the “Costco effect” – buy more, save more.
Don’t limit yourself to big names: According to Beth Swanson, an insurance analyst with The Zebra, an insurance comparison platform, smaller regional carriers can be hidden (money-saving) gems.“ Just because you haven’t heard of them yet doesn’t mean they won’t have something great to offer you as a customer,” she points out.
Up your deductible: If you’re comfortable taking on a bit more risk, consider raising it. The Insurance Information Institute says increasing it from $200 to $500 can slash your premium by 15% – 30%. Just make sure that you’re prepared for an accident, and have enough to cover repairs in an emergency fund or other savings account.
THE BLUEPRINT FOR CHEAPER HOMEOWNERS INSURANCE
Homeowners insurance premiums have skyrocketed in recent years, from an average of $2,656 annually in 2021 to $3,303 in 2024 (though notably, costs can vary widely depending on your location, the size of your home and how much coverage you require).
Regardless of where you live – or how high your bill has gotten – we can all take steps to save. Here are some of the best:
Shop around: Only 7% of homeowners are actually shopping for another policy. So, if you’ve never done so, you’re in good company. But also – now is a great time to start. Here’s where to begin.
Take advantage of your credit score glow-up: Credit score on the rise? We love to see it! And your homeowners insurance companies do, too.“Your credit score is a really important driver of the cost of homeowners insurance in a lot of states,” says Ben Keys, the Rowan Family Foundation Professor of Real Estate and Finance at the University of Pennsylvania’s Wharton School. If your score is higher than when you signed up, let your insurer know.
Invest in resilience: If you live in an area where it’s increasingly more difficult to find affordable homeowners insurance premiums, there’s still hope. Many insurers reward homeowners (and neighborhoods) that take steps to reduce risk. “Suppose that you live in a wildfire-prone area. Insurers are going to offer you a better deal if you and your community are clearing brush around properties, using more fire-resistant materials, and so on,” Keys says. Programs across the country are increasingly tying premiums to real resiliency improvements.
Bundle, bundle, bundle: Just like an auto insurance policy, bundling your home, auto and possibly other types of coverage can lead to meaningful savings.
THE BOTTOM LINE
Insurance premiums take up a big chunk of the budget, but protecting your home and vehicle are non-negotiables. With a few savvy moves, you can lower your costs and free up cash for the things that matter most.
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