If you own and drive a car in the vast majority of U.S. states, you are required by law to carry liability car insurance at the absolute minimum. Just because you have to buy car insurance, however, doesn’t mean that you must pay top dollar. Car insurance rates vary widely across not only U.S. states but between car insurance providers and even individual policies, so it is well worth it to do what you can to find the cheapest policy possible. This means putting in a little extra time and effort, but it will all be worth it when you secure truly cheap car insurance.
Here are 20 ways to get the cheapest car insurance possible:
1. Shop Around
This piece of advice can’t be emphasized enough. The difference in premiums and rates between that are offered by competing insurance companies can be truly staggering. Each insurance company has its own way of calculating risk and, in turn, premiums, so one company’s process may be better for you than another’s. With online quotes readily available from most insurance providers, comparison shopping for car insurance is easier than ever and more than worth it.
2. Consider Local and Regional Insurance Providers Too
Currently, only four car insurance companies control nearly 50 percent of auto insurance business in the U.S. Due to their size, influence and marketing clout, it is easy to feel like they are the only names in the game. However, local and regional car insurance providers are worth your consideration too. They not only sometimes offer more competitive rates, but they are widely considered to provide far superior customer service than their large, nationwide counterparts.
3. Don’t Assume That One Company is the Cheapest of Them All
Car insurance companies invest vast amounts of money into marketing their services. It is easy to come away with the impression that one of them is truly cheaper than them all. Although many insurance providers insist that they offer the lowest rates, you shouldn’t believe the hype. The prices that customers pay for the same coverage from the same company, even, can vary widely based on individual factors and how much importance they are assigned by the company. As a result, there’s no such thing as a low-price leader in the industry.
4. Improve Your Credit Score
Insurance companies have found that there is a strong correlation between credit standing and the likelihood of filing insurance claims. The lower the credit score, the likelier a person is to file one. Fair or not, most insurance companies take credit scores into consideration. The practice is not allowed in three states: Massachusetts, California and Hawaii. If you live in any of the other 47 states, pay your bills on time, reduce your debt and take additional steps to improve your score before shopping around for car insurance.
5. Consider Usage-Based Coverage
Depending on your driving habits and driving style, you might consider usage-based insurance. If you drive less than 10,000 per year, mileage-based insurance, which is charged based on how much you drive, may be a good way to save money. Increasingly, many car insurance companies are offering usage-based insurance. Using special devices, they track your driving electronically and provide discounts for being a safe driver. Such programs include Drive Safe and Save by State Farm, DriveWise by Allstate and Snapshot by Progressive.
6. Move to an Area with Less Crime
Car insurance companies consider crime rates in the area where your vehicle will be parked when calculating premiums. This makes sense because a car is more likely to be broken into, vandalized or stolen in a high-crime area as opposed to one that has moderate or low crime. While it isn’t practical to move solely to save on car insurance, it is something to keep in mind the next time that you need to relocate.
7. Have Your Car’s VIN Etched in Its Window
Studies have shown that cars are less likely to be stolen when their VINs are etched into their windows. That’s because it is much more difficult for thieves to cover up or remove such etchings. Many car insurance companies provide discounted rates for drivers who have this done to their vehicles. Having this done at the dealership can be pretty pricey, but there are do-it-yourself kits that you can use to get it done more affordably.
8. Get Storage Insurance for Cars That You Don’t Drive Year-Round
If you own a show vehicle, a seasonal vehicle or another vehicle that you only drive during part of the year, it doesn’t make sense to pay to insure it all 12 months. Luckily, many car insurance companies offer what is known as storage insurance, which allows you to cover the vehicle only during the part of the year when it’s actually being used. This can translate into significant savings.
9. Get All of the Discounts to Which You are Entitled
Most car insurance companies offer discounts for a variety of things. Before buying a policy, inquire about the kinds of discounts that are available–and make sure that you get every one to which you are entitled. Some of the most popular examples of discounts that are offered for car insurance policies include:
- Multi-line discounts for buying more than one type of insurance from the same company
- Multi-car discounts
- Clean driving discounts
- Safety discounts for having certain anti-theft features
- Retirement discounts for drivers over age 55
- Discounts for belonging to certain organizations–typically work or school
- Good grade discounts for students
- Discounts for paying your yearly or six-month premium upfront
- Discounts for agreeing to receive documents and correspondence online
10. Consider the Cost to Insure a Car Before Buying It
The type of vehicle that you drive affects how much you will pay for insurance. Generally speaking, new, flashy cars tend to cost more to insure. The same applies to cars that have high repair costs, which are typically new cars, foreign cars and luxury cars. Stick with safe, reliable vehicles to get the most competitive rates, and always do some research to find out the average cost to insure before buying a car.
