7 Ways to Cut Your Car Insurance

Let's say you live in Michigan, where the typical household shells out a whopping 8 percent of its annual income on car insurance. Or maybe you live someplace where the rates are cheaper-Colorado, say, or Massachusetts-but you'd like to save some cash. Is there any way to reduce your yearly payments?

Absolutely, says John Egan, the managing editor of CarInsuranceQuotes.com, which recently released a state-by-state breakdown of car insurance costs in all 50 states.

"While you're probably not going to move to a new state just because of car insurance costs, the most important thing to remember is that - regardless of where you live - you can get a better deal than the Average Joe by shopping around," says Egan.

Here are some more tips.

1. Don't pay for more coverage than you need.

If your car is over, say, 10 years old, and you're carrying collision and comprehensive coverage, you may want to look at dropping that coverage. State laws don't require that type of coverage, but most states do require basic liability coverage. You may cut your premium by 20 percent or more by doing this.

2. Bundle your policies.

Many insurers offer discounts if you buy at least two policies from them. A typical combination is car and home insurance policies. Discounts can be substantial. For instance, Nationwide customers in some states receive as much as a 25 percent discount for bundling.

3. Ask for discounts.

You may be eligible for discounts based on age, driving record, memberships or other considerations. For example, drivers who are 55 and older typically qualify for a senior discount. If your household includes teen drivers, they may qualify for "good student" discounts. Online defensive driver courses may reduce your premium too.

4. Ensure your rates are based on accurate information.

Your car insurance company will determine your rates based on factors such as your age, driving record, geographic location and driving habits. But if something has changed that could reduce your rates, you'll want to make sure your car insurance company knows about it.

You may be eligible for a lower rate if you've recently modified your driving habits. Example: You now work from home rather than at an office and are driving far fewer miles each week.

5. Shop around for a better deal.

If you think you can get better coverage for the same amount or less with another insurance company, obtain quotes online and talk with several insurers. Many consumers fail to look around for lower car insurance rates - and could be paying higher premiums as a result. If you're displeased with your current insurer, tell the company that you're considering a switch. The insurer may want to give you a price break to hang on to your business.

6. Guard Your Driving Record.

Points on your license mean higher insurance rates. It's worth your while to go to court to get points reduced on infractions. In addition, many states allow you and drivers in your family to complete courses to reduce those points.

7. Raise Your Deductibles.

Deductibles as low $100 on your collision or comprehensive insurance raise your premium. Consider a $500 or $1,000 deductible-that's the amount you must pay when there's claim-and you may save hundreds.