Finding Affordable Auto Insurance: Tips And Tricks

Finding cheap auto insurance can be a challenge, but there are several ways to get more affordable coverage. The cost of auto insurance depends on a number of factors, including your age, address, the type of car you drive, and your driving history.

- Shop around and compare quotes from multiple companies

- Improve your credit score

- Choose a cheaper vehicle to insure

- Increase your deductible

- Skip comprehensive and collision coverage if you have an older car

- Claim car insurance discounts, such as for a clean driving record or being a good student

- Choose a company with strong customer service and efficient claims processing

- Take advantage of bundling and discount opportunities

- Choose a usage-based insurance model that tracks your driving behaviour

Compare quotes from multiple companies

Comparing quotes from multiple companies is a crucial step in finding cheap auto insurance. Each company uses its own methodology to determine rates, so comparing quotes will help you find the best coverage at the lowest price. Here are some tips to help you compare quotes effectively:

• Use a reputable insurance comparison website, such as The Zebra, NerdWallet, Compare.com, Insurify, or Gabi. These sites allow you to input your information once and receive quotes from multiple companies.
• Make sure you have the necessary information on hand before starting the comparison process. This includes personal information (name, address, date of birth, etc.), driving history, vehicle information, and current or previous insurance details.
• When comparing quotes, ensure that each one includes the same levels of liability coverage, deductibles, and drivers. This will enable you to make an accurate comparison.
• Consider using an independent insurance agent or broker, who can help you navigate the process and find the best coverage for your needs.
• Remember that price is not the only factor to consider. Also, look at the company's customer service reviews, complaint records, and financial strength to ensure they will be reliable in the event of a claim.
• Don't be afraid to ask questions and negotiate. Insurance can be complex, and it's important to understand exactly what is and isn't covered. Don't hesitate to reach out to the company or agent to clarify any details.
• Take advantage of discounts. Many insurance companies offer discounts for things like bundling policies, having a clean driving record, or being a good student. Don't forget to factor these discounts into your comparison.
• Compare quotes regularly. Insurance rates can change over time, so it's a good idea to shop around and compare quotes every six months to ensure you're getting the best deal.

Understand the factors that affect insurance premiums

Several factors determine the cost of your auto insurance premium. Here are the key factors that influence the price of your auto insurance:

• Driving Record: A clean driving record helps lower your premium. Accidents, serious traffic violations, or a history of claims will increase your premium. New drivers without an insurance track record may also face higher rates.
• Usage: The more you drive, the higher the chances of accidents. Therefore, those who use their cars for work or long commutes will have higher premiums. Occasional or pleasure use drivers will pay less.
• Location: Urban areas tend to have higher insurance prices due to higher rates of vandalism, theft, and accidents. The specific location where you park your car, such as a secure garage, can also impact the cost.
• Age: Mature and experienced drivers often have lower premiums as teenagers and young people below 25 are considered higher-risk.
• Gender: Women generally have fewer and less severe accidents and DUIs, leading to lower premiums compared to men.
• Vehicle Type: The cost of insuring a car depends on its value, repair costs, engine size, safety record, and theft likelihood. Vehicles with better safety equipment may qualify for premium discounts. Additionally, insurers consider the potential damage a vehicle can inflict on another car in an accident.
• Credit Score: A good credit score can lead to lower insurance premiums as it indicates a lower likelihood of filing claims.
• Insurance Coverage: The basic insurance limits, deductible amount, and policy options (e.g., collision coverage) you choose will impact the overall premium.

Consider your liability-coverage limits

When considering liability-coverage limits, it is important to understand the implications of insufficient coverage. While liability insurance is legally mandated in most states, the minimum coverage requirements vary. Typically, liability insurance includes bodily injury liability coverage and property damage liability coverage. However, it is advisable to opt for higher coverage limits to protect your assets adequately.

Understanding Liability Coverage

Liability coverage is designed to protect you financially if you are at fault in an accident. It covers the injuries and property damage you cause to others. The coverage limits refer to the maximum amount your insurance provider will pay for these expenses. Therefore, selecting appropriate limits is crucial to ensure you are not left with significant out-of-pocket expenses.

State Requirements

Across the United States, the average liability limits are around $90,000, with approximately $18,000 for property damage, $26,000 for bodily injury per person, and $52,000 per accident. However, it's essential to check your specific state's requirements, as they can vary widely. While some states mandate higher limits, others may require lower amounts. Additionally, certain states may also mandate additional coverages, such as personal injury protection.

