Quickly Lower Your Car Insurance Premium the Dave Ramsey Way — What He Recommends

Car insurance concept.
Guzaliia Filimonova / Getty Images/iStockphoto

Need a surefire way to reduce the cost of your car insurance? Dave Ramsey recommended increasing your deductible, among other avenues. But, while this method may work for some drivers, it could be financially disastrous for others.

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What Is a Car Insurance Deductible?

Your deductible is your share of your vehicle’s repair costs after an accident. For example: If you must file a claim, and your deductible is $500 — and the body shop’s bill is $3,000 — your insurance company will only pay $2,500. You’re responsible for the remaining $500.

When you increase your deductible, you shift more of the financial responsibility from your insurer to you. Then, because you’re less of a liability to the company, your insurance premium will drop to reflect that.

Should You Increase Your Deductible?

With the average cost of car insurance coming in at just under $1,500 for the year, it’s no wonder drivers want to reduce the expense. However, raising your deductible could backfire on you if you don’t have a healthy cash cushion. If you get into an accident and can’t afford to cover your deductible, you won’t be able to get your car fixed.

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Unless you have a well-stocked emergency fund, you may be better off finding other ways to save money on your car insurance.

Other Ways to Save on Car Insurance

You can use many strategies to make your insurance more affordable. They include, but aren’t limited to:

  • Asking about available discounts. Seniors, students, and other groups may qualify for a lower rate.
  • Bundling insurance policies. The insurer may give you a deal if you insure multiple assets simultaneously.
  • Shopping around. It’s worth taking time to compare prices from several insurance companies.
  • Taking a defensive driving course. Some insurers will give you a discount if you can prove you took and passed the class.
  • Switching to a lower-cost insurer. Check out the cheapest car insurance companies.

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More: 10 Genius Things Dave Ramsey Says To Do With Your Money

Remember: The best way to keep your insurance rate down is to be a careful driver. A clean driving record over the long haul shows insurers that you’re low-risk — and you’ll be rewarded for that.

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About the Author

Laura has been a freelance writer since 2018. Her work primarily focuses on managing your money, navigating your career, and running a successful business. She earned her MBA and a Bachelor's degree in Psychology during her previous career in human resources. She is also a business coach to new and aspiring freelancers and runs an online resource hub for them called Before You Go Freelance. In addition, she helps other writers get clear on their message, plan their content, and produce compelling written works.
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