When it comes to car insurance cost, not all companies are created equal. If you’re looking for the best rate, you’ll have to shop around. There are discounts available if you know how to look — and lucky for you, we do! Before you go shopping for car insurance, review the eight steps below to make sure you get the best rate possible.
1. Compare multiple car insurance quotes
You should always get a second opinion on your car insurance rate. It’s important to shop around and compare rates before signing up for a policy. The perceived risk you pose as a driver determines the cost of auto insurance, and each insurance company evaluates a person's risk differently. We recommend getting a minimum of three quotes before making a final decision.
2. Determine what auto insurance coverage you actually need
In most states, you're required to have a minimum of liability coverage for any car on the road, but that’s just the beginning of your coverage options. Among the most common car insurance options are liability, uninsured and underinsured motorist, collision, medical payment coverage, personal injury protection, and comprehensive coverage. Each of these options comes with its own benefits and costs.
Some states may require insurance beyond liability, like medical payment coverage or personal injury protection. For example, Michigan requires drivers to have unlimited personal injury protection, which drives insurance costs up in the area.
If you live in a state that only requires the liability minimum, you’ll need to decide what coverage is right for you. You may want collision coverage or uninsured motorist coverage to feel safer on the road. However, if you drive an older car that’s seen better days, you may opt not to get comprehensive coverage. Comprehensive pays out the car’s total value for numerous types of claims (like damage from weather or vandalism), but if that value is low, the premium may not be worth it.
3. Check for discounts
You may be able to qualify for one or more discounts from your insurance company. One of the most common discounts is the safe driver discount, which rewards you for maintaining an accident and ticket-free record. Talk to your agent to see which of the following discounts you qualify for and how adding up all your discounts will impact your premium.
- Safe driver discount
- Good student discount
- Defensive driver discount
- Full payment discount
- Affiliation discount
- Anti-theft discount
- Anti-lock brake discount
- Distant/resident student discount
- Early signing discount
- Green vehicle discount
- Low mileage discount
- Loyalty discount
- Military discount
- Multi-policy discount
- Multi-vehicle discount
- Autopay discount
- New vehicle discount
4. Improve driving habits
People with clean driving records can score a lower insurance premium than people who have accidents and speeding tickets on their record. Safe driver discounts have been in place for a while, but some insurance companies are now taking it a step further with monitoring systems. If interested, you may be able to opt-in to a driving monitoring program which involves installing a tracking device in your vehicle to keep a record of your driving habits including speed, braking distance and your location as it relates to crime and accident rates. The data is then transmitted back to your insurance provider who will use the information to determine if you qualify for a reduced premium for safe driving.
5. Bundle insurance policies
Bundling is another way to save money on your insurance bill. For example, if your selected provider offers auto insurance in addition to property or life insurance, you may qualify for a discount if you purchase more than one policy. Using the same company for your home, auto and life insurance can add up to big savings. So when you’re shopping around for auto insurance, make sure to ask how much it will cost if you also add on your homeowners and life insurance policies, along with any other policies you have on boats, motorcycles or other vehicles.
6. Raise your deductible
Raising your deductible keeps your insurance premiums low without sacrificing coverage. Experts advise drivers to raise their deductible to $1,000 or more, provided they can absorb the cost of $1,000 in the event of an accident. This can be an especially good option for drivers with a short commute and people who don’t drive regularly since the chances of getting into a serious accident decrease the less you drive.
Raising your deductible is generally a better alternative to lowering your liability, which can save you money in the short-term but end up costing you everything you have if you end up at fault in a serious accident.
7. Improve your credit score
Your credit score affects more than your monthly car payment. It also affects your insurance premiums. Insurance companies will check your credit score to help determine risk. The higher your score, the lower you are as a risk factor, and this will drop your premium.
While it may seem unrelated, studies have shown a correlation between credit scores and safe driving. If your score is less than perfect, there are ways to fix your credit score. If you’ve done the work and improved your score, be sure to shop around for more affordable car insurance rates — you’ve earned it!
8. Understand how insurance is priced
Every auto insurance company has a specific group of consumers they target, which is reflected in their advertising, their discounts and their quotes. Some insurance companies cater to high-risk drivers, while others are more interested in selling to adults over 25 who own their own home.
While some companies do offer more affordable coverage than others, there are many factors that go into how much car insurance costs and the truth is car insurance is largely priced based on the individual customer and their car