If you are looking to get cheap car insurance, here is a list of ways to get the cheapest car insurance available in the United States. We discuss everything from researching the type of coverage you need and how policies work to finding discounts and comparing quotes online. However, before finding affordable auto insurance, you need to know what factors affect rates, how companies calculate premiums, and who gets the cheapest quotes.
- How Car Insurance Rates Are Determined
- Who Gets The Lowest Price Quotes?
- How To Lower Your Car Insurance Rates
- List of Ways To Get Cheap Car Insurance
- Bundling, Multi-Policy Discounts
- Age-Based Discounts
- Multiple Vehicle Discounts
- Driver’s Education, Defensive Driving Discounts
- “Good Student” Discount – Get Good Grades
- Group or Affiliate Discounts
- Policy Length or Term Period
- Increasing Your Deductible
- Research Before Buying A New Car
- Don’t Overpay For Unnecessary Coverage
- Review and Improve Your Credit Score
- Make Sure You Provide Correct Information
- Compare Car Insurance Quotes
How Car Insurance Rates Are Determined
When evaluating your risk profile and calculating rates, auto insurance companies consider the following factors:
- Personal Demographics – Age, Gender, Marital Status
- Location, Local Theft and Crime Rates, Urban vs. Rural
- Vehicle Type, Make, Model, Crash Test and Safety Scores
- Driving Record/History – Accidents, Citations/Tickets, Violations
- Annual Mileage Driven
- Credit Score and History
Drivers who are statistically more likely to submit insurance claims, also known as “high risk applicants”, tend to get higher premiums, while the cheapest rates are reserved for low-risk safe and responsible drivers.
Who Gets The Lowest Price Quotes?
Based on actuarial tables and statistical analysis, companies offer the lowest insurance quotes to those who:
- Are female.
- Are over the age of 25.
- Are married.
- Drive older, cheaper vehicles.
- Own cars with good safety records.
- Live in rural areas or suburbs.
- Maintain a clean driving history with no accidents.
- Have no moving violations within the last 3 years.
- Drive less than 10,000 miles per year and qualify for a “Low-Mileage” discount.
- Have and maintain a high credit score.
Consumers with the above characteristics cost carriers less money in terms of paid out claims, and are therefore the best types of customers to insure. Just remember that each of these factors does not equally affect your rates because your gender, age, driving history, and vehicle type are significantly more important than your credit score or marital status.
How To Lower Your Car Insurance Rates
If you have existing coverage, there are several ways to instantly lower your premiums. While not every option listed below will make a huge difference and save you hundreds of dollars per year, combining multiple strategies may make your policy noticeably more affordable. Here are some quick ways to get a discount on your car insurance.
- Lower your coverage limits, but be careful to avoid under-insuring yourself.
- Increase your deductibles.
- Enroll in a defensive driving course.
- Improve your driving record and avoid accidents and violations.
- If you have a teen or college student added to your policy, make sure they maintain good grades and a high GPA.
- Buy a car with a good safety record, the newest safety features, and an anti-theft system.
- Move to a safe neighborhood with low crime rates, or a less densely populated area.
- Driver fewer miles per year.
- Increase your credit score.
List of Ways To Get Cheap Car Insurance
While all the top auto insurance companies generally use the same factors to determine premiums, each carrier’s calculations differs slightly, resulting in a broad range of prices. This is why comparing car insurance quotes from several companies is critical to getting cheap rates.
Start by reviewing your current policy because you’ll find there are changes you can make to your coverage that can immediately help you save money. Otherwise, the following list will help you find and get cheap car insurance.
Bundling, Multi-Policy Discounts
Most people have different types of insurance policies, including auto, health, life, home, dental, disability or renter’s insurance. By bundling multiple insurance policies with one company, also known as a “Multi-Policy” Discount, you can save up to 15% on each and every one. This also makes it easier if you ever have to file a claim. Working with the same company can help you build a relationship with your agent, broker or case manager, thereby getting better customer service.
Before switching companies, always complete a car insurance quotes comparison to make certain that the provider you choose is really the cheapest option. Some carriers specialize in certain types of insurance and can offer you better coverage.
Age is among the largest factors contributing to a company’s determination of your risk profile. Typically, drivers will see up to 20% cheaper premiums once they reach 25 years old, with additional discounts as they age and mature. Overall, studies have shown that drivers between the ages of 25 and 55 are the safest drivers on the road; obviously safer than teens, college students, and elderly drivers, including seniors. Therefore, the 25 to 55 age group will get the lowest rates.
However, some of this correlation might be attributed to discounts associated with marital status and a long, clean driving history, since married drivers are usually more responsible and family-oriented.
Multiple Vehicle Discounts
Most households and families own multiple cars, including seasonal, classic, or show cars. When looking for cheap auto insurance, add each new vehicle onto an existing policy with the same carrier. In addition to lower premiums, you will have less mail, policies, bills, and companies to deal with. Many insurers allow families to insure up to 5 vehicles under the same policy.
