Auto Insurance: Find The Cheapest

Finding the cheapest auto insurance can be a challenge, but it's not impossible. The cost of car insurance is on the rise, and rates vary depending on factors such as age, location, driving history, and coverage level. To get the best deal, it's important to shop around and compare quotes from multiple insurance companies, both large and small. Increasing your deductible, improving your credit score, and taking advantage of discounts can also help lower your premium. It's worth noting that simply choosing the cheapest option may not be the best idea, as it could result in higher out-of-pocket costs and inadequate coverage.

Compare quotes from multiple insurers

Comparing quotes from multiple insurers is a great way to find the cheapest auto insurance. Here are some tips to help you through the process:

Understand the Factors Affecting Your Insurance Rate

Before you start comparing quotes, it's important to understand the factors that can influence your insurance rate. These include your age, gender, marital status, driving history, accident or violation history, credit score, vehicle information (make, model, year, mileage), and location. By understanding these factors, you can make more informed decisions when comparing quotes.

Gather Your Information

When comparing quotes, you'll need to provide personal information such as your name, address, date of birth, occupation, driver's license, and marital status. You will also need to provide details about your vehicle, including its make, model, mileage, and vehicle identification number (VIN). Additionally, have information about your driving history, such as any claims, violations, or tickets you've had, as well as the name of your current or previous insurer.

Use Comparison Tools and Websites

Take advantage of comparison tools and websites that allow you to compare rates from multiple insurers at once. These tools will help you efficiently gather and analyze quotes from different companies. For example, Progressive's AutoQuote Explorer® tool allows you to compare your quoted rate with rates from other companies. Websites like The Zebra and NerdWallet also offer free quote comparison services, helping you find the best value for your needs.

Ensure Consistent Coverage Levels

When comparing quotes, make sure you are maintaining consistent coverage levels across all insurers. This includes liability coverage, collision coverage, and comprehensive coverage. By keeping the coverage levels the same, you can accurately compare the prices and make an informed decision.

Consider the Reputation and Customer Service of Insurers

In addition to price, consider the reputation and customer service of the insurance companies you are comparing. Check customer reviews, complaint records, and financial strength ratings to get an idea of the quality of their services. Choosing an insurer with reliable customer service and a strong financial standing can make a significant difference in your overall experience.

Look for Discount Opportunities

When comparing quotes, inquire about potential discounts offered by each insurer. Many companies provide discounts for various factors, such as being a good student, having a clean driving record, bundling policies, or taking advantage of loyalty programs. By exploring these opportunities, you may be able to further reduce your insurance costs.

Get Quotes Regularly

Don't just compare quotes when you're initially purchasing insurance. It's a good idea to periodically review and compare quotes from different insurers. Insurance rates can change over time, and you may find that you can get a better deal by switching providers. Additionally, your personal circumstances may change, and you want to ensure that you're always getting the most suitable coverage at the best price.

Understand the factors that affect insurance premiums

Several factors affect insurance premiums. Here are some of the key considerations:

Age and Gender

Age is a significant factor in determining insurance premiums. Younger individuals generally pay lower premiums than older adults, as the likelihood of an insurer having to pay out a claim increases with age. Additionally, women tend to have higher life expectancies than men and, therefore, often pay lower premiums.

Health and Family History

Insurers often require access to medical records and may increase premiums for individuals with a history of serious illnesses or medical conditions. Family history, particularly concerning hereditary diseases, can also impact premiums.

Lifestyle Choices

Smoking, due to its associated health risks, can lead to increased premiums. Similarly, engaging in high-risk hobbies or occupations can result in higher rates. These include activities like skydiving and racing and jobs such as logging, piloting, and roofing.

Driving Record and History

For auto insurance, a clean driving record is crucial for obtaining better rates. Accidents, moving violations, and speeding tickets can significantly impact premiums, with surcharges applied for at-fault claims. A good driving record can also make one eligible for safe driver discounts.

Credit Score

A strong credit score demonstrates financial stability and responsibility. Individuals with low credit scores may face higher premiums or even be required to pay the full premium upfront.

Vehicle Type and Usage

The type of vehicle one drives influences insurance rates. Brand-new sports cars or vehicles with extra safety features may have higher premiums due to potential replacement or repair costs. Additionally, insurance companies consider annual mileage, with longer commutes or higher mileage resulting in higher premiums due to increased risk.

Marital Status

Married couples are often considered safer drivers and are, therefore, offered lower rates than single individuals. Married couples can also benefit from multi-car and multi-policy discounts when combining their insurance policies.

Location

Location plays a significant role in determining insurance rates. Insurance companies consider state regulations, population density, accident rates, and insurance claim prevalence in specific areas. Living in a highly populated or metropolitan area typically leads to higher premiums due to increased accident risks.

Insurance History

Insurers view continuous insurance coverage positively, believing that individuals without lapses in coverage are less likely to get into accidents. Maintaining coverage with the same company for an extended period can also lead to loyalty discounts.

Consider your liability-coverage limits

When considering liability-coverage limits, it is important to note that liability insurance is the main type of insurance mandated by law. It covers damage and injuries you cause to others in an accident. The minimum amount of auto insurance you need to buy varies by state, but liability car insurance is the main required coverage in almost every state.

