Find the Best Cheap Car Insurance
How Do You Find the Best Cheap Car Insurance?
Easy, you want to find the lowest premiums for the best coverage with an insurance company that has reliable customer service and a good reputation. That’s because getting into a car accident is a situation where you will need and appreciate a reliable partner.
For shoppers looking for cheap car insurance from a solid car insurance provider, this list of best practices will inform you of some details you should consider when shopping around for insurance quotes. They’re categorized into four areas of consideration:
- Be Informed — Information is ammunition, a little knowledge about insurance before shopping will help you make the right choices and avoid the wrong ones.
- Balance Your Policy — Despite the state-mandated minimum coverage, you should tailor your insurance policy to your needs—sometimes getting more than the minimum coverage offers a better cost per dollar for coverage, look for the deals.
- Bundles, Clean Records, and Discounts — There are some easy ways to reduce your rates even more, and one crucial way to keep them low, hint: drive safe.
- Overlooked Ways to Reduce Your Insurance — Here are some not-so-common ways to reduce your rates.
The Risks of Cheap Car Insurance
Sometimes, drivers may reduce their coverages below a responsible risk protection level in the pursuit of the cheapest car insurance. This is not good, and it’s a situation best to be avoided.
Policyholders need to balance their financial health with the benefits of insurance. Insurance is a protection for your money from potential future catastrophes. And often, having just the state minimum required car insurance isn’t enough protection for most drivers.
When deciding on your coverage limits, you choose how much protection to surround your finances and assets. Think of it as a protective moat between your savings and any car accident claims against you—the greater the coverage, the wider the moat. With 56% of Americans with less than $5,000 in savings, if you wind up having to pay $10,000 out-of-pocket after an accident, will you have enough to cover it? If not, you could be in jeopardy of serious financial consequences.
Here are a few questions that you should consider and answer yourself honestly. The answers should help direct you towards what you have at risk.
- How much savings do I have?
- How much are my assets worth, like my house?
- If I only have minimum car insurance, is that enough to protect my savings and assets?
- If I’m injured in an accident and unable to work, how much savings do I have to sustain my lifestyle after paying any out-of-pocket expenses for the accident and my own medical bills?
Finding Cheap Car Insurance Best Practices
Be Informed
What Factors Do Insurers Use to Calculate Your Rates?
There are many common factors that insurance companies use to calculate your premiums. Some of them you have more control over than others, like what kind of car you drive. Maybe, to lower your rate, it’s time to change out your red Mustang for a modest sedan with a high safety rating. Consider how your lifestyle choices influence your premiums.
- Insurance Provider — Not all providers are created equal. Everyone offers their own benefits vs. price. Be sure to compare providers along with price and coverage benefits. You might find one gives more significant benefits, especially if the price is only a few dollars more. Also, compare customer reviews. There is a lot of value in responsive customer service. Find out if your provider is proactive when it comes to fulfilling claims.
- Driving History — Speeding tickets, DUIs, and reckless driving are just some violations that can inflate a driver’s rates. Insurance providers use a driver’s history as a predictor for their future behaviors, and ultimately how risky they are. Fortunately, this is one factor that drivers have control over.
- Age — Not an insignificant factor; age is one of those things you have no control over. Typically, the younger the insured, the more the insurance premium will be. Luckily, as you age and prove to be a safe and responsible driver, the lower premiums will go.
- Gender — Less of a factor than others on this list is gender. Though it has been shown that female drivers see a bump in their premiums compared to their counterparts, it is not as significant as other factors such as driver history, like getting speeding tickets. Men are ticketed 50 percent more than women across all age groups.
- Car Type — Driving a sports car? Expect to spend more on insurance. Family vehicles, like minivans, will fetch a better rate thanks to their safety record.
- Driver Location — Both the state and zip code are important factors. Regulations impact all rates at the state level, while each zip code’s unique characteristics, like driver density, or crime, contribute to how providers calculate overall risk.
- Credit Score — Another factor that impacts premiums, but is within the control of drivers, is their credit score. Insurance providers found that drivers with poorer credit scores file more claims than drivers with high credit scores. And more, they file claims of greater amounts than drivers with high credit scores.
