ow do I get the cheapest car insurance? A lot of people ask that question, and this post answers that. You’ll learn different things from tips for how to find cheap insurance to ways to tricks on how to avoid and find hidden fees.
Here’s the deal:
According to Nerdwallet, the national average cost of car insurance is $1,621/year. That’s a lot of money. Of course, there are differences in insurance rates depending on where you live.
That all said, there are ways you can still save money on car insurance.
Some of the things you will learn from this post include:
- Tips for what to look for in a good insurance
- Companies that offer cheap car insurance
- Ways to get the best auto insurance rates
- And many more
In addition, you'll learn the answers to the following burning questions that people ask over and over again:
- How can I get super cheap insurance?
- What are the 10 best insurance companies?
- How do I get the best auto insurance rates?
- Who offers the cheapest auto insurance?
If you are ready:
How your choice of car can make your car insurance more (or less) expensive
There are factors that will make your car more or less expensive. That’s a fact. That said, choosing a specific car over another will help you with better car insurance rates.
If you're trying to learn how to live cheap, then, looking for a great deal on car insurance is a must.
Here are the top ten least expensive cars to insure in 2019. This means that if you’re going to a buy one of the cars listed here, then, you’d be looking at saving hundreds of dollars every year for a couple of years.
What makes a car less expensive for an insurance
It boils down to data.
The longer a car insurance company insures a particular type or model of a car, the more data it has to understand the risks associated with that car.
For example, an insurance company insures hundreds of car model XXXX. At the end of the year, it has information to determine how many of this car type has been in accidents, how many claims have been filed, the common issues this car is known for, etc.
If this car has been in accidents a lot of times, then, the rates could spike.
But what about new car models? That’s a good question. Without much data, it’s hard for insurance companies to determine the right insurance rate charge.
In this case, the insurers predict what the expected performance of these models would be.If you're trying to learn how to live cheap, then, looking for a great deal on car insurance is a must.
They look into safety ratings from the National HighwayTraffic Safety Administration (NHTSA) since cars with (better) safety features have less injury and/or maybe safer.
The insurers will also look into other pricing mechanisms such as the price of parts for these models, estimated labor costs, anti-collision features, among others.
Best, Cheapest car insurance companies of 2019
Here are some auto insurance companies that can help you save money on car insurance (Click here to learn how to save money more). Depending on your location, profile, and other factors, some of these will be cheaper or more expensive than others.
Do you drive less than 10,000 miles each year? If you are, then, you would probably save money by switching to a pay-per-mile type insurance policy like the ones offered by Metromile.
Metromile estimates drivers could save around $500 with its innovative insurance. If you aren’t driving a whole lot, there’s really no reason for you to pay so much for car insurance.
Metromile insurance charges a monthly flat-rate fee plus a mileage fee. You may pay $30/mo plus 5 cents per mile, for example. That means if you drive 500 miles a month, you would only pay $55/mo. That’s not bad at all. As with any other insurance companies, your rate is based on your age, where you live, and your driving record.
MetroMile is available in CA, IL, NJ, PA, OR, VA and WA.
Liberty Mutual has been one of the best auto insurance companies lately. The two features that make this company the best include:
- Accident forgiveness – This means that your rates won’t go up after one claim. Not all companies offer this. If you’re looking for cheap car insurance or one that doesn’t automatically raise your rate when you get into an accident, Liberty Mutual is a great choice.
- New car replacement – If your car is new and you get into a crash within the first year, Liberty Mutual will help you get enough money so you can buy a new car. This is a feature, unlike other companies that will only pay the depreciated value of the car, which can be thousands of dollars less than you just paid the car.
Esurance, an Allstate company, is known for its low online quotes. It’s easy to get a quote online. You can also reach Esurance 24/7 via its toll-free customer service.
You can get reasonable or cheap insurance by getting a quote online, going for a multi-policy discount, and multi-vehicle discount. You can also do the Switch and Save, where you can get discounts by switching from one company to another.
Other benefits it offers include alumni discount (for a Pac-12 school), good grades, among others.
