Auto insurance shouldn’t drain your bank account. Here’s how to save money while getting the coverage you need. Car insurance is a must if you own a vehicle, and you’ll be glad you have it after an accident. But you don’t want to spend a penny more than necessary on a policy, and you shouldn’t have to. By knowing exactly what affects your auto insurance rates, you can figure out how to save on car insurance and get good coverage without breaking the bank.

Car insurance rates vary by hundreds of dollars a year among insurers for the same levels of coverage, so it’s important to check rates.

A good driver with good credit can save more than $100 a month, on average, by finding the cheapest insurer instead of the most expensive in the state.

Savings can be even bigger for drivers with poor credit or a recent at-fault accident. Those drivers might lower their car insurance costs by more than $200 a month, on average, by picking the cheapest insurer instead of the costliest.

On average, rates from a state’s cheapest widely available insurer are less than half the rates from the priciest one, according to our analysis, which compared sample rates for 40-year-old drivers buying a full-coverage policy.

But the company with the lowest rates in one state can be the most expensive in another. And the cheapest company for a good driver with good credit might not be cheapest for someone with poor credit or a recent accident.

Every insurance company offers special ways to lower your car insurance premium. To make sure you’re getting all the discounts you’re entitled to, ask your agent to review your possible savings.

Here are some discounts offered by the four largest car insurance companies. But remember to compare quotes based on your own situation. Just because an insurer offers many discounts doesn’t mean it offers the lowest overall price.

• ·         Allstate offers discounts based on vehicles, coverage options, lifestyle and driving. They range from a 5% discount for setting up automatic premium payments to a 35% good student discount. In some states, the company also offers Drive wise, a usage-based insurance program, and Mile wise, a pay-per-mile program. Some drivers could save up to 39% by allowing Allstate to track their driving through these programs, the company says.
• ·         Geico offers discounts for vehicle equipment, driving history and habits, driver training, customer loyalty and membership in one of 500 “affinity” groups, such as organizations and employers. In addition, military members may be eligible for up to a 15% discount, and federal government employees and retirees may be eligible for up to an 8% discount.
• ·         Progressive offers discounts for owning your home, starting your quote online and signing documents online when purchasing coverage. The company also offers Snapshot, a usage-based program that tracks mileage and driving habits. Most customers earn a discount with Snapshot, but some customers may pay higher rates at renewal time if their driving data reveal risky habits.
• ·         State Farm offers discounts for students, vehicle-safety equipment and safe driving, among others. The company’s Drive Safe & Save usage-based program gives customers an initial 5% discount for signing up. Safe drivers who log relatively few miles can save as much as 50% on car insurance, the company says. The program and discounts vary by state.

Traffic tickets and accidents drive up car insurance premiums. If you get a ticket, you may be offered the opportunity to go to traffic school to get it dismissed or reduce the number of violation points that go on your driving record. If you can keep the violation off your driving record, the time spent in class could save you hundreds of dollars over several years.

4. Drop car insurance you don’t need

If you’ve got a clunker, it might be time to drop collision and comprehensive insurance, which pay for damage to your vehicle. Collision insurance pays to repair damage to your car if it crashes into another vehicle or object, or flips over. Comprehensive insurance pays if your car is stolen or damaged by storms, vandalism or by hitting an animal such as a deer.

If your car is worth less than your deductible plus the amount you pay for annual coverage, then it’s time to drop them. Collision and comprehensive never pay out more than the car is worth. Evaluate whether it’s worth paying for coverage that may reimburse you only a small amount, if anything.

If you drop collision and comprehensive, set aside the money you would have spent in a fund for car repairs or a down payment on a newer car once your clunker conks out.

5. Drive a car that’s cheap to insure

Before you buy your next car, compare car insurance rates for the models you’re considering. The vehicle you drive affects your car insurance premium, particularly if you buy collision and comprehensive coverage. Safe and moderately priced vehicles such as minivans and small SUVs tend to be cheaper to insure than flashy and expensive cars.

6. Increase the deductible

You can save money on collision and comprehensive by raising the deductible, the amount the insurance company doesn’t cover when paying for repairs. For example if the repair bill is $2,000, and you have a $500 deductible, the insurer will pay out $1,500. Savings vary by company, so compare quotes with different deductible levels before you decide.

7. Improve your credit

Your credit is a big factor when car insurance companies calculate how much to charge. It can count even more than your driving record in some cases. (This is not true in California, Hawaii and Massachusetts, where insurers aren’t allowed to consider credit when setting rates.)

• ·         Make all your loan and credit card payments on time.
• ·         Keep credit card balances well below your credit limits.
• ·         Open new credit accounts only when necessary. Applying for too many credit cards can hurt your score.

8. Don’t drive a lot? Consider usage-based insurance

If you don’t drive much, consider an insurer that offers a usage-based or pay-per-mile driving program. These policies base rates in part on how much you drive and, in some cases, how well you drive. To participate, you install a small device in your car that transmits data to the insurance company. You score a discount for low mileage and, with many programs, safe driving habits.