Balance Your Policy
Consider Your Liability Coverage Limits, or Raise Your Deductible to Save
Your liability coverage limits are balanced by your premium payments. The more you pay in premiums, the more your coverage limits should increase. Expect to pay less for 25/50/25 coverage rather than 100/300/100. But if you do get less coverage, you could actually be paying more per dollar. When you decide on your liability coverage limits, consider how much you’re paying for each additional dollar of coverage.
For example, comparing the two coverages in the table shows that the best deal has more coverage, not less. Even though Coverage B is twice the premiums as Coverage A, the limits are much more significant, bringing down the average cost of coverage. You are actually buying more coverage per dollar of premium paid with Coverage B.
| Coverage Limit | Annual Premium | Total Coverage Per Accident* | Cost of Coverage** | |
|---|---|---|---|---|
| Coverage A | 25/50/25 | $683 | $75,000 | $110 |
| Coverage B | 100/300/100 | $1366 | $400,000 | $292 |
* Total coverage per accident equals the total bodily injury limit plus the total property damage limit.
** Cost of coverage equals total coverage per accident divided by annual premiums or the amount of coverage every dollar of premium buys.
Decide Whether You Need Comprehensive and Collision Coverage
Nearly every state requires insurance, including liability, personal injury protection, and underinsured/uninsured motorist insurance. However, most states don’t require comprehensive and collision coverage.
Because of that fact, but not entirely advisable, a significant way to reduce your premiums is to remove any comprehensive and collision (C&C) coverages that you have on your policy. But the consequences could be bad for you. Collision coverage is for damages to your car if you are involved in an accident with another vehicle or some object like a fence. Comprehensive coverage protects you from damages that are not collision-related, like a tree falling on your car, vandalism, theft, or bad weather. Without these protections, you run the risk of having to pay out-of-pocket for damages to your vehicle if you’re in an accident or you back up into a tree.
Bundles, Clean Records, and Discounts
Bundle All Your Insurance Policies
Most insurance companies that offer multiple lines of insurance also offer discounts for bundling policies together. If they allow it, you can bundle your homeowner’s or renter’s insurance with your auto insurance and pay less overall.
Claim Any Car Insurance Discounts
In many states, insurance companies also offer discounts based on a driver’s safety, driver’s status (like accident forgiveness for good drivers, or student discount), policy bundling, or high safety-rated vehicle (think airbags). You need to ask your provider about these discounts, don’t leave money on the table. Suppose you’re fortunate enough to live in California. In that case, the good driver discount is mandated by law to all drivers that exhibit good driving behavior—you can get up to a 20% discount!
Keep a Clean Driving Record
While shopping around for the cheapest quote is the best way to find a reduced rate, maintaining a clean driving record, free from accidents and violations, is the most effective way to keep it low. Of course, this is not always the easiest feat to achieve, even for the best of us. Still, as the saying goes, an ounce of prevention is worth a pound of cure. Obey the rules of the road, travel with plenty of time to reach your destination, stay vigilant while driving (no texting or similar acts, distracted drivers are the #1 reason for accidents), and never use drugs or alcohol of any kind before and when driving.
Overlooked Ways to Reduce Cost of Car Insurance
Avoid Fees
Some insurance providers charge fees when you make a manual payment or send you a paper bill. This could be because they are encouraging their policyholders to sign up for faster electronic billing and payments. It’s better to make electronic payments for most everyone, but if you don’t prefer it, be sure to check if you are charged any hidden fees, including late payment fees, which could amount to $60-$120 annually in some cases.
Use Pay-Per-Mile or Telematics Insurance
A fairly new idea in the car insurance space is pay-per-mile or telematics insurance, the use of GPS technology to track car mileage. Pay-per-mile (PPM) or pay-as-you-go insurance is a program that charges a low monthly rate and additional premiums for every mile you drive. For drivers who drive less, this can be an affordable way to protect themselves with full coverage while keeping their rates low. However, not all providers offer this plan. You will need to find a specialized insurer that has the appropriate technology.
Suspend Your Coverage of an Unused Vehicle
If you plan on not driving your car(s) for more than a month, it might be worth looking into suspending or canceling your insurance on it and informing the DMV that you are storing the car. For example, California offers drivers to set their vehicle status to Planned Non-Operations. “Planned non-operation” (PNO) means that the vehicle will not be driven, towed, stored, or parked on public roads or highways for the entire registration year. During this time, you can remove your insurance and save that money or suspend most of it and retain your comprehensive-only coverage to protect it from damages while stored.
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