Before you cut your car insurance, get quotes for the same policy elsewhere

When the bill goes up, cutting part of the policy can look like the quickest saving. Two checks come first. One can lower the bill without removing any protection. The other stops a cut that rests on a wrong idea.

Before you cut any car insurance cover to save money, get quotes for the same cover from other insurers, and look up what your car would sell for today.

“Cover” here means what a policy pays for; in the US it is usually called coverage. This page is for someone who already has car insurance and wants a lower price. It is not about driving without insurance, which is against the law in the UK and, the NAIC says, in most US states. If you still owe money on the car, or you lease it, your lender may decide what cover you must keep.

First, get quotes for the same cover

Some people say changing insurer and keeping the same cover can save more than cutting cover with the insurer you have. Some people suggest asking for new quotes at every renewal instead of letting the policy renew by itself, because prices for the same driver and car can differ a lot between insurers.

For a fair comparison, every insurer needs the same facts and the same cover. The NAIC says: “it is crucial that you provide the same information to each agent or company.” It also says every state insurance department has staff to answer questions about auto insurance, and that many departments publish premium comparisons to make shopping around easier. In the UK, GOV.UK says you may want to use an insurance broker. One person says a broker who works with several insurers can compare more options than an agent who sells for one company.

One person says insurers often offer a low price for the first term that then rises a lot, like some cable promotions. In the UK a rule now limits that. The Financial Conduct Authority (FCA), the UK financial regulator, has had a rule in its Handbook (ICOBS 6B.2.1R) since 1 January 2022: “A firm must not set a renewal price that is higher than the equivalent new business price.” That is the price the same insurer would offer you as a new customer buying the same way you first bought (for example, through the same comparison site or broker), and the rule covers home and motor insurance. The rule compares your insurer with its own price for a new customer, so another insurer can still be cheaper.

Tell your insurer when something real changes. Some people say they overpaid for a while because details on the policy were out of date, such as how many miles they drive in a year or the type of cover. One person says insurers do not go through a policy to find you savings. Another says rates also depend on facts such as marital status and whether you own or rent your home, which can change over time. Give true figures. The section on true answers below says why.

What a payout is based on

Some people point out a mistake that costs money: thinking an insurer will pay what you paid for the car. The NAIC says: “The company is required to pay you what your vehicle was actually worth (as a used car) the moment before the crash.” It adds: “It’s a good idea for you to independently research the value of your car too.” In the UK, the Financial Ombudsman Service says: “If your vehicle’s been written off, your insurer will usually pay out its market value. This is the amount your vehicle would have been worth just before it was stolen or damaged.”

What you paid is not the number. One person says their car was valued at more than they had paid for it. Some people warn that “the car isn’t worth much” is a thought that can mislead. Before you decide a car is not worth insuring, look up what cars like yours are selling for near you today and write it down.

If you are thinking of dropping cover on the car itself

In the US, the NAIC describes three main parts of a policy. Liability pays for harm you cause to other people and their property. Collision pays for damage to your own car in a crash. Comprehensive pays for damage from almost all other causes, including fire, severe weather, vandalism, floods and theft, and it covers broken glass. The NAIC says collision cover “is optional and not required by law”, and adds: “However, collision insurance may be required by your lending institution or lessor.” It says you are not required by law to carry comprehensive cover. In the UK, GOV.UK says: “Third party insurance is the legal minimum.” It explains that this covers damage or injury to other people, vehicles, animals and property, and “does not cover any other costs like repair to your own vehicle.”

So the cut people discuss is to keep the part the law requires and drop the part that pays for your own car. It trades a smaller bill for a risk you carry yourself. This page does not make that choice for you. Here is how people weigh it:

• Some people say that on a car worth little, damage cover can cost more over the years than it would ever pay out.
• Some people say they regretted dropping it after an accident.
• Some people say to drop it only when you own the car outright, with no loan left, and could buy a replacement from your own savings straight away.
• Some people warn that without it nothing pays for damage to your own car from hail, fire or animals. One person warns that rental-car cover is easy to skip and then missed while your car is being repaired. The NAIC says that on a claim under your own policy the company will pay for a rental if you paid for rental reimbursement cover, and that most policies have a dollar limit.

To see the real saving before you decide, ask your insurer or a broker for two quotes, one with damage cover and one without, giving the same facts each time.

