Cheap car insurance in 10 steps
1. Comparison shop
Sure, it’s crucial to compare car insurance quotes from multiple companies, but look beyond price. Insurance provides a safety net between you and financial disaster, so be wise and vigilant.
Sometimes, you already have the best deal with your current car insurance company. However, your search could lead you to break up with your steady and jump into the arms of a new car insurance company.
Comparison shopping can help you uncover cheap car insurance companies and auto insurance discounts. You may discover a new company that has emerged or dropped its prices in this competitive market.
Check auto quotes each year when your policy comes up for renewal. Think of it like changing your smoke alarm.
You should also take a look at the rates if any of these circumstances arise:
For more information, see 7 reasons your car insurance rates drop.
2. Bundle your policies
Statistically speaking, married people and homeowners tend to file fewer claims; that leads to cheaper car insurance.
We don’t recommend getting married just to save on your car insurance. However, purchasing homeowners or renters insurance with your car insurance company can deepen discounts.
It’s called “bundling.” These multi-policy savings can climb up to 30% depending on the company.
Similarly, you can get up to 25% off by taking advantage of a multi-car discount when you insure two or more vehicles with the same company. This discount is typically on your liability, collision and comprehensive coverages.
But be wary; it doesn’t always work out that way. Compare what it would cost to purchase your policies separately to that of a bundled deal before signing on the dotted line.
National averages for bundled policies are:
- 11.4% for auto and homeowners insurance
- 9.6% for auto and condo insurance
- 5% for auto and renters
- 2% for auto and life
3. Raise your deductible
Simply increasing your deductible from $250 to $500 can lower the collision or comprehensive portion of your premium. You may save between 15 and 30% with some companies, according to the Insurance Information Institute. Increase it to $1,000, and you can save even more, potentially 40%.
Remember, though, that a higher deductible means more money out of your pocket in the event of a claim. Cheap insurance can become expensive if you have to pay your deductible with a high-interest credit card. (See How much can I save by raising deductibles?.)
4. Take advantage of all the discounts for which you qualify
Does Junior get good grades? Most car insurance companies offer a good student discount, both for high school students and college students. A “good student” usually means maintaining a “B” (3.0) or better average to qualify for this discount and typically applies to students under 25.
How much can you save? The average base premium for the student-driving population is $6,110. Add in a good student discount, and that yearly policy rate dips to an average of $5,750. That’s a savings of $361, or about 7%. The good student discount is a significantly larger reduction than for most other discount categories.
Homeschooled teen drivers may also be eligible. They must achieve a certain score on standardized tests. The discount normally applies to bodily injury liability, property damage liability, PIP, medical payments, collision and comprehensive coverages.
Likewise, for good students who are away at college, most insurance carriers offer discounts. A wide array of variables affect the discount rate, including:
- Whether or not the student is taking a car to school and driving it regularly
- Whose name(s) is on the title
- Whether or not the student’s permanent address is still the parent(s)’ home
Have you stuck through thick and thin with your insurance provider? Your loyalty could equal savings. Farmers, Geico, Nationwide, Allstate and USAA are among those who offer this discount, which generally earns up to 10%. State Farm boasts a loyalty rewards program in which you can earn points on credit cards.
Good driver and safe driver discounts can get you between 5 and 25% in savings, depending on your carrier. Reducing how much you drive your vehicle can garner a discount. More on both of these later.
Have an alarm or security/anti-theft device, such as a LoJack, installed in your vehicle? That could qualify you for a “safety-feature discount” of up to 30% in some cases.
If you can pay your annual bill in full, that can save you up to 10%, rather than the more common approach of paying in installments. Going paperless, too, can add a small discount.
Understand all the car insurance discounts for which you may qualify, so that you can take advantage of some reductions in your bill that can really add up.
5. Buy the “right” type of car
Perhaps you’re shopping for a sweet ride or one that accommodates all the kids. You might want a vehicle that kills it on mileage.
When you’re factoring those specifics, realize that your choice plays a role in landing lower (or higher) insurance rates. Cars that cost less to repair or replace generally receive lower premiums.
Don’t make the mistake of thinking that the “cheaper the car, the cheaper the insurance.” It doesn’t work like that.
