How to get Affordable Car Insurance
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Car insurance is something that we all need, but at the end of the day, its an annoying expense everyone who drives must pay no matter what. Particularly in the United States, where only a handful of cities are truly considered pedestrian-friendly, cars and their underlying insurance are an absolute necessity. So how do you get affordable car insurance that covers what is needed and doesn´t break the bank? Let´s break it down below.
In this article
Types of car insurance coverages
Choosing the right type of auto insurance coverage can be challenging, especially with several coverage options available. Here’s a breakdown of the main types and which type of insurance suits each individual best.
How do you get affordable car insurance?
Finding the best affordable car insurance is similar to finding the best affordable anything, you need to gather as much information as possible and look for it. In the world of car insurance, finding the best rates often requires comparing companies and selecting the right mix of comprehensive and collision coverage for added protection. Different companies may provide competitive rates, so it's worthwhile to shop around. Below are some things to consider.
- If your goal is to keep costs low, liability coverage may be sufficient. Liability insurance covers damages to others, but it won’t cover damage to your vehicle.
- If your car is newer or financed, try considering both collision and comprehensive coverage to protect your investment. Full coverage, which includes both types, is generally a better option for newer vehicles as it provides protection in more scenarios.
- For added peace of mind, uninsured motorists and bodily injury liability coverage can handle unexpected situations.
Save $1,604 (or more) per year on car insurance today.
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What affects car insurance costs?
Car insurance premiums vary based on a few differnet factors. In the majority of cases here is what insurers will be looking at:
- Driving record. A clean driving record means lower rates of course. Traffic violations like speeding tickets and DUIs often raise premiums due to the higher risk associated with these behaviors.
- Age and gender. Young drivers under 25 typically pay more, while men generally pay higher rates. Teen drivers and those just a year old into driving may benefit from discounts like being a good student and safe driver, which can help reduce the premium burden.
- Credit score. Insurers often consider credit score in calculating premiums. Good credit can lower rates, while poor credit might increase costs.
- Vehicle type. Cars with high safety ratings or those considered low-risk, like sedans, often have cheaper premiums than sports cars.
- Location. Where you live affects rates due to accident statistics, theft rates, and local insurance policy regulations. Insurance costs can vary widely by state. In places like California, premiums may be higher due to traffic density, while rural areas might have lower state minimum requirements.
Impact of driving habits on insurance rates
Insurers are increasingly using telematic devices and safe-driving apps to monitor driving habits, such as speed, braking patterns, and mileage. Demonstrating safe driving through these programs can lead to discounts. Some insurers offer savings based on monitored driving history and safe driver behaviors.
How to get the best and most affordable car insurance
Getting the best car insurance is not an exact science that you can plug into an algebra-like equation, but there are certain steps one can follow to maximize one's time and effort.
Shop around for quotes
Getting car insurance quotes from multiple insurers is one of the most effective ways to find affordable auto insurance. Rates can vary widely, so compare options to find the best deal. Getting multiple auto insurance quotes allows you to compare auto insurance policy details, including auto insurance rates, to find the best option for your needs.
Consider adjusting your coverage
Adjusting coverage limits and choosing a higher deductible can help lower premiums. Here’s a breakdown of the main coverage types:
- Liability coverage. Covers damages to others in accidents where you’re at fault.
- Collision and comprehensive coverage. These cover your vehicle in accidents and non-collision incidents like theft or natural disasters.
- Uninsured motorist coverage. Protects you in accidents with uninsured drivers.
Try different cost-saving strategies
If you’re looking for the cheapest car insurance, consider a higher deductible as many insurers also offer low-cost options for drivers with clean driving records. Comparing quotes from various providers will allow you to see which companies provide cheap auto insurance for your specific profile.
Save $1,604 (or more) per year on car insurance today.
- 2-minute quote
- State minimum coverage
- Full coverage
- Explore top brands
How to get car insurance discounts
When looking for ways to reduce your premiums, it is advisable to ask your car insurance company if they give out discounts. Not all organizations are the same, and their policies differ, so it makes sense to check what discounts are available. These are a few of the most common ones.
- Good driver discount. The majority of insurance companies do not charge if a person has a clean record and this can save up to 20% of the bill. Many insurers reward drivers with no accidents or traffic violations, as they pose a lower risk, so it’s a good idea to stay vigilant on the road.
- Good student discount. For drivers under 25, achieving good grades can lead to reduced rates. This discount is often offered to students maintaining a B average or higher, as insurers view responsible students as more likely to be cautious drivers.
- Multi-policy discount. Bundling your auto insurance with other policies, such as homeowners or renters insurance, can yield significant savings. Having multiple policies with the same insurer not only simplifies policy management but often leads to discounts of up to 25%.
- Safe vehicle discount. Cars equipped with advanced safety features like anti-lock brakes, airbags, and theft-prevention systems may qualify for lower premiums. Insurers value vehicles with added safety elements, as they lower the risk of injury and damage in an accident.
- Usage-based discounts. Many insurers offer discounts through usage-based programs that monitor driving habits via a tracking device or app. These programs reward safe driving behaviors, such as smooth braking and low mileage, and can help drivers save quite a lot on their premiums.
Tips to lower car insurance costs
Maintain a good credit score
A person's credit score is often an overlooked factor in determining car insurance rates, but credit is something that all insurers will look at. Improve your score by paying bills on time, reducing debt, and keeping credit utilization low. Just as bad grades can increase your insurance premiums as a student, so can bad credit habits. Make sure your credit score and history are sparkling if you really want all that it takes to get good rates.