Protecting Your Assets

When determining your liability-coverage limits, consider your net worth and the value of your assets. Ideally, your total bodily injury limit should be higher than your net worth to ensure sufficient coverage in the event of a severe accident. For example, if your net worth is $90,000, consider a policy with bodily injury limits of $100,000 per person and $300,000 per accident. This way, you can be confident that your insurance will cover any potential claims arising from an accident.

Understanding Property Damage Coverage

Similar to bodily injury coverage, your property damage liability limit should also reflect what you have at stake. If your net worth exceeds the property damage coverage limit, you may be at risk if you cause extensive damage in an accident. Therefore, it is advisable to choose a limit that adequately covers the value of your assets.

Considering Additional Coverages

While liability coverage is essential, it is crucial to remember that it does not cover your own injuries, deaths, or property damage in at-fault accidents. To protect yourself in these situations, consider adding collision coverage and medical payments coverage or personal injury protection (PIP). Additionally, if you live in a state with a high percentage of uninsured drivers, consider uninsured motorist coverage to protect yourself if you are hit by an uninsured driver.

Cost Implications

Increasing your liability limits will likely result in higher insurance costs. However, it is essential to weigh the potential savings against the risk of having insufficient coverage. By opting for higher limits, you reduce the likelihood of having to pay a substantial amount out of pocket if you are involved in a severe accident.

Increase your deductible

Raising your deductible is one way to lower your auto insurance costs. A deductible is the amount of money you pay out of pocket every time you file a claim against your car insurance policy. For example, if your vehicle incurs $1,500 of damage, and your deductible is $500, you'll pay that amount, and your insurer will cover the remaining $1,000.

The benefit of raising your deductible is that it will generally result in lower premium costs. If you don't drive that often and feel you're less likely to get into accidents or sustain vehicle damage, then a higher deductible could be a good idea. However, it's important to make sure you have enough money in the bank to absorb those higher costs. Take a look at your emergency fund before moving forward with a change to your auto insurance.

According to a Forbes Advisor analysis, drivers who increase their deductibles can save between 7% and 28% a year on average. The biggest savings are usually available to drivers who make a substantial change to their deductible, such as increasing it from $250 to $2,000.

Consider third-party ratings

Third-party ratings can be a helpful indicator of the quality of an auto insurance company and its policies. When considering third-party ratings, it is important to look at various factors such as customer satisfaction, financial strength, and complaint ratings. Here are some paragraphs to consider:

Customer Satisfaction Ratings:

When considering third-party ratings, it is essential to look at customer satisfaction scores. These ratings give you an insight into how satisfied customers are with their auto insurance provider. Look for companies with high customer satisfaction ratings, as this indicates a history of positive experiences with policy pricing, claims handling, and customer service. Websites like J.D. Power and AM Best provide customer satisfaction ratings for many insurance companies.

Financial Strength Ratings:

The financial strength of an auto insurance company is another crucial factor to consider. You want to ensure that the company is financially stable and able to pay out claims. AM Best, Moody's, and Standard & Poor's are independent credit rating agencies that assess the financial strength of insurance companies. They provide ratings based on the company's ability to meet its financial obligations and claims payouts. Choosing a company with a strong financial strength rating can give you peace of mind about their stability and reliability.

Complaint Ratings:

Third-party complaint ratings can also provide valuable insights. Organizations like the National Association of Insurance Commissioners (NAIC) and the Better Business Bureau (BBB) track customer complaints against insurance companies. These ratings can help you identify companies with a pattern of customer dissatisfaction or unfair claims handling practices. A high volume of complaints in comparison to the company's size and market share could be a red flag.

Awards and Accreditations:

Keep an eye out for awards and accreditations from reputable third-party organizations. For example, some auto insurance companies may be recognized for their exceptional customer service, innovative use of technology, or commitment to sustainability. Look for companies that have won awards or been accredited by trusted industry bodies, as this can be a sign of their quality and reliability.

User Reviews:

In addition to formal ratings, consider reading user reviews on third-party websites. Websites like Trustpilot, Yelp, or Google Reviews can provide first-hand accounts from customers about their experiences with specific auto insurance companies. While individual experiences may vary, reading a variety of reviews can give you a sense of the company's overall reputation and common pain points.

Remember, when considering third-party ratings, it is essential to look at multiple sources and factors. By doing so, you can make a more informed decision about which auto insurance company best meets your needs and expectations.

Frequently asked questions