How to get cheap car insurance
8 steps to deep discounts
When it comes to the cost of car insurance, 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 — before you go shopping for car insurance, review the eight steps below to make sure you get the best rate possible.
- It’s crucial to get quotes from several different insurance companies to ensure you get a good rate for your coverage.
- There are plenty of discounts available for car insurance — you might qualify for a good driver discount, for instance, or for AAA or military discounts.
- If you don’t get a good insurance rate, you might try fixing your credit score or bundling your coverage with home insurance.
8 steps to affordable car insurance
While there's no single guaranteed way to lower your car insurance rates, following these steps could help.
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, liability coverage is required for any car on the road, but that’s just the beginning of your coverage options. Among the most common car insurance coverages are liability, uninsured and underinsured motorist, collision, medical payment and comprehensive. Each comes with its own benefits and costs.
Get at least three car insurance quotes before signing for a policy, and make sure you’re comparing rates for the coverage you actually need.
Some states may require insurance beyond liability, like medical payment coverage or personal injury protection. For example, Michigan requires unlimited personal injury protection, which drives insurance costs up in the area.
If you live in a state that only requires liability insurance, 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.
If you drive an older car that’s seen better days, you may opt to go without 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 also 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.
These days, you can also get a discount for driving an environmentally friendly vehicle. John Ellmore, editor of the website Electric Car Guide, recommends that you ask your provider about any green vehicle discounts if you drive an electric or hybrid vehicle.
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
- Multipolicy discount
- Multivehicle discount
- Autopay discount
- New vehicle discount
4. Improve driving habits
People with clean driving records can score a lower insurance premium than those with a record of accidents and speeding tickets. Safe driver discounts have been in place for a while, but some insurance companies can now monitor your driving. Typically, this involves installing a tracking device in your vehicle to keep a record of your driving habits (speed, braking distance and location).
5. Bundle insurance policies
Bundling is another way to save money on your insurance bill. Some providers offer auto insurance in addition to property or life insurance, so you may qualify for a discount if you purchase more than one policy from an insurance company.
So when you’re shopping around for auto insurance, make sure to ask how much it costs to add on your homeowners and life insurance policies, along with any other policies you have on boats, motorcycles or other vehicles.
Reviews on our site have even mentioned bundling their auto insurance with renters insurance, like one from Yasuko from Washington: “It gives me peace of mind knowing that I have this … because I bundled it with car insurance and I got a great rate. The paperwork was all online and it was easy to understand and read.”
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 could end up costing you more if you’re 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 check your credit score to help determine risk. The higher your score, the lower your risk factor, which can 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 it. If you’ve improved your score, be sure to shop around for more affordable car insurance rates — you’ve earned it.
» MORE: How to fix your credit
8. Understand how insurance is priced
Most auto insurance companies have a specific group they target, often reflected in their advertising, discounts and 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 — the truth is, the cost of your car insurance depends in large part on your car and your particular situation.
What factors determine the cost of my insurance premium?
Several factors influence the cost of your insurance premium. These can include:
- Type of coverage: The type of insurance and extent of coverage you choose will significantly affect the cost.
- Personal information: Age, gender, marital status and employment can impact premiums, as certain demographics are considered riskier than others.
- Driving history: Your driving record (any history of accidents, traffic violations or claims) will influence your premium.
- Location: Living in an area with high crime rates, natural disasters or other similar risks can lead to higher premiums.
- Credit score: A higher credit score usually results in lower premiums.
- Deductible: Choosing a higher deductible can lower your premium, but it means you'll pay more out of pocket if you file a claim.
How can I reduce my insurance premium without compromising coverage?
There are several ways to reduce your insurance premium without sacrificing coverage. It’s important to compare quotes from multiple insurance providers to find the best rates and coverage for your needs. Also make sure to avoid unnecessary coverage — assess your needs and only purchase coverage that’s essential for your situation.
Can I negotiate my insurance premium with my insurance provider?
Insurance premiums generally aren’t negotiable; they’re calculated based on risk factors and statistical data. Still, you can discuss available discounts or policy adjustments with your insurance provider to potentially lower your premium.
How can I ensure the insurance company I choose is reputable and reliable?
To ensure the insurance company you choose is trusty, check its licensing, financial ratings, customer reviews, complaint history and general track record. It’s always a plus to have friends and family who can point you to great companies, too.
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