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Insurance

Car insurance: Lower your rates by avoiding these fees and add-ons

Find out what unnecessary charges might be hiding in your car insurance premiums.

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Car insurance is a big expense these days: Drivers paid an average of $212 a month for full coverage in February 2024, according to data compiled by Bankrate, a 26% increase from 2023.

Savvy shoppers know you can save money by comparing rates, bundling home and auto insurance and maintaining a good credit score. But you can also trim your premiums by eliminating unnecessary fees and options.

You might be paying a surcharge and not even realize it.

Hidden car insurance fees

Installment payment fee

Many car insurance companies charge a fee to pay your premiums in monthly installments, rather than in one annual lump sum. States don't regulate these fees, so they can be significantly higher than the cost insurers pay to process your payments.

Your carrier might offer a discount for paying your yearly premium up front: Progressive's paid-in-full discount is worth up to 15% off, one of the best in the market.

Progressive offers more than a dozen other discounts, including for homeowners and safe drivers. Policyholders who qualify for the multiple-car discount average a saving of 12% off their premiums.

Progressive Auto Insurance

  • Cost

    The best way to estimate your costs is to request a quote

  • App available

    Yes

  • Policy highlights

    Progressive offers a number of lines of insurance to allow for bundling, and convenient tools to help you keep your coverage in your budget.

  • Terms apply.

Auto-Owners will also discount your rate if you pay in full upfront. The Michigan-based insurer is known for its affordable rates, especially for minimum coverage policies and for specialty vehicles, including classic cars and vehicles modified for accessibility.

Auto-Owners Insurance

  • Cost

    The best way to estimate your costs is to request a quote

  • App available

    Yes

  • Policy highlights

    Auto-Owners offers affordable premiums with high customer satisfaction ratings. There are 12 different types of discounts available, as well as various other types of insurance besides auto.

Terms apply.

It may not be financially feasible for you to pay your annual premium all in one go. If so, a high-yield savings account (HYSA) could help you earn the funds faster: Marcus by Goldman Sachs has a HYSA with an APY of 4.40% with no monthly fees or minimum balance requirements.

Marcus by Goldman Sachs High Yield Online Savings

Goldman Sachs Bank USA is a Member FDIC.
  • Annual Percentage Yield (APY)

    4.40% APY

  • Minimum balance

    None

  • Monthly fee

    None

  • Maximum transactions

    At this time, there is no limit to the number of withdrawals or transfers you can make from your online savings account

  • Excessive transactions fee

    None

  • Overdraft fee

    None

  • Offer checking account?

    No

  • Offer ATM card?

    No

Terms apply.

Credit card fee

Paying for your car insurance with a credit card might earn you rewards like cash back or travel points. However, some companies add a convenience fee of up to 4% for charging your premiums. Based on the average monthly premium in February 2023, that would work out to $102 a year.

While some of the best rewards cards can earn 2% cash back, you'd still be in the red.

Some companies will waive this fee if you're paying in full, but if you're paying month-by-month, consider linking your checking account and setting up an automatic electronic funds transfer instead of paying with a credit card.

Roadside assistance

Insurance companies don't charge a lot for roadside assistance — Geico offers it for as little as $14 a year. However, if you already get roadside assistance elsewhere, why pay twice?

The Chase Sapphire Reserve® comes with roadside protection, which covers $50 service calls four times a year through a partnership with Cross Country Motor Club. Available 24 hours a day, it includes towing, jumpstarts, lockouts and fuel delivery.

The card's $550 annual fee is further offset by an annual $300 travel credit and unlimited 5X points on flights and 10X points on hotels and car rentals made through Chase Travel.

Chase Sapphire Reserve®

On Chase’s secure site
  • Rewards

    Earn 5X total points on flights and 10X total points on hotels and car rentals when you purchase travel through Chase Travel℠ immediately after the first $300 is spent on travel purchases annually. Earn 3X points on other travel and dining & 1 point per $1 spent on all other purchases plus, 10X points on Lyft rides through March 2025

  • Welcome bonus

    Earn 75,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,125 toward travel when you redeem through Chase Travel℠.

  • Annual fee

    $550

  • Intro APR

    None

  • Regular APR

    22.49% - 29.49% variable

  • Balance transfer fee

    5%, minimum $5

  • Foreign transaction fee

    None

  • Credit needed

    Excellent

  • Terms apply.

Pros

  • $300 annual travel credit for travel purchases
  • Global Entry or TSA PreCheck application fee credit up to $100 every four years
  • Priority Pass™ Select lounge access at 1,000+ VIP lounges in over 500 cities worldwide
  • Points are worth 50% more when redeemed for travel via Chase Travel℠
  • Special benefits at The Luxury Hotel & Resort Collection
  • Complimentary year of Lyft Pink membership

Cons

  • High annual fee, but it can be offset by taking advantage of all the card’s perks
  • No introductory APR
  • Estimated rewards earned after 1 year: $1,469
  • Estimated rewards earned after 5 years: $3,346

Rewards totals incorporate the points earned from the welcome bonus

Most auto manufacturers offer some kind of assistance if you lock yourself out of the car, run out of gas or get a flat, according to Edmunds. Coverage is usually capped at a certain number of miles or years, and each manufacturer's offerings are different, so review your owner's manual or ask the dealer.

Broker fee

If you work with an insurance broker to find an auto policy, you'll likely pay them a commission. You may decide their professional expertise is worth the cost, but you can also gather quotes on your own or with no-cost aggregate sites like Insurify and The Zebra.

Gap insurance

Since cars can depreciate quickly in their first few years, the amount you owe on a car loan may be more than the automobile is worth. Gap insurance can cover the difference if the vehicle is totaled or stolen.

If you lease a new car, you may be required to have gap insurance — in fact, it may be included in your lease. If it is, there's no need to buy gap coverage twice.

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Bottom line

If you want to lower your auto insurance premiums, review your statement and see if there are fees or services you can eliminate. It's not a replacement for comparison shopping, but removing gratuitous charges can add up to some real savings.

Why trust CNBC Select?

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every insurance article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of insurance products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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