Car insurance premiums continue to climb, with rates rising by an average of 12.7% nationwide between November 2023 and 2024, according to the Bureau of Labor Statistics’ Consumer Price Index. This increase is driven by factors such as inflation, the growing cost of vehicle repairs, an uptick in severe weather events, and a rise in both the number and severity of accidents.

The good news? You don’t have to let these rising costs strain your budget. As a trusted insurance agency, we’re here to help you navigate your options and find ways to reduce your premiums. Here are six effective strategies to lower your car insurance costs in 2025:

1. Pay Your Premium in Full

Many insurance companies add extra fees for monthly payment plans. By paying your annual premium in full, you can avoid these charges and potentially qualify for a discount. Insurers like Auto-Owners offer reduced rates for policyholders who pay upfront and on time at renewal.

Let’s say you have a car insurance policy that costs $1,200 per year. If you choose to pay monthly, your insurer might add a $5 processing fee to each payment. That means over 12 months, you’re paying an extra $60—money that could stay in your pocket.

Now, if you go the pay-in-full route, not only do you avoid those pesky fees, but some insurers offer a discount for upfront payments. Let’s say they give you a 5% discount—that’s $60 off your premium. Add that to the $60 you’re saving on fees, and you just kept $120 in your wallet for the year!

Paying upfront isn’t always easy, but if it fits your budget, it’s an effortless way to cut costs on car insurance.

2. Bundle Your Insurance Policies

Bundling your home and auto insurance with the same provider can lead to significant savings. Many insurance companies provide multi-policy discounts, which often extend to renters, life, and even pet insurance. Here’s a look at how much you could save:

• Acuity: Up to 20%
• Auto-Owners: Up to 25%
• Nationwide: Up to 20%
• Progressive: Up to 3%
• Travelers: Up to 15%
• Prudential Up to 15%

3. Take Advantage of Available Discounts

Beyond bundling, insurers offer various discounts based on factors such as:

• Safe driving habits: Programs like the Snapshot® program from Progressive, can reduce your premium by an average of $231/year.
• Good student discounts:  For student drivers on your policy, maintaining a “B” average or better could mean savings. Companies like Acuity offer discounts for academic achievement.
• Loyalty and military discounts: Many insurers provide savings for long-term customers or active service members.

The Johnsons, a busy family of four from St. Charles, were looking for ways to cut costs without sacrificing quality coverage. With a teen driver about to get behind the wheel, their insurance rates were set to rise.

After speaking with their local agent, they discovered several discount opportunities. Their daughter, Emily, maintained a 3.8 GPA, qualifying them for a good student discount. Mr. Johnson, a Navy veteran, was eligible for a military discount. On top of that, Mrs. Johnson enrolled in a safe driving program, which rewarded her good driving habits with a reduction in premiums.

By stacking these savings, the Johnsons cut their auto insurance costs by nearly $600 a year, proving that a little research and the right discounts can make a big difference!

4. Consider Pay-Per-Mile Insurance

If you don’t drive frequently, a pay-per-mile insurance plan could save you up to 40% compared to traditional policies. Programs like Nationwide’s SmartMiles charge a base rate plus a per-mile fee, ensuring you only pay for the miles you actually drive.

For instance, a driver logging 500 miles per month could save over $450 annually. Some policies even include special allowances for road trips, ensuring longer drives won’t drive up costs unexpectedly.

Meet Sarah, a freelance graphic designer who works from home and only drives a few times a week—mostly for errands and weekend outings. She used to pay a flat $150 per month for traditional car insurance, even though her car sat in the driveway most days.

After switching to Nationwide’s SmartMiles, her new policy includes a $50 monthly base rate plus a per-mile fee. Since she only drives about 500 miles a month, her total monthly cost comes out to around $90—a $60 savings each month. Over the course of a year, that adds up to $720 in savings!

Even better, when Sarah took a road trip, her policy only counted the first 250 miles per day, so she didn’t see a massive spike in her bill. With pay-per-mile insurance, she finally feels like she’s paying for what she actually uses—not miles she isn’t driving.

5. Improve Your Credit Score

In most states, your credit score plays a role in determining your insurance rate. A higher credit score can translate into lower premiums. Services like Experian Boost® can help by factoring in positive payment history from bills such as rent and streaming services, potentially improving your score and lowering your insurance costs.

Think of Jason, a recent college graduate, who was shocked when he received his first car insurance quote—it was way higher than he expected. After some digging, he learned that his credit score was affecting his rate. Since he had limited credit history, insurers saw him as a higher risk.

Determined to lower his costs, Jason signed up for Experian Boost®. By linking his bank account, he allowed the service to factor in his on-time payments for rent, utilities, and his favorite streaming services. Within a month, his credit score improved by 20 points.

When he requested a new insurance quote, his premium dropped by nearly 15%! That simple move helped Jason save hundreds of dollars a year—all because he made the most of a tool that showcased his responsible financial habits.

6. Raise Your Deductible

Your deductible is the amount you pay out of pocket before your insurance coverage kicks in. Opting for a higher deductible can lower your monthly premium:

• Increasing your deductible from $200 to $500 could cut collision and comprehensive coverage costs by 15% to 30%.
• Raising it to $1,000 may result in savings of 40% or more.

However, before choosing a higher deductible, ensure you have the financial cushion to cover it in case of an accident.

Emily, a careful driver with a solid record, was looking for ways to cut down her car insurance costs. While reviewing her policy, she noticed she was paying a higher monthly premium for a low $200 deductible.

After discussing her options with her insurer, Emily decided to raise her deductible to $1,000. The result? Her monthly premium dropped by nearly 40%, saving her over $300 a year.

To make sure she wouldn’t be caught off guard in case of an accident, Emily set aside the difference in a separate savings account. That way, she enjoyed lower insurance costs while staying financially prepared for any unexpected repairs.

Take Control of Your Car Insurance Costs

You’ve learned some great ways to potentially lower your car insurance costs, from raising your deductible and improving your credit score to considering pay-per-mile insurance, exploring discounts, and bundling your policies. These are all smart moves, but the best way to truly understand your savings potential is with a personalized quote.

At Alexander Agency of St. Charles, we’re dedicated to providing quality insurance products that keep you protected, and our insurance specialists will work with you one-on-one to find a policy that fits your needs and budget. 

Don’t leave money on the table – request a quote today and see how much you could save!