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The average annual car insurance premium was $3,017 in 2023, and that number will probably be higher in 2024. Things like maintaining a clean driving record and shopping around can help keep costs down, but that’s not always enough.

Fortunately, there’s another way to keep car insurance premiums manageable. It works with all insurance carriers and it only takes about 10-15 minutes. But it might not be the right move for everyone.

Paying now vs. paying later

Drivers face two main costs when taking out an auto insurance policy. The premiums are the payments drivers pay to keep their policy in force. Drivers can pay monthly or for the full policy period — usually six months — upfront. Paying in full often results in a small discount. Drivers have to pay their premiums regardless of whether they file any claims with their insurance during the policy period.

When drivers need to file a claim, they’ll also pay a deductible. This is a set dollar amount that the driver determines when purchasing their policy. Options usually range from about $100 to $2,000.

Low deductibles seem appealing because they reduce out-of-pocket costs after an accident, but this increases the risk that insurers will have to pay a larger sum to cover the claim. So they hedge against this by charging higher premiums.

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This makes going with a higher deductible a fast and effective way to score cheaper car insurance. The Insurance Information Institute found that raising a policy’s deductible from $200 to $500 reduced premiums by 15% to 30%. And signing on for a $1,000 deductible reduced premiums by 40% or more. To put this in perspective, a 40% reduction would drop the $251 average monthly premium to $151.

Progressive reported similar findings in its own research. Interestingly, it found that the premium reduction was greater for lower-level increases. For example, raising the deductible from $100 to $250 reduced premiums by 29%, while raising the deductible from $1,000 to $2,000 only dropped rates by 17%. But either way, it’s still a substantial drop.

How to raise a car insurance deductible

Raising a policy’s deductible is pretty straightforward. But first, weigh the financial consequences to decide if it’s the right move. Drivers who cannot afford the higher deductible could find themselves in debt when they need to file a claim. It might be possible to avoid this by saving for the deductible in an emergency fund. But if this isn’t feasible, it’s probably safer to stick with a lower deductible.

Drivers who want a higher deductible just have to contact their insurance company and request the change. Many companies also enable drivers to make this change through their online account or mobile app.

It’s worth contacting the insurer to learn when this change will take effect if this isn’t clearly stated in its online account. It might not be until the next month’s payment or until the next policy period. Any claims filed before this change takes hold will have the old deductible.

Drivers should be able to see the effect this change will have on their premiums right away. If it doesn’t save that much, it’s worth shopping around with other car insurance companies. Every insurer weighs risk differently and some reward deductible increases more than others.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Kailey Hagen has no position in any of the stocks mentioned. The Motley Fool recommends Progressive. The Motley Fool has a disclosure policy.