Consider a higher deductible
A higher deductible can lower premiums and raising your deductible from $500 to $1,000 might save 10-15% annually. The only caveat is you must make sure you can cover out-of-pocket costs if an accident occurs.
Take a defensive driving course
Defensive driving courses such as Master Drive, especially for young or high-risk drivers, can lead to discounts by teaching safe driving techniques that insurers reward. Remember that defensive driving tactics and knowledge can limit damage and thus pay-outs in the eyes of insurance companies.
Limit your mileage
If you drive under 7,500 miles annually, ask your insurer about low-mileage discounts as low-mileage drivers are often eligible for lower rates.
Bundle policies
Combining multiple insurance policies, such as auto and homeowners, with the same provider can lead to substantial discounts, often between 10% and 25%. This approach reduces premiums and simplifies insurance management.
How often should you review your car insurance policy?
Insurance needs can change over time, and regularly reviewing your car insurance policy can ensure you’re not overpaying or missing out on valuable coverage. Here’s a general guideline on how often to review your policy and what to look for.
- Annual review. Reviewing your policy once a year helps you stay informed about any premium changes and coverage adjustments. Shopping for new quotes annually is a good habit to ensure you’re still getting a competitive rate. Insurers often adjust rates based on broader risk factors, so it’s wise to compare quotes regularly.
- After major life events. Certain life changes can impact your insurance needs and eligibility for discounts. Consider reviewing your policy in these situations:
- New vehicle purchase. Adding a new car to your policy or switching to a more or less expensive model can change your premiums.
- Moving to a new area. Insurance costs can vary by location, so if you move, check if your rate has changed and if your coverage is still adequate.
- Changes in marital status. Married couples often qualify for lower rates, so updating your policy after marriage can save money. Divorce or separation might also require adjusting coverage if you’re no longer sharing a vehicle.
- Changes in driving habits. If you start driving significantly less, you may qualify for low-mileage discounts.
- When your rates increase unexpectedly. If you notice a sudden increase in your premiums, it’s a good time to review your policy. Contact your insurer to ask about the rate change and whether any new discounts apply. If you’re not satisfied, shopping around could reveal better rates with another provider.
- After filing a claim. Filing a claim can sometimes result in a rate increase. Reviewing your policy after a claim allows you to assess whether your current insurer still offers the best rate and if adjustments to your coverage might be beneficial.
Save $1,604 (or more) per year on car insurance today.
- 2-minute quote
- State minimum coverage
- Full coverage
- Explore top brands
FAQs
What factors should I prioritize when comparing car insurance quotes?
When comparing car insurance quotes, it's essential to look beyond just the monthly premium. Focus on coverage limits to ensure you have adequate protection, especially for liability and collision. Consider the deductible amounts—choosing a higher deductible can lower premiums but requires more out-of-pocket payment if an accident occurs. Also, evaluate the available discounts offered by each insurer, such as those for good drivers, students, or multi-policy holders. By balancing these factors, you can find a policy that gives the best value and protection for your needs.
What should I do if my insurance rates increase unexpectedly?
If you notice an unexpected rate increase, contact your insurer for an explanation and to inquire about any available discounts. Sometimes rate increases result from broader market adjustments or changes in your driving record. If your provider can’t offer a competitive rate, shop around and compare quotes from other auto insurance companies to ensure you’re getting the best possible price. Many drivers save by switching providers, especially when rates jump without clear justification.
How do claims affect my car insurance premium?
Filing claims can impact insurance premiums, particularly for frequent or high-cost claims. Each claim reflects a potential risk to the insurer, which often results in higher rates. For minor incidents, consider covering repairs out-of-pocket to avoid potential premium hikes. However, if a claim is necessary, be aware that it may affect your rates, especially if it involves at-fault accidents or property damage liability.
What are the state-specific minimum coverage requirements?
Each state sets its own minimum coverage requirements for car insurance. Generally, this includes minimum liability coverage for bodily injury and property damage. Some states also require uninsured motorist or personal injury protection coverage. To stay compliant, it’s crucial to check your state’s specific requirements. While the minimum coverage meets legal standards, many drivers opt for additional coverage for better protection.
Are there affordable options for high-risk drivers?
Yes, high-risk drivers—those with poor driving records, DUIs, or recent accidents—can find affordable options through non-standard insurance providers who specialize in high-risk policies. In some cases, an SR-22 certificate may be required to demonstrate compliance with minimum insurance requirements after certain violations. While rates may be higher, shopping around and comparing car insurance companies can help high-risk drivers find the best available option.
Save $1,604 (or more) per year on car insurance today.
- 2-minute quote
- State minimum coverage
- Full coverage
- Explore top brands
The bottom line
Young drivers usually pay more for car insurance because they don’t have much experience on the road, but there are simple ways to save money. Getting good grades, like a B average or higher, can earn discounts from many insurance companies. Taking a safe driving course approved by the insurer can also bring the cost down. Also, it should be mentioned that choosing a car with strong safety ratings can make insurance cheaper, as safer cars are less risky to insure.
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Writer
Benjamin is a writer and entrepreneur who spent 15 years in Asis involved in the real estate and financial services industry. He currently writes about finance, real estate, geopolitics, and short stories involving his cat from Argentina named Tuki. He has written for The Motley Fool, SuperMoney, and other online and offline publications spanning the globe.
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