Trying to get the best car insurance rates is something all consumers strive for. According to III.org, in 2019, the average cost of car insurance amongst all states was $1,070.47, up 36% since 2010. That means in some states, it is even higher than that, causing it to be unaffordable for some families.
By knowing some tips and tricks to be sure you are getting the best rate for your situation, you can know how to get the cheapest car insurance.
What Goes Into Your Car Insurance Rate?
A big part of what determines car insurance rates are nationwide trends, which unfortunately may not have anything to do with you but will impact you. If car accidents are up across the country, causing insurance companies to pay more in repairs, they will want to recoup this cost from future insurance premiums.
Another thing that insurance companies take into consideration is how likely you might be to file an injury claim. States will differ in this likelihood, but less affordable states tend to see a higher rate of injury claims, causing premiums to be higher.
In addition to national and state trends, the following are things that can affect your car insurance rates.
Where You (and Your Car) Live
Car insurance companies will consider where you store your car when you are not driving it and how often you drive. For example, a car that may be parked overnight on a busy city street could pay higher insurance premiums than one stored in a locked garage.
The more risk to your vehicle, the higher the chance of a claim, so that the insurer will charge for that.
What you can do: Keep your car in a covered garage, in a low-crime area, if possible.
Your Driving History, Past, and Present
If you commute to work rather than work remotely, causing you to drive more frequently, this could impact rates. Driving across the country on road trips several times a year may also impact your car insurance premiums. Whatever your annual mileage is estimated will determine if you pay more or less since you are increasing your risk the more you drive.
Taking a defensive driving or similar course can positively impact your rates, so report that to your insurance company.
Tickets and accident claims can be avoided with a few steps. For example, be careful about your speed, don’t try to run a red light, and drive defensively to avoid an accident. Avoid using your cell phone or other devices, and pay attention to your surroundings.
You may not be able to get the cheapest car insurance policy if you have a poor driving history. Insurance companies will check your record to determine whether you are a good customer for them to have or not. Driving under the influence, speeding tickets, and accidents can all raise your insurance rates. Being a higher-risk driver will ultimately cause you to pay more.
Accidents on your driving record, especially if you were at fault, will undoubtedly negatively impact your car insurance rates. Typically, insurance companies will look at 3-5 years of your driving history, so if you have had any accidents or violations in that time, be upfront about it. If you disclose the information up front and can provide any documentation, that would be helpful.
What you can do: Clean up your driving record, employ safe driving habits and vehicle safety features.
Your Financial and Insurance History
Unless you live in a state that doesn’t allow car insurance companies to consider your credit score when factoring rates, your car insurance quote is heavily influenced. Insurance companies say they have seen a direct correlation between lower credit scores and a higher probability of claims.
Reduce your debt and build your credit by paying your credit card bills and loan payments on time. Keeping an eye on your credit score is an excellent way to track your progress.
Having car insurance for a long time without a lapse is always better than having a lapse at all.
Suppose your history shows a lapse of coverage. In that case, an insurance carrier will think twice about offering you a quote, and if they do, it could show higher rates so they can ensure you will not be at risk of allowing the policy to lapse with them, which is risky as you would be uninsured.
What you can do: Improve your credit score; ensure you do not have a lapse in car insurance.
Things You Can’t Control
Of course, there are some things you cannot control that can influence car insurance rates. Males and females will have different car insurance rates due to statistics. Age also plays a factor in determining insurance premiums.
If you live in a home with other people, they may have to be listed as a driver on your policy if they have access to your car. This can negatively impact your rates if they have a bad driving history, even if yours is spotless.
Your marital status, the type of car you drive, and the coverages you carry will also impact your car insurance rates.
What Else Can You Do to Get the Cheapest Car Insurance?
Besides ensuring that your driving record is clean, your car is stored in a safe place, and you have good credit, there are a few other things you can do to get the cheapest car insurance.
Change Your Policy Deductibles and Coverages
Typically, liability insurance covers bodily injury, property damage, and uninsured and underinsured motorists. The insurance carrier usually sets up these limits to be at an amount that is comfortable based on claims experience and trends. Each state has minimum limits, but many insurance companies prefer their policyholders to carry higher limits.
The minimum coverage requirement for liability insurance differs from state to state, but you can purchase more coverage for a higher price. Auto insurance rates tend to increase as your coverage limit increases, though liability coverage is usually a nominal difference in premiums.
When you file a claim for auto insurance, you’ll pay a deductible out of your own pocket for your car to be repaired or replaced. By raising your deductible, you may be able to lower your monthly premium.
Remember that amending your limits and deductibles is not the best way to lower your car insurance and should be a last resort. You don’t want to get into a situation where you have lowered your limits, get into an accident, and are financially devastated because you didn’t have enough insurance to pay the damages.
If you decide to lower your limits, ensure you are still meeting your state’s minimum limits for liability. Also, if your vehicle is financed or leased, ensure you are not breaching your contract by increasing your deductibles or removing physical damage coverage altogether.
Look For Insurance Discounts
Most car insurance companies offer many discounts you may qualify for. They will vary by carrier, but if you keep these in mind, you can probably find one to add to your policy.
If you are in the military, ask if there is a discount for that. Many insurance companies offer a good student discount if you have a certain GPA. Bundling your policies, or having a policy like a homeowner’s or renters with your auto, can get you a discount at most insurers. You could also qualify for a multi-vehicle discount if you have more than one auto.
Being accident-free can sometimes earn you a discount on your car insurance. Your car may also have special anti-theft features that could qualify for a discount.
Change When You Pay Your Premiums
Many car insurance policyholders like to pay their premiums every month. While this may be good for cash flow purposes, there may be a discount if you pay differently. Many insurance companies charge an installment fee each time they bill you. Simple things like signing up for paper-free billing or paying via automatic withdrawal can reduce your premium.
Many insurance companies also offer a paid-in-full discount. Even paying on a quarterly or semi-annual basis can cut down on fees, ultimately cutting your costs. For example, if your car insurance monthly payment is $100 but the insurance company says you can pay in full for an annual premium of $1,000, that saves you $200.
Shop Around Regularly
Every year you should take a quick peak at what other car insurance companies may have to offer. Because each insurance company offers different coverages and discounts, the premiums will never be quoted precisely the same.
It’s always beneficial to compare multiple car insurance quotes, but you should consider more than just price. When you shop for insurance, protect yourself against financial disaster by looking at coverage limits and any enhancements the carrier may offer.
There are times when the car insurance you currently have is the best deal available, but you may discover you have left money on the table unknowingly.