The most common minimum limits for liability are $25,000 per person and $50,000 per accident for bodily injury, and $25,000 for physical damage. However, your state's requirements may differ. For example, in California, the minimum liability insurance requirement is $15,000 for bodily injury to one person, $30,000 for bodily injury to multiple people in a single car accident, and $5,000 for property damage.

While state minimums are a good starting point, they are often insufficient and will not provide coverage for your own car's repair bills. It is recommended to purchase more than the minimum requirements if you want better coverage. A good rule of thumb is to buy enough liability insurance to cover what you could lose in a lawsuit against you if you cause a serious car accident. For instance, in California, a policy with 250/500/100 would be a wiser choice than the state minimum.

In addition to state requirements, your personal financial situation will also determine how much liability insurance you need. It is generally recommended to choose a liability coverage limit that matches or exceeds your total net worth. This ensures that your assets are well-protected if you are legally responsible for someone else's injuries or property damage.

When deciding on liability coverage limits, it is crucial to consider both property damage and bodily injury coverage. Property damage coverage reimburses the other party for car repairs and other property damage you caused in at-fault accidents. On the other hand, bodily injury coverage includes injuries or deaths you caused to another party in a car accident.

While liability coverage is essential, it is important to understand what it does not cover. Liability insurance does not cover your own injuries, deaths, or property damage in at-fault accidents. Additionally, it does not include a deductible, so once a claim is filed and approved, your insurance provider will begin liability payouts immediately. If the costs exceed your policy limit, you will be responsible for the additional expenses.

In conclusion, when considering your liability-coverage limits, it is crucial to review your state's requirements, assess your personal financial situation, and choose a limit that matches or exceeds your total net worth. This will ensure that you have adequate protection in the event of an accident.

Increase your deductible

One way to find cheaper auto insurance is to increase your deductible. A deductible is the amount you pay out of pocket before your insurance policy kicks in. 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.

Raising your deductible could make sense if you can afford to pay a larger sum should you need to get your car repaired. 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. If your emergency savings are strong, then increasing your deductible may be a good move.

However, one of the biggest insurance myths is that raising your deductible will lower your monthly premiums proportionally or evenly. If you raise your deductible by 100% (e.g. from $500 to $1000), your premiums won't automatically halve. The relationship isn't direct or proportional; raising your deductible drastically doesn't necessarily mean your monthly premium will lower drastically.

Before increasing your deductible, you'll want to do some calculations to see how much you'll save versus how much you'll risk by doing so. Take a look at what your current premium and deductible are. Then ask your insurance agent what the premium would be if you raised your deductible to the next level or two. Consider the difference. For example, if you currently have a $500 deductible and a monthly premium of $80, increasing your deductible to $1000 might lower your premium to $72, a saving of $96 per year. It would take almost five years without any auto comprehensive claims to make up the difference in the deductible.

You'll also want to consider how often you would make a claim. If you're financially secure and you don't want to submit a lot of insurance claims, you might choose not to submit a claim for any damages under $500 or $1000. In that case, a higher deductible wouldn't hurt you anyway, because you're only really using your insurance for the “big stuff”. You'll save more per month, and your auto insurance focus is more on major incidents as opposed to the nicks and dings. If you tend to use your auto insurance more frequently, though, a lower deductible might be worth it to you.

Finally, it's worth noting that the savings you'll make by raising your deductible usually aren't enough to outweigh the risk you're assuming. Saving a few dollars per month is not usually worth taking on more responsibility in the case of a costly accident.

Consider skipping comprehensive and collision coverage

Collision and comprehensive insurance are two separate types of coverage that are often sold together. Collision insurance covers repairs or replacements if you collide with something like a car, guardrail, pole, or tree. Comprehensive insurance covers repairs or replacements if your car is stolen or damaged by problems such as floods, fires, striking an animal, falling objects, or vandalism.

While these types of insurance are not required by law, they are valuable and shouldn't be overlooked. If you have a car loan or lease, they are typically required to protect the lender or leasing company.

However, as your car gets older and less valuable, you may want to consider skipping collision and comprehensive coverage to save money on your insurance premiums. Here are some factors to consider when making this decision:

• The value of your vehicle: If the value of your car is low, the cost of collision and comprehensive insurance may not be worth it. Consider the cost of parts and repairs when making this assessment.
• Your driving habits and history: If you are a safe driver with no history of accidents, you may be better off financially claiming on the other driver's insurance if they are at fault.
• The cost of the premium: Compare the price of the premium with the current market value of your vehicle. If your annual insurance cost is over ten percent of your car's value, it may not be worth the additional protection.
• Your financial situation: If you don't have cash savings, you may want to keep collision and comprehensive coverage so that you don't find yourself without a car if you can't pay for repairs out of pocket.
• Deductible amount: Both collision and comprehensive coverage have deductibles, which reduce the amount of any insurance claims. You can choose a lower deductible, but this will increase your premiums. Weigh the potential insurance payout against the deductible amount when deciding whether to keep this coverage.
• Peace of mind: Ultimately, you may want to consider your peace of mind. While skipping collision and comprehensive coverage can save you money, it also means taking on more risk.

When deciding whether to skip collision and comprehensive coverage, carefully weigh your options and consider the value of your car, your driving habits, the cost of the premium, your financial situation, and your risk tolerance. Remember that every claim you make will increase your premium for the next few years, so consider whether you are better off paying for repairs out of pocket to protect your premium price.

Frequently asked questions