This page does not suggest lowering your liability cover for any reason. The NAIC says that if a court judgment or settlement is more than your policy limits, “you will have to pay the difference.” One person warns that state minimum limits may not cover the injuries or damage you cause.

No-fault does not mean nobody can sue

Some people point out a common misunderstanding in the US: that in a “no-fault” state nobody can be blamed or sued. The Insurance Information Institute (Triple-I), an information body funded by the insurance industry, says no-fault means each driver’s own insurer pays certain losses, called personal injury protection (PIP), whoever was at fault. It also says: “Drivers in no-fault states may sue for severe injuries if the case meets certain conditions.” Those conditions depend on how serious the injury is. In traditional “tort” states, it says, “there are no restrictions on lawsuits”, and “a policyholder at fault in a car crash can be sued by the other driver and by the other driver’s passengers.”

So the label “no-fault” does not tell you whether you can be sued; the system in your state does. The NAIC says: “Check with your state insurance department for questions concerning tort or no-fault state systems.”

Give true answers

One person says adding a young driver to a parent’s policy is cheaper than a separate policy. The Insurance Fraud Bureau, a UK body that supports the insurance industry and law enforcement, says insurance is priced on the risk of the individual, so the insurer needs to know who the main driver is. In the UK, naming an older driver as the main driver when a younger person mainly drives the car is called “fronting”. The bureau says that lying when taking out cover can make the insurance void: “This is fraudulent and illegal.” It says a driver stopped by the police with fronted insurance faces the same consequences as any uninsured driver: the car seized and possibly crushed, a driving ban and an unlimited fine. The Financial Ombudsman Service says: “Always provide accurate information about who will be driving, where the car will be kept, and any driving convictions. Failing to be truthful could mean your policy is invalid and claims may not be paid.” GOV.UK adds that after an accident you must report it to your insurance company “even if you’re not planning to make a claim.” In the US, the NAIC says misquotes usually come from a mistake by the agent or from incorrect information on the application, and that you can protect yourself “by completing the application accurately and keeping a copy.”

If you are not sure who counts as the main driver, or what a question means, ask the insurer or a broker before you buy. In the UK, Citizens Advice (England 0800 144 8848, Wales 0800 702 2020, Scotland 0800 028 1456) and, in Northern Ireland, Advice NI (0800 915 4604) give general advice and MoneyHelper gives guidance on money. In the US, the NAIC says every state insurance department has staff to answer questions about auto insurance.

A box in the car or an app that tracks your driving

Some people say these policies saved them money when they drove smoothly. Some people say these devices can count necessary hard braking as bad driving and lead to a higher price. The NAIC says: “These telematics devices measure a number of elements of interest to underwriters: miles driven; time of day; where the vehicle is driven (GPS); rapid acceleration; hard braking; hard cornering; and air bag deployment.” One person says the savings are often very small, around 1 percent; another says they can be 5 to 20 percent or more. One person points out that some programs only give discounts and cannot raise your price. One person suggests checking the terms for a promise that the data will not be used to raise your rate, and one person says a quote can show the monitoring option already switched on, which makes the first price look lower than the price without it.

In the UK, the Financial Ombudsman Service says: “Telematics policies can be good and offer reduced premiums for ‘good’ driving. But if your driving habits do not match the policy requirements, then you might never get these benefits, or worse, your policy may be cancelled.” Its advice is to understand how a telematics policy works and what data feeds into it before you choose one.

Who this page is not for

If you have no car insurance now, driving is against the law in the UK and in most US states, so an insurer or a broker is the first call. If you owe money on the car or lease it, check with your lender before you change anything. If your problem is a claim that was refused or a payout that looks too low, not the price, the next paragraph is the door. If you hope to lower the price by naming someone else as the main driver, or by leaving out something the insurer asks, this page does not help, and the section on true answers says why. And outside the US and UK, this page does not apply; your country’s insurance regulator is where to start.

If an insurer’s offer for a written-off car looks too low, ask it to show how it worked out the figure. In the US, your state insurance department takes complaints; the NAIC lists them at content.naic.org/state-insurance-departments, and LawHelp.org points to legal help in each state. In the UK, complain to the insurer first. The Financial Ombudsman Service (0800 023 4567) says that if you do not get a final response within eight weeks, or you are unhappy with it, you can bring the complaint to it. If you got a final response, it says you have 6 months from its date. It says its service is free.