Each year, our sister site Insure.com compares car insurance rates for approximately 3,000 different vehicle models to find both the cheapest and most expensive vehicles to insure. The most recent comparison earned the Honda Odyssey minivan as the least expensive 2019 vehicle to insure, followed by the Jeep Wrangler and the Subaru Outback. Among the most costly to insure for 2019 vehicles were several models of the Mercedes, as well as the Nissan GT-R, which ranked tops as most expensive.
6. Be a good driver; avoid tickets and accidents
You can drive 55, or 65, or whatever the speed limit may be, even if you’re Sammy Hagar. You can be more cautious and possibly avoid that fender-bender coming out of the convenience store parking lot.
A poor driving history can easily disqualify you from getting the cheapest car insurance. Insurers will check your record to see if you present a high level of risk. Speeding tickets, accidents, drunk driving citations – all can drive your insurance rates higher.
As we pointed out earlier, these good driver discounts can save you up to 25%. The insurance company usually requires that you have a clean driving record for at least three years. That means no DUIs, no moving violations and no at-fault collisions. Keep your hands firmly on the three and nine positions, folks (and yes, it used to be two and 10).
Drive sensibly and cautiously and you’ll be on the way to cheap car insurance by avoiding surcharges and receiving a good driver discount. (See “How much will a ticket affect my insurance rates?“)
7. Don’t carry unnecessary insurance coverage
If you have an old beater, reduce your car insurance costs by dropping comprehensive and collision coverage.
Don’t drop that coverage without giving it some thought. When should you make this move toward cheaper auto insurance? Many experts say it’s time to drop these coverages when the actual cash value you’d receive for your vehicle doesn’t justify the insurance expense.
Another type of coverage that could be unneeded is rental reimbursement coverage. You can skip that if you have an extra car in the household that you can use if yours is in the shop after an auto accident.
Also, you may want to forgo personal injury protection or medical payment insurance (if your state doesn’t require it) if your family already has an excellent health insurance plan.
8. Consider buying only the state-required minimum liability coverage
One way to get the cheapest car insurance available is to buy “bare bones” coverage. The protection typically is liability insurance at the lowest legal limits required by your state to legally drive a car.
If you cause an accident, it pays for others’ property damage and medical bills; that’s it.
Liability limits are usually written like this: 30/60/25. In this example, which uses minimum requirements in Texas, the numbers show coverage that would pay:
- Medical expenses of up to $30,000 per person
- Medical expenses up to $60,000 per accident
- Up to $25,000 for property damage
Here are average annual rates for the cheapest car insurance coverage in every state.
It’s usually not wise to go with state minimums, but if you don’t drive much and need to find a way to reduce your rates, you can explore going with barebones coverage.
9. Don’t drive as much
Policyholders who drive less than a specified number of miles each year, usually 7,500 to 10,000 miles, can get a reduction in their base rates. The rate cut is applied to bodily injury liabilities, PIP, property damage liability and collision premiums, depending on the policy.
If you participate in this, car insurance companies often require that you install a small device in your vehicle that transmits our mileage data to the company. Keep it under a certain amount, and you score discounts.
“Driving fewer miles means you have less road time, resulting in lower risk of getting into an accident,” says Janet Ruiz, director of strategic communications, Insurance Information Institute. “Most insurers ask for yearly mileage to give a lower rate to drivers who are on the road less.”
Hey, maybe you can even start biking it more or join that carpool with your co-workers.
10. Ask about group insurance
Some companies offer reductions to drivers who get insurance through a group plan from their employers, professional, business and alumni groups, other associations or schools. Experts from the Insurance Information Institute suggest checking with your affiliated organizations to see what they offer.
Employers, of course, often offer health insurance group plans, but a lesser-known option is group car insurance. Larger companies are more apt to provide this option to their employees because the sheer volume of employees allows the company to secure a group rate.
Large colleges or trade schools sometimes offer not only their students, but alums, the benefit of buying into group insurance. City University of New York (CUNY), for instance, not only offers its alums car insurance, but home insurance, dining and travel discounts and theater and movie tickets.
As you can see from our list, there are many ways to get cheap car insurance. By doing your research and finding the right plan for you, you can find an auto insurance policy at the right price.
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