Driver’s Education, Defensive Driving Discounts
By taking a drivers education or defensive driving class and earning a certificate of completion, you may qualify for lower rates. Driving classes are offered by many public or private organizations, so be sure to ask your current carrier about the specific program you are interested in. Most companies will discount your premiums by up to 10% after completion.
Other insurers may offer their own specific program or class that drivers can participate in to get a discount. These driver’s education discounts can apply to anyone, regardless of age. Policyholders just need to successfully complete the course.
“Good Student” Discount – Get Good Grades
Teenagers, college students, and parents of young drivers may be discouraged at how much car insurance costs! Luckily, for any student currently enrolled in high school or college, “Good Student” discounts can help reduce premiums by 10% to 15%. It doesn’t matter if you are a teen driver under your parent’s policy or a college student with your own coverage, if a student can provide proof of good grades or a high GPA (3.0 or higher), an insurance agent will probably instantly lower your rates.
Group or Affiliate Discounts
While it isn’t advertised by companies or agents, you can get a discount on car insurance through personal affiliations and memberships. Being associated with certain employers, schools, military organizations, honors societies, credit unions, professional clubs, and associations such as the AARP or AAA can help you lower prices by up to 15%. Some credit card companies and banks even offer discounts to their customers. To see if you qualify through any memberships you may have, ask your agent about the types of affiliation discounts they honor.
Policy Length or Term Period
Changing the length of your policy and paying in full for 6 or 12 months can save you 10% on your total cost of coverage. While you may prefer to pay monthly premiums because it helps you set your monthly budget, an annual contract makes you less likely to let your coverage lapse. Making larger upfront payments also increases customer loyalty and minimizes administrative costs for your insurance company, who is happy to pass on some of the savings to you.
Increasing Your Deductible
A deductible is the amount of money you will have to pay out-of-pocket before your car insurance company will pay out on your claim in the event of an accident. Your policy’s deductible has a significant impact on your car insurance rates; the larger your deductible is, the cheaper your auto insurance will be.
Most coverage starts with a $500 deductible, so you may be able to increase yours to $1,000 or $1,500. However, realize that an increase in your deductible will mean a higher out-of-pocket expense to cover repairs, damages, and medical bills after an auto accident, which can be financially difficult for families on a tight budget. Don’t ever risk crippling financial hardship in the future for short-term cheap car insurance.
Research Before Buying A New Car
Buying a new car can be an exciting experience, but it is important to know if a new car is going to increase or decrease your car insurance costs. There are some instances where a new car can help you get cheap car insurance. For example, new cars with safety features such as driver-side and passenger-side air bags, anti-lock brakes, and anti-theft or security systems can help you lower premiums because safer cars prevent injuries during a collision.
On the other hand, a new car can mean higher repair or replacement costs. Buying a popular new vehicle can increase the risk of theft. Other factors to consider include the vehicle’s make, model, color and size. Sedans and smaller cars tend to have cheaper auto insurance than SUVs and trucks, and sports or luxury cars have more expensive policies than low-cost, older vehicles.
Don’t Overpay For Unnecessary Coverage
It can be hard to know exactly how much coverage you need in order to be adequately protected. At minimum, most states require liability car insurance, but companies offer many other add-ons, including comprehensive, collision, personal injury protection, rental insurance, gap coverage, etc. If you don’t know what these industry terms mean, check out our comprehensive guide on the different types of car insurance; otherwise, you could end up overpaying for protection you don’t need.
Work with your agent, broker, or company representative to determine how much coverage you should be buying according to your state’s minimum car insurance requirements. Afterwards, feel free to get a second opinion from a different carrier to double-check.
Review and Improve Your Credit Score
Surprise, your credit score affects your car insurance rates. This is because auto insurance is something that requires a monthly, semi-annual, or annual payment, and companies want to be sure that they can trust you to make payments regularly and on time. A high credit score symbolizes financial responsibility and credibility, which carriers have found correlates to being a safer, calmer, and better driver.
When searching for cheap car insurance, review your credit history to find inaccuracies that may be negatively affecting your score and rates. If you have a low credit score, work on improving it by becoming debt free, paying bills on time, and making timely installment loan payments.
Make Sure You Provide Correct Information
The information you provide on your application obviously influences your premiums. One figure many U.S. consumers overestimate is the mileage they drive every day to either work or school – their daily commute. Before you sign a contract for a new policy, you may want to keep track of how many miles you drive. For insurance companies, the more time and miles spent on the road, the greater your risk of being involved in a car accident and filing a claim. If you drive less than 10,000 miles per year, ask about a “Low-Mileage” Discount.
Additionally, where you live or move to can change your cost. Make sure you use the right zip code for your residence. Areas with lower crime and theft will typically have more affordable rates, although parking in a garage when living in a not-so-great part of town can help mitigate an increase in price.
Compare Car Insurance Quotes
Getting cheap car insurance doesn’t have to be a time-consuming hassle; there are many easy ways to get discounts and lower rates. By comparing car insurance quotes online, you can easily find the best and cheapest company. Get a free quote now to find affordable coverage, or wait till later to find out just how much you’ve been overpaying.