Auto insurance companies determine rates in different ways. However if your policy costs too much, there are many ways to reduce your auto insurance premiums.

1. Comparison shop. Auto insurance rates vary from company to company. So, ask friends and relatives for their recommendations. Get quotes from different types of insurance companies. Use consumer information provided by your state's insurance department. These guides tell you what coverages you need and provide comparisons of prices charged by major insurers. Before dealing with any insurance company, check its financial responsibility through independent rating companies and by consulting consumer magazines.

2. Increase of your deductible. Deductible is the amount of money you’ll pay in accident cases and the insurance company will pay the rest up to your coverage limit. The more you agree to cover yourself, the lower rates will be.

3. Buy a “low profile” car. Before buying a new car or used one, check its theft rates and repair cost. The higher they are, the higher your insurance rates will be.

4. If your car worth less than 2,000$, you may drop collision and comprehensive coverage. Because you'll probably pay more for the coverage than you would ever collect on a claim.

5. If you and your family members are covered by health insurance, you don’t need to buy the PIP coverage.

6. You can save service charges by paying premiums in one lump sum rather than monthly payments.

7. Include in your policy only necessary drivers. A lot of people on the policy will raise your premiums.

Also all auto insurance companies offer discounts for good drivers and those who take care of safety measures. Discounts vary depending on your insurer and you can lower your rates from 5 to 35 percent. The most frequent reasons to give discounts are the following:
- Safety features - airbag, anti-lock brakes, automatic seatbelts and other passive restraint systems.
- Anti-theft devices - alarms, ignition and fuel cut-off systems, hood and wheel locking devices, window identification systems, electronic locks and others.
- Buying different types of policies from the same insurer.
- Insuring more than one car with the same insurer.
- If you are insuring your car with the same company for a certain number of years.
- Formal agreements not to drink and drive.
- Low-mileage or restricted mileage. This discount for those who drive a lower than average number of miles per year. But you'll have to provide accurate mileage information each year. It can also apply to drivers who carpool to work or use public transportation to commute to work.
- Getting insurance through a group plan from employers, or through professional, business, alumni groups and other associations.
- Good credit rating. Check your credit history and correct inaccuracies. If your credit reports contain errors or inaccurate information, you may end up paying more for insurance than you need to.
- Absence of any accidents or moving violations for a number of years.
- Completion of driver's education courses for teenagers.
- Completion of defensive driving or accident prevention courses for adults.
- If you are over 50 or in some cases 55 and retired.
- If you are a nonsmoker.
- If there are student drivers with good grades or college students away from home on the policy.
- Other discounts.