How to Lower Car Insurance Costs: Deductible Math on Real Claim Rates
Michael Whitman
·
Trading since 2017, full-time since 2020
·
YouTube creator, 137K subscribers
·
Published 2026-11-08
To lower car insurance costs, re-quote identical cover before each renewal, raise collision and comprehensive deductibles when the saving beats the expected cost, and drop that cover on a low-value car you own. On 2024 claim rates, moving both from $500 to $1,000 costs about $40.55 a year.
To lower car insurance costs, change the price you pay before you change the cover you have. Get fresh quotes on identical limits before every renewal, then raise deductibles only where the yearly saving beats what the higher deductible is expected to cost you, drop collision and comprehensive on a low-value car you own outright, and ask for each discount by name.
The timing matters more than usual right now. After three years of steep increases, the Bureau of Labor Statistics’ price index for car insurance has sat below its year-earlier level every month since May 2026, so a quote taken today is priced in a softer market than the renewal your insurer filed months ago.
| Lever | What to do | What the data says |
|---|---|---|
| Re-quote | Same limits, same deductibles, three or more insurers, 30 days before renewal | Prices fell 5.0% in the year to September 2026 (BLS) |
| Deductibles | Raise collision and comprehensive from $500 to $1,000 if the saving tops about $40 a year | Expected extra cost $40.55 a year at 2024 claim rates |
| Old car | Compare what physical-damage cover costs with the most it could ever pay | A $4,000 car with a $500 deductible pays out at most $3,500 |
| Liability | Keep it; raise it if your assets exceed it | Average bodily injury claim $28,278 in 2024 |
| Discounts | Ask for each by name: bundling, multi-car, paid-in-full, telematics, low mileage | Amounts vary by insurer and state, so get them in writing |
Before you start: five things on the table
Pull your current declarations page, the one-page summary of your limits, deductibles and the price of each coverage. Without it you cannot ask other insurers to quote the same policy, and a quote on lower limits looks cheaper only because it buys less.
Next, the renewal notice with the new premium, so you know the number to beat. Then three facts about you and the car: its approximate market value, your driving record and yearly mileage, and the cash you could hand a repair shop tomorrow, because that sets the deductible you can carry. That last number belongs in an emergency fund, not on a credit card.
The steps: one renewal, start to finish
1. Mark the date 30 days before your policy renews.
That leaves time to collect quotes, ask your insurer to match, and switch without a gap in cover.
2. Copy every limit and deductible from your declarations page into one list.
Each quote you collect must use exactly those numbers, or the comparison is meaningless.
3. Get quotes from at least three insurers on that identical list.
Include at least one insurer that sells through agents and one that sells direct.
4. Price two deductible levels on each quote: $500 and $1,000.
Use the table in the worked example below to decide which one wins at the price difference you see.
5. Price the car without collision and comprehensive if you own it outright.
Divide the most a total loss could pay (value minus deductible) by the yearly cost of those two coverages.
6. Ask for each discount by name and get the amount in writing.
Bundling with a home or renters policy, multi-car, paying in full, paperless billing, good-student, defensive-driving courses, low mileage and telematics programs are the usual list.
7. Take the best total to your current insurer and ask it to match.
If it will not, switch, and cancel the old policy only after the new one is in force.
A worked example: raising both deductibles on one car
The cost of a higher deductible is not the full extra amount. You pay the extra only in a year when you claim, so the expected cost is the claim rate times the extra.
ISO’s 2024 figures, published by the Insurance Information Institute, put the claim rate at 4.16 collision claims and 3.95 comprehensive claims per 100 insured cars a year, measured on policies with a $500 deductible. Moving each deductible to $1,000 adds at most $500 to any one claim:
- Collision: 4.16% x $500 = $20.80 a year
- Comprehensive: 3.95% x $500 = $19.75 a year
- Both: $40.55 a year, and that is an upper bound for the claims ISO counts, because a claim between $500 and $1,000 costs you less than the full $500 extra.
ISO’s comprehensive rate includes glass but leaves out wind and water losses, so a car parked in hail or flood country can claim more often than this average; add a margin there.
| Yearly saving from the higher deductible | Expected net gain a year | Years of saving to cover one extra $500 |
|---|---|---|
| $25 | -$15.55 | 20.0 |
| $50 | $9.45 | 10.0 |
| $100 | $59.45 | 5.0 |
| $150 | $109.45 | 3.3 |
| $200 | $159.45 | 2.5 |
At these rates a car carrying both coverages averages one claim every 12.3 years. If the quote shows a saving of $100 a year, the higher deductible comes out ahead on average, and five years of savings cover the extra $500 of one claim. At $25 a year it does not. The table assumes your own claim rate is average; a driver who has claimed twice in three years should not.
The old-car version. Take a car worth $4,000, owned outright, with a $500 deductible. The most a collision or comprehensive claim can ever pay is $3,500. Divide $3,500 by what the two coverages cost you a year; the answer is the number of years of premium that equal the largest possible check.
The 2026 turn: why this renewal is the one to shop
Insurance prices follow claim costs with a lag, because insurers file new rates after their losses show up. ISO’s average collision claim rose from $3,377 in 2015 to $5,489 in 2024, up 62.5%, and the average bodily injury claim rose from $17,014 to $28,278. Rates caught up in 2023 and 2024: the CPI for car insurance was 18.9% higher in September 2023 than a year before and 16.3% higher in September 2024.
