How to Get the Cheapest Car Insurance
In the majority of states, auto insurance is absolutely mandatory—and the penalties for not having insurance are never worth the risk. But despite the fact that you need it, there's no year-end clearance sale on car insurance.
However, there are still ways to make sure you are getting the cheapest insurance rate possible, though it might take some work to find the best rates.
1. Shop Different Insurance Carriers
Rates can vary widely between major insurance companies—and small ones, too. One company may deem you an average risk and charge you an average rate, while another may find you to be a preferred risk and give you a much lower rate. Others still might deem you an above-average risk, and you definitely want to avoid those insurance options!
To make shopping easier, consider contacting an independent agent or using an online quoting website, as well as speaking to local friends and family about the insurance coverage they have since rates and policy options vary widely across state lines. Independent insurance agents have access to multiple carriers and can guide you to the best company without the pain of making lots of phone calls.
Online quoting websites, such as Esurance.com, to help find the cheapest company for you as quickly as possible. You can also go to the insurance company site directly, but you won't be able to compare against other companies as easily if you choose this route. Just make sure that any website or person that you give personal information to (especially financial information) is trustworthy.
2. Bundle All Insurance Policies
Policies grouped together are almost always cheaper than policies insured with different companies. The multi-policy discount is a great way to save money on insurance. If you are insuring multiple cars, homes, and toys, insure them all with the same company to maximize your savings, and request quotes for bundled policies when you're calling around to different insurers.
3. Verify All Discounts Available
Car insurance companies are notorious for having a variety of unique discounts. Ask for all the possible discounts and verify which ones you are receiving. A couple of discounts to inquire about are the homeowner discount, paid-in-full discount, and good student discount. You can also get a discount if you complete a defensive driving course, and some insurers will give you a discount for getting married, living in an over-55 retirement community, or paying your bill online instead of getting paper bills. Regardless of how many discounts a company offers, though, it is the final price that counts so don't be swayed by just the discounts.
4. Decide Whether You Need Comp & Collision
In some cases, you can save money by canceling your comprehensive and collision coverage. When you buy insurance, you need different types of coverage to take care of a variety of damages. Comprehensive and collision coverage, often called comp & collision, pays for damage to your car if it's involved in an accident with another object, such as another car, a building, an animal, or hailstorm. It also covers damage from fire, floods or vandalism, and will reimburse you if your car is stolen.
Comp & collision insurance will only pay you the current market value of your car if it's stolen or if the insurance company decides to total it. Do a comparison to see if the cost to carry this coverage is more than the replacement value of your car. This is often true if you are driving an older model or you have a car with high mileage that no longer has much resale value.
5. Raise Your Deductible
If you only carry liability insurance, you won’t have any deductible to pay because this insurance covers damage you cause to other people in an accident. However, comprehensive and collision coverage does have a deductible. The larger the deductible amount you agree to pay in case of an accident, the lower your insurance will cost. If you go this route, consider keeping your deductible amount in a savings account so that you don’t get caught unprepared in case anything happens.
6. Consider PPM Insurance
If you don’t drive many miles and you have a good driving record, you could save some money with pay-per-mile or usage-based car insurance. Certain insurers including Allstate, Progressive and State Farm Insurance, have programs set up to track your driving mileage and habits. In exchange, you can potentially receive discounts on your premiums.
If you log 10,000 miles or less each year, Esurance and Metromile offer mileage-based insurance programs. Not all states are eligible, so check with these companies to see if you can buy this type of insurance in your state.
7. Keep a Clean Driving Record
Safe drivers get some of the best rates. If you are looking for the cheapest rate possible sometimes it can come directly from your own actions. Set your cruise control, turn your cell phone off, and consciously pay attention to the road.
8. Improve Your Credit Score
Good credit can also influence your insurance rates as most insurance companies are basing your rate off of your insurance credit score. Keep your credit score high and your insurance credit score is sure to follow. A great credit score can get you some surprisingly low insurance premiums.
9. Avoid Fees
Look for ways to avoid extra fees. Many insurance companies charge payment fees, and they're essentially charging you for the processing and paperwork of your bill. Paying your premium in full or having your payments taken automatically out of your bank account could save you some money. Late-payment fees can be even higher so be sure to pay on time. Also, find out if combining multiple policies into one billing account can lower fees.
10. Get the Right Coverage
The coverage you carry on your vehicle is a personal choice. Determine the value of your vehicle and weigh its replacement cost against the cost of full coverage. Be smart; if you are not driving one of your vehicles, and put it in storage.
If you store your car for longer than 30 days, you can cut your insurance costs by suspending your liability and collision insurance, since these cover you while you're driving your vehicle. Keep the collision insurance to cover your car in case of theft or damage from a fire or other natural disaster.
If you want to cancel your insurance altogether, you won't have coverage for theft or damage, you'll have a gap in your coverage which may cost you more later, and if your car's financed, the lender may require you to carry full coverage regardless of whether or not the auto is garaged full time. If you do not know all your coverage options, get advice from an experienced agent.
What happens if, after evaluating each of these ten steps you are still not happy with the price of your car insurance policy? Continually managing and improving your credit score and driving record can drastically improve your car insurance rate over time. When your credit score improves or a traffic violation point falls off your record, it's time to shop for a new policy.
Getting the cheapest car insurance possible is something that needs to be reviewed every few years if not more. Car insurance is always changing along with your history and future needs. Talk with your insurance agent for a review of your policy and if you do not like the results, call around for some quotes for comparison.