Quick answer: Most Americans overpay because they never shop their policies. The four changes that save the most money without cutting protection are: raising your deductible to an amount you could actually cover in an emergency, bundling home and auto with one insurer, re-shopping every renewal rather than staying loyal, and removing collision and comprehensive from an older car. How much that adds up to depends on your insurer, your state and your claims history, so treat any single dollar figure with suspicion. The Insurance Information Institute puts the individual discounts at 5 to 15 percent for bundling, up to 25 percent on a home policy for a higher deductible, and 40 percent or more on auto collision and comprehensive cover for a $1,000 deductible. What you should never do is lower your liability limits to save a few dollars a month.
Where the savings actually come from
| Change | Typical saving | Risk it adds |
|---|---|---|
| Raise auto deductible from $500 to $1,000 | Up to 40% or more on collision and comprehensive cover, per the III | You pay $500 more if you claim |
| Raise home deductible from $500 to $1,000–$2,500 | Up to 25%, per the III | Same principle, larger amount |
| Bundle home and auto | 5% to 15%, per the III | None, but check the combined price against two separate best quotes |
| Re-shop at every renewal | Varies widely; often hundreds | None |
| Drop collision and comprehensive on an old car | Varies with the car’s premium; the III advises dropping it once the car is worth less than 10 times the annual premium | You self-insure the car |
| Usage-based or telematics programme | Up to 30% | Your driving is monitored |
| Pay annually instead of monthly | 5%–10% | Requires the cash upfront |
| Improve credit-based insurance score | Varies; can be large | None, takes time |
The deductible decision, done properly
A deductible is a bet: you accept a larger cost if you claim, in exchange for a lower premium every year. The maths is simple. As a worked example rather than a quoted rate: if raising your deductible from $500 to $1,000 saved you $180 a year, you would be ahead after roughly three claim-free years, and most drivers go far longer than that between claims.
The rule that keeps this safe: never set a deductible higher than the amount you could withdraw today without borrowing. A $2,500 deductible is only a saving if you actually have $2,500 available.
Never cut these
- Liability limits. This is what protects your savings, home and future earnings if you seriously injure someone. State minimums are typically far below the cost of a single serious injury claim. Most advisers suggest limits well above the minimum, and the extra cost is usually modest.
- Uninsured and underinsured motorist coverage. Cheap, and it covers you when the at-fault driver has nothing.
- Dwelling coverage below rebuild cost. Insuring your house for its market value rather than its rebuild cost leaves you short exactly when it matters. Construction costs have risen sharply; check the figure annually.
- Flood and earthquake, if you are in a risk area. Standard homeowners policies exclude both, which people discover after the event.
Discounts most people never claim
- Multi-policy (bundling), multi-vehicle, and multi-driver
- Good student, for young drivers with a B average or better
- Defensive driving or mature driver course
- Low annual mileage, particularly after retirement or a move to remote work
- Vehicle safety features: automatic emergency braking, anti-theft systems
- Home security system, monitored alarm, smart water leak detectors
- New or recently renovated roof
- Professional or alumni association membership
- Paperless billing and autopay
- Loyalty and claim-free discounts, which are rarely applied automatically
Ask your insurer to run a full discount review annually. Many are applied only on request, and eligibility changes when your circumstances do.
How to re-shop without wasting a weekend
- Pull your current declarations page, which lists your exact coverages and limits.
- Get quotes from at least five insurers using those identical limits, so you are comparing like with like.
- Include regional insurers and any available through an employer or association, not just the national advertisers.
- Ask each about discounts you might qualify for before accepting the quote.
- Check the insurer’s complaint record with your state insurance department, not just the price.
- If a competitor is cheaper, tell your current insurer before switching; retention offers are common.
Switching does not penalise you, and there is generally no fee to cancel mid-term; you receive a pro-rata refund.
The credit factor
In most states, insurers use a credit-based insurance score as a rating factor, and a weak score can raise premiums substantially. A few states prohibit it. Improving your credit therefore lowers insurance costs as well as borrowing costs; see our guide on protecting your credit file and on where to keep your emergency fund, which is what makes a higher deductible affordable.
Frequently asked questions
How often should I shop for insurance?
At every renewal, so every six or twelve months. Rates change constantly and the cheapest insurer for you rarely stays the cheapest.
Does filing a claim raise my rate?
Usually yes, for three to five years, and sometimes more than the claim was worth. For small damage close to your deductible, paying out of pocket is often cheaper overall.
Is the cheapest insurer a bad idea?
Not necessarily, but check complaint ratios and claim-handling reputation. A low premium is worth little if claims are slow or contested.
Should I drop collision on my old car?
Compare the annual premium for collision and comprehensive against the car’s value. If it exceeds roughly 10% of the value, dropping it is often rational, provided you could replace the car yourself.
Last updated September 2026. Savings ranges are typical, not guarantees, and vary by state, insurer and profile. This is general information, not insurance advice. Your state insurance department offers free consumer help.
Sources
Discount percentages in this article come from the Insurance Information Institute, the US insurance industry’s research body: Nine Ways to Lower Your Auto Insurance Costs and 12 Ways to Lower Your Homeowners Insurance Costs. Actual discounts vary by insurer, state and individual circumstances — confirm any figure with your own insurer before acting on it.
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