With car insurance policies averaging nearly $900 per year nationwide (source), getting the best value possible is a must. But with so many companies and policies to choose from, where do you start?
How to find the best cheap car insurance
The best advice is: shop around. Experts advise consulting at least three car insurance companies to get their rates. Our site gives an overview of the best companies and rates. It’s a convenient way to find affordable car insurance.
When shopping around, don’t just pick the insurance company with the lowest rates. Look for customer service and financial stability
SuperMoney allows you to read reviews of the companies you are considering to get an idea of the quality of their customer service.
Cheap rates are worthless if the insurance company doesn’t have the financial clout to pay claims. Check what their A.M. Best rating, which you can also find on SuperMoney’s insurance comparison page. This rating provides an easy way to check the financial stability of insurance companies.
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Before comparing auto insurance companies, take some time to determine your priorities. Then check out the types of coverage offered and the rates. The premium is the amount you will pay to keep the insurance active, and the deductible is the amount you will pay out-of-pocket if there is an accident or claim.
While shopping around is key, there are other ways to get the cheapest rates possible.
Take the highest possible deductible
A deductible refers to how much you will pay out of pocket before your insurance kicks in. The higher your deductible on a car insurance policy, the less your insurance premium payments will be.
Most policies give you a choice when you apply. The choices may be $500, $1,000, or $2,000. A $2,000 deductible policy will be cheaper than a $500 deductible policy.
Your deductible will only come into play if you are in an accident. You will be paying the deductible out of pocket if you are in an accident. It is more difficult to pay $2,000 out-of-pocket than it is to pay $500 or $1,000. But how many accidents are you likely to be in during a year? In the meantime, you’re saving money.
Know the minimums for your state
Each state has its own rules on the amount of coverage you must have on your car insurance. Some require $100,000 for collision and others may require $150,000, for example. If cheap premiums are your priority, insure yourself only for the minimum. The more you are insured for, the more you will pay monthly for car insurance.
What are the types of car insurance?
Insurance companies offer liability coverage, comprehensive insurance, and collision insurance.
- Liability coverage is to cover you if you damage another vehicle, person, or property. It will reimburse you for any costs if you are determined to be responsible for the damage.
- Comprehensive insurance covers your car for any accident. If your car is struck by lightning or a tree falls on it, for example, comprehensive insurance will reimburse you.
- Collision insurance pays for the cost of any repair due to an accident.
For most people, it makes financial sense to get liability and comprehensive coverage. The financial hit you’d take if an accident happens and you don’t have them could be devastating.
If you don’t have liability coverage and are in an accident for which you’re responsible, you may end up paying for repair and damages out of your own pocket. That can set you back thousands of dollars – much more than an insurance premium.
If you don’t have comprehensive insurance and a tree limb falls on your car, you will have to pay for damages yourself. A falling limb could total your car. With insurance, an insurance company pays. Without insurance, you do.
However, going without collision insurance may be a good financial idea. Collision insurance pays for damages to the car. If your car is older, it may cost more than the car is worth to repair it. If you are hit by another driver and the repair would cost $3,000, you are out of luck if your car is assessed at just $2,800. Your car will be considered a total loss, and you’ll just get the actual cash value.
Omitting collision insurance will result in cheaper insurance. So if your car is older, consider not getting collision insurance.
A poor driving record makes car insurance more expensive. This is especially true if you’re 25 years old or younger. If you have an accident, your premium will rise.
Buy cars that are cheaper to insure
Some cars are cheaper to insure than others. Fancy and expensive models, on the whole, will cost you more in insurance than average cost, reliable cars.
Install anti-theft devices
Cars with anti-theft devices are cheaper to insure. They are less likely to be stolen. Insurers don’t have to pay for theft, so the premiums come down accordingly. If you’re in the market for a new car, buying one with anti-theft devices is a good move.
Don’t double dip other benefits
Car insurance companies sometimes offer car-related insurance. They may offer, for example, insurance for emergency room visits if you are in a car accident.
While going to an emergency room to get checked out for a concussion may be a good idea after an accident, you may already be covered by your health insurance policy. If you are, it’s wasted money to pay for it as part of your car insurance.
Some companies also offer insurance to pay for a car rental in case your car has to be repaired. Assess the value of this coverage carefully. If a car repair takes two days and you depend on your car to get to work, then car rental insurance may be helpful. But if you have a membership with an organization like AAA, they may offer that as well.
Take a driver safety course
Many insurance companies will reduce the cost of your insurance premiums by 10% or more if you complete a driver safety course. There are many online driver safety courses available. Taken online, they are convenient, because you can take them anytime you want.
The cost of the driver safety course is offset by the savings on your insurance.
Check around for discounts
Many organizations offer discounts on car insurance. If you belong to a union, you may be able to get a discount. If you are or have been in the military, you may qualify for a discount.
Students can also receive discounts, especially if their grade point average (GPA) is high. If you belong to a professional association, an alumni association, or a credit union, you may be able to get a discount.
These discounts can range from 5% to 15%, so it’s worth asking about them.
Explore state-sponsored programs
A few states have insurance programs for low-income families.
If you live in California, for example, the California Low-Cost Automobile Insurance Program (CLCA) offers liability car insurance capped at less than $400 per year. That’s considerably cheaper than the national average.
To qualify for the CLCA, you can’t exceed the income eligibility (which varies by county), you must have a good driving record and own a car worth $20,000 or less that is paid for.
New Jersey has a program called The Special Automobile Insurance Policy (SAIP) for low-income people. It provides medical assistance coverage in case of an accident. SAIP covers emergency treatment right after a car crash. It also covers expenses related to serious brain or spinal cord injuries up to $250,000.
People need to be enrolled in a Federal Medicaid with Hospitalization program and have a valid driver’s license. The premium is about $365 per year.
Cut down on your yearly mileage
Insurance premiums take into account how many miles you drive in a year. People who drive 60,000 miles are going to pay a lot more for car insurance than those who drive 2,000 miles.
So the more you can cut down on the miles you drive, the cheaper your insurance will be. Can you take a bus or train to work? Can you join a car pool?
Make sure your credit score is as high as it can be
Some states allow insurers to take your credit score into account when deciding how much to charge you for insurance.
It’s a good idea to monitor your credit score. Check your credit score for free at Credit Sesame.
Are cheap insurance policies the same?
Don’t go on price alone. Some companies have better reputations for excellent customer service and reliable, prompt payment. And the type of coverage you need will depend on your particular circumstances. No, not all cheap insurance policies are not the same.
To find the best cheap car insurance you will need to compare companies and policy options.