In this article:
When you get a quote for car insurance online, the numbers are computed so quickly, it may seem like a simple decision. But a staggering number of data points go into the equation, some obvious and some perhaps not.
You probably know insurers look at things like your age, gender, driving history and vehicle when deciding rates. What you may not realize is that in the majority of states, whether you're a homeowner or a renter might also be factored into your rates.
On average, homeowners do pay less for car insurance since they're viewed as being on more solid financial ground than renters.
Will Owning a Home Reduce My Car Insurance Premiums?
While not always the case, being a homeowner rather than a renter could translate to lower rates for auto insurance.
As mentioned above, when auto insurance companies evaluate a new customer's application, they consider a number of factors to decide whether to approve the application and what to charge. Insurers look at your financial history, which could include your credit score, plus things like your location, driving record and vehicle type. Insurance is a game of risk, so companies are trying to determine if you have more or less of a chance of filing claims.
One of many factors insurers often consider is whether you're a homeowner or renter. Homeowners can appear more financially stable than renters, meaning they're less likely to file a car insurance claim, according to insurance comparison site The Zebra. Its data finds that homeowners typically pay $166 less for car insurance annually compared with the national average. And among the nation's top insurers, homeowners typically save between 9% and 10% on their car insurance compared with renters.
How to Get a Multi-Policy Insurance Discount
Major insurance carriers—like the ones you see in commercials—offer a range of insurance products. You may choose to buy your homeowners or renters insurance, auto insurance or life insurance from different companies.
But when you bundle your insurance, or get more than one type of insurance policy with one company, the company typically reduces your premiums. According to the Insurance Information Institute, when you purchase more than one type of policy, most insurers knock 5% to 15% off the premiums.
The good news is you may be able to bundle your insurance whether or not you're a homeowner: Many insurance companies allow you to bundle homeowners or renters insurance with auto insurance policies.
You can also receive a multi-vehicle discount if your family uses the same insurer for more than one car.
Here's how to get started bundling your insurance:
- If you already have auto insurance or homeowners insurance with a company you like: You'll need a quote for adding a new policy to bundle them. You can typically log in to your online account and request a quote for adding a policy. You might also be able to call the insurer or set up an appointment with your agent to review options. Once you've added the new policy, you can cancel your old policy with the other company.
- If you're not a fan of your current insurance companies, or you're paying too much: It's ideal to get free quotes from multiple insurance companies on the price of bundling multiple policies. In the quote process, many major insurers have the option to select multiple policies for bundle pricing. Once you switch over, don't forget to cancel your old policies.
Other Strategies for Saving on Auto Insurance
Beyond being a homeowner and bundling your insurance policies with one company, there are many other ways to lower your auto insurance costs:
- Shop around. Insurance rates are determined based on a large number of factors, and the calculations can vary by insurer. Checking rates annually can help you see if you're still getting the best deal. You can compare rates with Experian's auto insurance comparison tool to see if you could find a better rate elsewhere.
- Increase your deductible. Your premiums and deductibles have an inverse relationship: The higher your premiums, the smaller your deductible, meaning fewer out-of-pocket costs when you make a claim. But not everyone can afford high premiums, especially since there's no guarantee they'll ever reap the benefit. You might switch to a higher deductible to reduce your premiums—just be prepared for that out-of-pocket expense upon filing a claim.
- Drop comprehensive and collision coverage. Most states require a minimum amount of liability coverage. Comprehensive and collision coverage aren't legally required, though if you have an auto loan, your lender might require it. When it's not required, dropping this coverage could save money, though it's a gamble. Collision coverage helps pay for vehicle damage in an accident that's your fault, while comprehensive covers car damage for situations beyond your control (think vandalism, a natural disaster, hitting a deer). Some insurers suggest it may not be worth paying for this extra coverage if your car is older and not worth much.
- Pay more upfront. You'll usually have the option to pay your premiums upfront for the quarter or year rather than monthly. If the savings are significant and you can afford it, consider switching payment timing.
- Leverage digital discounts. Some insurers offer customers discounts for saving them time with technology. You might score discounts for obtaining a quote and/or signing up for a policy online, paying premiums via autopay and switching to paperless statements.
- Look for driving-related discounts. You can often score lower rates when you have a safe driving record without accidents or tickets. If you don't drive often, you could nab a low-mileage discount; some insurers offer pay-per-mile policies where you can save if you drive less. Some insurance companies also have optional safe driving apps that could reduce your rates—as long as you're diligent about not speeding, hard braking or using your phone while driving.
Better Credit Could Also Lower Premiums
Owning a home could help you save on auto insurance, but it's only one of many factors insurance companies consider when setting rates. In states where it's allowed, insurance companies often use credit-based insurance scores when evaluating applications and determining premium costs. These scores aren't the same as credit scores, but they use information in your credit report. People who have a strong history of paying credit accounts on time are statistically less likely to file claims, reducing risk for the insurer and potentially lowering your costs.
If your credit isn't in the best shape, making efforts to improve your credit, such as using Experian Boost®ø, could help lower the cost of insurance premiums.