Auto insurance may appear to be an unwelcome expense at times, but its purpose is a good one: it can protect you from financial loss as a result of injuries or property damage caused by a traffic accident, auto theft, natural disaster, or other event.
However, you should not have to break the bank in order to obtain dependable coverage. There are numerous auto insurance companies available; you simply need to take the time to look for coverage that is right for you, compare quotes, and take advantage of any discounts that may be available.
7 Tips to find cheap car insurance
Here are seven tips to help you find low-cost car insurance that meets your requirements.
1. Compare quotes using an auto insurance comparison website.
If you want competitive insurance rates, you’ll need to shop around. Consider getting auto insurance quotes from not only national companies like Geico and Allstate, but also smaller insurers, because you never know where the best deals might be hiding.
Comparing auto insurers online is one of the simplest ways to shop around for insurance coverage. Working with a car insurance agent is another option if you prefer to discuss your insurance options with someone.
2. Recognize the factors that influence your insurance premium.
The insurance quotes you receive are influenced by factors other than your driving record. Insurers base the cost of insurance, or premiums, on the risk they take by insuring you. They assess this risk using claims data and personal information, among other things.
In some states, your credit score may have an impact on your premium (though California, Massachusetts and Hawaii have all banned the practice of using credit-based insurance scores to help determine rates). And, while it’s debatable, the use of credit-based insurance scores to influence premium cost is still a reality, with studies and surveys indicating that those with poor credit are more likely to file insurance claims, and vice versa.
Whether you agree with the practice or not, you should be aware that in some states, drivers with better credit may receive lower rates than those with less-than-perfect credit. According to a 2015 Consumer Reports survey, single respondents with only “good” credit paid up to $526 more per year (depending on their state) than similar drivers with the best credit scores.
Aside from credit, the following factors may have an impact on your insurance rates:
Your ZIP code — Some areas have higher-than-average rates of car accidents and theft. Car insurance companies may take this into account when determining rates.
Your car’s year, make, and model — The more expensive your car, the higher your insurance rates may be. Insurers can also examine whether drivers of the same make and model file more claims or are involved in more accidents, as well as safety test results, repair costs, and theft rates.
The number of miles you drive each month — Driving fewer miles each month can affect the rates you receive.
Your driving record — Drivers with a clean record usually qualify for lower rates, and you may be eligible for a good/safe-driver discount.
Your age and marital status — Data suggests that these factors may be related to the likelihood of an accident.
3. Think about your liability coverage limits.
Liability insurance typically includes three types of coverage: bodily injury liability, property damage liability, and uninsured motorist coverage.
Each state with a liability insurance requirement has its own minimum coverage requirement, but you can choose more coverage — at a cost. The higher your coverage limit, in general, the higher your auto insurance rate.
However, before settling for your state’s minimum coverage requirement, take into account any assets, such as your home, savings, or investments.
They could all be jeopardized if you cause an accident that causes medical or property damage costs that exceed your coverage limit. You may want to select coverage limits that, at a minimum, reflect the total value of your assets.
4. Consider increasing your deductible.
The deductible is the amount of money you will pay out of pocket to cover the cost of an auto insurance claim. By increasing your deductible, you may be able to reduce your monthly premium.
When deciding on a deductible, you should consider your overall financial situation. If it’s too high, it could lead to financial hardship if you ever need to file a claim.
5. If you have an older vehicle, you may want to forego comprehensive and collision coverage.
Collision coverage can protect you if you are involved in a single-car accident or if you are hit by another vehicle or object. Comprehensive coverage can protect you if your car is stolen or damaged as a result of a non-collision event such as theft, natural disaster, or animal contact. These coverage options, when combined, are intended to cover repairs or reimburse you for the value of your vehicle.
Comprehensive and collision coverage are not required unless you lease or finance your vehicle, in which case your auto loan lender may require it.
If you have a paid-off older car with low value, you may be able to get less expensive comprehensive and collision coverage, or you may be able to opt out of comprehensive and collision coverage entirely — what’s best for you depends on your specific situation.
To determine whether this is a good option for you, look at the “book” value of your car and compare it to the comprehensive and collision deductibles as well as the annual cost of this coverage as stated in your insurance quote. Kelley Blue Book and Edmunds.com both have tools that can help you estimate the value of your car.
6. Make a claim for your car insurance discounts.
Is your driving record spotless? A-plus student? Some insurers provide discounts based on group membership, vehicle features such as anti-theft devices, driving history, policy ownership, and other factors. Depending on the insurance provider, the following groups may be eligible for a discount.
- Personnel from the military
- Students who are enrolled full-time and have a good academic record
- Excellent drivers (accident-free for a certain number of years)
- Drivers who have completed a defensive driving or driver’s education program
- Drivers whose insured vehicles are equipped with airbags, antilock brakes, antitheft systems, or daytime running lights
- Federal employees, both active and retired
- Drivers who have multiple vehicles insured with the same company
- Drivers who have homeowners or renters insurance through their car insurance company
- Drivers who pay their annual premium in a lump sum and/or opt for automatic payments
7. Take into account third-party ratings.
It may be tempting to simply choose the cheapest car insurance available. But first, do some research on the insurance company. A low premium is certainly important when selecting an insurance provider, but it should not be the only factor. If you ever need to make a claim, an insurance carrier that provides quick and efficient service can make your life a lot easier.
Look at third-party ratings to get a sense of the type of service a carrier offers. J.D. Power is one company that provides these ratings. This company conducts an annual study that ranks insurance companies based on a variety of customer service metrics. You can also check the Better Business Bureau for a carrier’s rating.
What comes next?
When it comes to car insurance, price is certainly important, but you also need to make sure you’ve chosen a reputable carrier and that the coverage you’re getting meets your needs. It is critical to shop around for the best car insurance for your needs.
Credit Karma makes it simple to compare rates from various carriers. Take the time to go over the details and compare them before deciding on the best auto insurance policy for you.