Then the direction changed. The index peaked in February 2026 and by September 2026 was 5.7% below that peak, with year-over-year declines in each month from May to September 2026. The NAIC’s latest national average expenditure, for 2023, was $1,281.92 a year per insured vehicle, 19.2% above 2019, so the drop starts from a high base.
A falling index is an average of every insurer’s prices. Your insurer’s filing might lag the rest, which is exactly what a fresh set of quotes finds out.
Liability limits: the one line not to trim
Cutting liability cover is the fastest way to a lower quote and the worst trade on the page. Liability pays other people when you are at fault, and the bill can follow you past the policy limit.
In 2024 the average bodily injury liability claim was $28,278 and the average property damage liability claim $6,770, ISO’s figures including the insurer’s claim-handling costs. A $25,000 per-person limit sits $3,278 below that average injury figure, before a serious injury is counted. If you own a home or savings, the usual move runs the other way: raise liability and fund it by raising the physical-damage deductibles.
The original data: what car insurance costs and who it weighs on
Prices since 2020. We pulled three BLS consumer price series and set each to 100 in January 2020. By September 2026 car insurance stood at 147.7, vehicle repair at 156.1 and all consumer prices at 130.6. The insurance index rose 22.6% in the year to April 2024, its fastest pace in this period, then turned negative in May 2026. BLS did not publish October or November 2025 insurance figures because of the 2025 lapse in appropriations, so the line has a short gap.
Who it weighs on. The 2025 Consumer Expenditure Survey puts the average household’s vehicle insurance spending at $2,153, which is 1.94% of its $110,847 pre-tax income. The share falls steadily as income rises, because the bill grows far more slowly than pay. The lowest-earning fifth spent $1,011, 5.58% of income, and the highest fifth spent $3,147, 1.10%. In dollars the highest fifth spent about three times what the lowest fifth did, yet its share of income was about one fifth as large. For a household near the bottom, a 10% cut in the premium is worth more than half a percent of income.
Download the data: the CPI series, the share of income and the deductible worked example, free to reuse with credit under the site license. How the BLS builds these price indexes is on the consumer price index.
| Dataset | Covers | Pages citing it | Download |
|---|---|---|---|
| Consumer prices for motor vehicle insurance, repair and all items, January 2020 to September 2026 | US city average, CPI-U, not seasonally adjusted, monthly; October and November 2025 not published for insurance (2025 lapse in appropriations) | 1 | CPI series (CSV) |
| Vehicle insurance spending as a share of pre-tax income, by income fifth, 2025 | All US consumer units and each fifth of income before taxes, Consumer Expenditure Survey 2025 | 0 | Share of income (CSV) Deductible worked example (CSV) |
How to tell it worked: three checks at renewal
The new declarations page matches the old one line by line, apart from the deductibles you chose to change. Same liability limits, same uninsured motorist cover, same drivers and cars.
The saving clears the expected cost. For each deductible you raised, the yearly saving beats the claim rate times the extra (about $20 per coverage per $500 at 2024 rates).
The cash is in place. The new deductible, for example $1,000, sits in savings you could spend within 7 days, and the next renewal date is in your calendar 30 days ahead so the check repeats every year.
When it fails: four ways a cheaper policy costs more
The quote bought less cover. A lower price on lower limits, a missing driver or a dropped uninsured motorist line is not a saving. A claim is where the difference shows up.
Credit rules change by state. Where state law allows it, insurers can price on a credit-based insurance score, so improving credit can lower a quote. The NAIC’s topic page lists California, Hawaii, Maryland, Massachusetts, Michigan, Nevada, Oregon and Utah as states that ban that use, and in those states this lever does little.
Telematics works both ways. A driving-data program can lower the price of a smooth, low-mileage driver and can raise it for hard braking or late-night miles, depending on the insurer’s terms. Read whether the program can surcharge before you enroll.
A financed or leased car cannot drop cover. The lender or lessor requires collision and comprehensive until the loan is paid, so the old-car step applies only to a car you own outright.
Questions drivers ask about lowering the bill
Why did my car insurance go up when prices are falling?
The BLS index is an average across insurers and drivers. Your own price also moves with a claim, a ticket, a new driver, a new car or your insurer’s own rate filing, which is why a fresh quote is the only way to see what the market charges you today.
Is it worth raising my deductible to $1,000?
On 2024 claim rates it is when the yearly saving is more than about $40.55 for collision and comprehensive together and you hold the $1,000 in cash. Below that saving the expected cost wins.
Should I drop full coverage on an old car?
Divide the car’s value minus the deductible by what collision and comprehensive cost each year. A small answer, a few years of premium, means you are paying a lot for a check that can never be large.
How often should I shop for car insurance?
Before every renewal, and after any change that resets your price: a move, a new car, a new driver or a cleared ticket.
Related: the rest of the household insurance math
The deductible you choose only works with the cash behind it, which is what an emergency fund is for. The price indexes in the chart are explained on the consumer price index, and fitting the premium into a monthly plan is covered in budgeting. If others depend on your income, sizing the policy that protects them is on how much life insurance you need. The same deductible math for a house, with its percentage storm deductibles, is on how to lower home insurance costs, and a renter can start with how to choose renters insurance.
This page is educational, not financial advice. Test every idea on your own charts before risking money.