Smart And Simple Ways To Find Cheap Car Insurance Rates
Not only does car insurance help ensure you don't end up in financial ruin should you accidentally cause a serious accident, but it's also a legal requirement in all fifty U.S. states.
With hundreds of potential auto insurance carriers to choose from, the process of picking the best and cheapest car insurance provider can be overwhelming. Thankfully, if you follow a few simple steps, you can quickly determine the most affordable insurance provider for your specific needs.
Shop Around For The Best Car Insurance Quotes
Car insurance quotes can vary by hundreds of dollars per year. While State Farm might believe you should pay $800 per year, Allstate might quote you half of that price.
If you're in no rush, purchasing new car insurance at certain times of the year could also affect the price you pay.
When shopping for different quotes, ensure you are receiving the exact same coverage from each provider. For example, if you want $100,000 in general liability insurance, make sure each plan offers that coverage. If one plan offers additional coverage over another, it's likely you will pay more for that additional coverage.
Understand What Coverage You NeedYou probably don't need collision or comprehensive insurance if you're driving a vehicle that would cost a few thousand dollars to replace. That insurance specifically pays to repair damage made to your own vehicle. If you have a Kelley Blue Book value of $1,000 on your car and a $500 deductible, this insurance option is likely to cost you money unless you're in an accident immediately after receiving coverage.
The same rule applies to Comprehensive insurance which usually covers vehicle theft or damage caused by such things as vandalism, storms, or hitting an animal while driving.
A simple method to determine whether you need this type of coverage is to add your deductible and the cost of adding these type of coverages. If the cost of replacing your vehicle is less than that additional cost, ditch those insurance options.
If you drop collision and comprehensive coverage, we recommend putting some "rainy day funds" to the side in case you need to replace your vehicle.
Understand The Discounts You Might Qualify For Right Now
Auto insurance providers offer many different types of discounts that could save you hundreds of dollars per year.
1. Bundle home and auto insurance. We've seen discounts that range from 5% to 25% simply by choosing a single insurance provider for your automobile and home insurance needs. Not only will you save on auto insurance, but you will also likely receive home insurance discounts as part of your bundle.
2. Seek Out Good Driver Discounts. If you haven't had an accident or it has been years since your last accident, you may qualify for a good driver discount. These discounts reward you for not filing claims since you likely post a significantly lower risk.
If you're new to driving, many insurance companies now offer mobile apps and easy to install hardware options that will monitor your driving habits. These apps continuously check if you're following speed limit rules, avoiding sudden braking, and driving with good practices in general. Even if your driving history isn't great, this option might help establish you as a safe driver which can save you hundreds of dollars per year.
3. Get Rewarded For Being A Good Student. This is a very specific discount but it's well worth looking into. If you are a student with good grades, you could save 5% to 10% on your insurance quote. In one case, we saw a 50% discount for State Farm when students listed a low number of miles driving.
Seek Out Car Insurance Alternatives
Traditional car insurance is based on a risk assessment of your driving along with an assessment of how many miles you drive per year. The problem with this system is that months of inactive driving still cost you the same as more active times.
For this reason, we recommend looking at alternatives such as Metro Mile. These types of new car insurance companies charge a low monthly fee and then you pay a per-mile charge. One driver in Philadelphia who rarely drove their own vehicle saw their monthly cost drop from $300 to $150. Metro Mile, Esurance, Nationwide, Progressive, and many other providers all now offer this type of usage-based car insurance.
Improve Your Credit Score
If you live in California, Hawaii, or Massachusetts you can ignore this because those states don't allow car insurance companies to pull your credit score. If you live in any other state, however, a low score can actually increase the cost of car insurance.
While there is no quick fix, if you can pay off debt or request fixes for inaccurate information found on your credit report, you may score better car insurance deals.
There are so many factors that affect what you pay for automobile insurance. At the end of the day, your best option is to look online at the car insurance plans that best suit your needs and fit without your price range. It turns out that spending more than 15 minutes looking for car insurance can actually save you more money than immediately turning to one of the big national car insurance companies.
References: Investopedia, Consumer Reports, Edmunds
