As with anything in life, you don’t want to pay more than you have to for car insurance. The good news is that there are many ways to get a lower rate, which means more money in your pocket each month. Here are 8 ways to get the cheapest car insurance rates possible.
How to Get Cheap Car Insurance
Insurance companies are always vying for new customers, and consumers like you tend to have the upper hand. Here are eight things you can do to get coverage at a great price.
1. Look at All Your Options
Don’t be fooled by the commercials and radio ads. Some of today’s biggest insurance companies are known for spending tons of money to run ads to convince consumers that they offer the lowest car insurance rates.
However, the fact is that no insurer offers the lowest price for everyone. The insurer that offers the cheapest rates for one driver may be the most expensive option for another.
The best way to ensure that you’re getting the lowest rate is to compare companies.
2. Don’t Ignore Local and Regional Insurers
Did you know that four companies control more than half of the country’s insurance business? While you may be tempted to go to one of the big names, such as Progressive, Geico, or All-State, don’t ignore local and regional insurers.
Smaller insurance companies, like Erie Insurance and Auto-Owners Insurance, offer great deals on coverage. Smaller companies are also known for having high customer satisfaction ratings, especially when compared to industry leaders.
3. Ask About Discounts
Many insurance companies offer discounts for customers. However, you won’t get these discounts without asking! Some of the most common discounts include:
- Insuring multiple cars with a single policy
- Bundling car insurance with other policies
- Having a clean driving record
- Being a member of a certain organization or affiliate group
Some discounts require work on your end. For example, to show you have a clean record, you’ll need to inquire about how to prove no claims discount on car insurance.
Even with a long list of discounts, it’s important to always shop around to ensure that you’re getting the lowest rate possible.
4. Work on Your Credit
Your credit score plays a significant role in determining your car insurance rates. Many companies believe that a customer’s credit score directly correlates with their chances of filing claims.
Only a few states, such as California, Hawaii, Massachusetts, Michigan, and Washington, prohibit insurers from using a customer’s credit score to determine coverage rates.
If you don’t live in any of those states, then your credit score matters. Having a poor credit score can increase your coverage costs by hundreds of dollars.
To improve your credit score:
- Pay your bills on time
- Reduce your debt load
- Limit credit usage
- Avoid opening new lines of credit
5. Skip Comprehensive and Collision Coverage for an Older Car
Comprehensive coverage pays the costs of repairing damage caused by weather, floods, fire, vandalism, and crashes involving animals along with theft. Collision coverage pays the costs to repair damage to your vehicle caused by another car or an object.
However, the maximum payout is limited to the value of the car. If you have an older car or one that has a low market value, it may make sense to skip collision and comprehensive coverage altogether.
6. Raise Your Deductible
If you need comprehensive and collision coverage, you can reduce your monthly costs by opting for a policy with a higher deductible. Be aware that there is no deductible on liability insurance. This coverage pays for damage that you cause to someone else in an accident.
7. Consider Usage-Based or Pay-Per-Mile Insurance
Do you drive much less than the average 12,000 miles each year? If you’re a safe driver who doesn’t spend much time on the road, consider a usage-based insurance program. There are several to choose from, including:
- Progressive’s Snapshot
- Allstate’s Drivewise
- State Farm’s Drive Safe & Save
With these programs, your insurer tracks your driving. In exchange, you receive discounts based on how far you drive, how well you drive, and when you drive.
If you average less than 10,000 miles a year, consider a pay-per-mile insurance policy to lower your monthly costs.
8. Check Insurance Costs When Buying a Car
There’s a lot to consider when buying a car, including maintenance costs, fuel efficiency, and safety features. It’s also important to consider insurance premiums. It’s no surprise that a sports car has higher premiums than a sedan.
Some of the top-selling vehicles with the lowest interest rates include the Honda CR-V, Jeep Wrangler, and the Subaru Outback.
Frequently Asked Questions
What Are the Pros and Cons of Collision Insurance?
There are advantages and drawbacks to having collision insurance as part of your overall auto insurance policy.
- Saves you money after an accident (less out of pocket costs)
- Covers accidents, including roll-over crashes
- Covers accidents involving stationary objects
- Doesn’t cover medical expenses
- Doesn’t cover non-collision damage
- Increases your premium
What Is OD Discount in Car Insurance?
Own damage (OD) insurance is designed to protect you and your car from damage and losses. In the event of an accident, OD insurance covers the expenses to repair and/or replace parts for your damaged car.
What Is a Collision Deductible Waiver?
A collision deductible waiver keeps you from paying your deductible in the event of an accident when an uninsured driver is at fault. However, the auto collision insurance waiver of deductible applies in certain scenarios.
The waiver does not apply if no one is at fault, if the accident is a hit-and-run, or if there’s only one car involved in the crash.
While a collision deductible waiver is nice to have, drivers shouldn’t get too comfortable with this type of coverage. It only comes into play if the at-fault driver is uninsured, which isn’t always the case.
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