11. Skip the Collision and Comprehensive Coverage
You are required by law to carry liability insurance, which covers damages and injuries to other drivers. Collision coverage, which covers damages to your vehicle from other drivers, and comprehensive coverage, which covers loss or damage to your vehicle due to vandalism, natural events and the like, are not required. They only pay up to the current value of your car, so if yours is older and not worth very much, you can safely go without these types of coverage.
12. Be 25 or Older
There’s no way to magically make yourself older. If you are under age 25, you are going to have to put up with higher premiums for a while. You may be able to reduce your costs a bit by joining your parents’ policy or by getting discounts for good grades. Once you turn 25, make sure to notify your insurance company. If they don’t lower your rate or lower it enough, start looking around.
13. Avoid Lapses
Never allow your insurance coverage to lapse. If it does for even a few days, you may be disqualified from receiving any discounts in the future. When you need new insurance, wait until you secure it before canceling your old policy.
14. Maintain a Safe Driving Record
There are tons of great reasons to be a safe and defensive driver. In addition to protecting your safety and the safety of others, doing so can help you to qualify for the most affordable insurance rates. Even just one or two incidents can make your premiums soar. In fact, the first accident on your driving record can raise your premiums by up to 40 percent. While on the road, steadfastly obey all traffic laws. Keep your attention on the road, and engage in defensive driving habits. Accidents and infractions drop away over time, so check in with your insurance company from time to time to ensure that they are giving you the best rate based on your current driving record.
15. Be Loyal
Sometimes, simply sticking with the same insurance company is one of the best ways to get cheap car insurance. If you have been with the same company for five or more years, do some shopping around and then present them with quotes for cheaper insurance, if you get any. They will probably work with you on improving your rates to keep your business. Also, make sure to pay your bills on time and to be a good customer in general.
16. Raise Your Deductibles
If you need to carry comprehensive and collision coverage because you have a loan or lease or because your car is still high in value, a great way to reduce your insurance costs is by raising your deductible. The deductible, of course, is the portion that you must pay out of pocket before insurance kicks in. According to a NerdWallet study in Florida and California, increasing a deductible from $500 to $1,000 can save up to $200 per year. However, make sure that you have the cash available to pay your deductible if the need arises.
17. Check for Unnecessary Extras
Because car insurance policies are so complex, they sometimes bundle in features and add-ons that you don’t really need–but that you will still pay for. This is why it pays to go over your policy from time to time with a fine-tooth comb. If you run into anything questionable, contact your agent and have it corrected.
18. Verify the Accuracy of Your Information
A single mistake in your personal information or other information can cause your premiums to be higher than they should. Periodically, pull up your information to confirm that you have the right amount of coverage and that you are paying the agreed-upon price as outlined in your policy. Double-check your personal information too. In particular, make sure that they are using the right birth date and marital status, as these can dramatically affect rates.
19. Complete a Defensive Driving Course
Many insurance companies will give you a nice discount for completing an approved driving class. Simply taking a driver’s education course may be enough. However, it is often better still to complete a full-fledged defensive driving course. Once you do, provide documentation of this to your insurance company, and they should reduce your rate by a decent amount. If you are shopping for car insurance, ask if this discount is available, and find out what kinds of classes meet the requirement.
20. Move to a Different State
Geography plays a major role in how much you will pay for car insurance. As mentioned before, living in low-crime areas will get you lower rates. On top of that, living in an entirely different state could really reduce your premiums. Consider this: According to Compare.com, the average yearly premium for car insurance in Maine is just $934. This makes Maine the cheapest state for car insurance. On the other end of the spectrum is Louisiana, where the average yearly premium for auto insurance is a staggering $2,699. By moving from Louisiana to Maine, for example, you could slash your car insurance bill by hundreds–or even thousands–of dollars.
The Bottom Line on Cheap Car Insurance
By putting the above tips into action, you can more easily identify car insurance policies that offer truly competitive rates. However, more than anything, the key to securing truly cheap car insurance is taking your time, doing your research and shopping around. It also pays to periodically comparison shop to ensure that you are still getting the most affordable rates. Although car insurance is a necessary evil, it’s not one that has to break the bank. By taking the right steps, you can get coverage that suits your needs and budget.