GEICO is known as the pioneer of the online insurance quote business model. It offers one of the best car insurance premiums out there. It markets its ability to save customers 15% or more on their auto insurance.
It is also one of the few companies that offer a lot of discounts. You can get discounts for having good grades. So, if you have teen drivers or college students and they have good grades, you can apply for a discount.
Other discounts include military service, federal employee, honor society discounts, and a lot more.
Known for its “Name Your Price Tool”, Progressive helps you get better rates based on your specific need. It’s also a place where you can get multiple quotes from many companies at the same time.
Some of the discounts it offers include multi-policy and multi-vehicle, good grades, online purchase policy, and others.
How to find cheap car insurance
Did you know that the average cost for car insurance is $1,457 a year? And with the majority of U.S. states mandating that all car owners have basic insurance, you're looking at paying at least $121 a month just for car insurance. That's crazy!
If you're anything like me (Read my story on how to pay off debt fast: $40K Debt to $70K Savings in 2 Years), you're always looking for practical ways to save a few bucks. With a little research, you could be saving upwards of $400 a year.
The key to finding cheap car insurance is being aware of what to look for in good insurance as well as how to combat high premiums with discounts and avoiding hidden fees. It's a big expense, and something you must calculate into your budget.
P.S., If you don't have a budget yet, read this post on how to make a budget that works.
Let's dive in.
What to look for a good insurance
Not all car insurance is created equal. If you want good but cheap car insurance for the best price possible, it's important to understand the factors that influence your auto insurance rate. For example, did you know that a lower credit score could mean a higher premium?
Practical Saver Tip: Learn how to boost your credit score with these credit score hacks.
Here are a few things to consider:
What you need in a car insurance
Your best possible insurance policy will fit your needs but also have the right amount of flexibility to ensure that you can use it whenever, wherever.
Some things are never worth sacrificing when it comes to car insurance, including bodily injury, collision, comprehensive, personal injury project (PIP), and property damage.
If you don't opt to have these, you'll risk not having the minimum level of protection in the event of an accident.
While supplemental coverage may seem unnecessary, it could mean cheap car insurance in the long run. The silver lining of supplemental coverage is while it might cost you money upfront, it could lead to paying less if you get in an accident.
Supplemental coverage can vary significantly from insurer to insurer, so try finding one that has plenty of options.
Some insurers offer an umbrella coverage that helps pay liability costs higher than the limits of your standard auto policy. This helps provide an extra layer of financial security in case you get into a severe accident.
You'll also find that auto insurers have supplemental coverage for specific instances. For example, some insurers offer things like pet injury coverage that helps pay veterinary expenses stemming from a car accident.
Who doesn't love a good monthly discount?
Once you've decided what coverage you want, it doesn't hurt to pick the cheapest place to get it. That's where companies with a wide range of discounts come in handy.
It's unlikely you'll qualify for every discount. Some factors for discounts are beyond your control, like your age, for example. However, there will likely be other discounts that are totally in your control that can lead to cheap car insurance for you.
If you find yourself asking yourself how to find cheap car insurance with a bad driving record, don't totally discount car insurance. Even high-risk insurance agencies offer discounts. You just have to ask and do your research.
Here are a few common discounts to consider to save money on car insurance:
- Paperless Billing – It's as simple as it sounds. If an insurance company doesn't have to send you a paper statement in the mail, many will provide you a discount. When it comes to all the discounts out there, this is a no-brainer.
- Multiple Vehicles on Your Policy – Like other companies, insurers often sell various products. Meaning if you bundle your home insurance or life insurance with your car insurance, you're probably in line for a discount.
- Safety Features – As you might imagine, the safer your car is to drive, the more likely an insurer will give you a discount. In fact, two of the top six most common insurance discounts are for safety features. Some safety feature discounts include:
- Anti-Theft Deterrent Systems – Anti-Theft systems drastically reduce the odds of a vehicle theft so insurance companies will often offer a discount for this feature.
- Anti-Lock Brakes (ABS) – This safety feature has a record of increasing your ability to navigate your vehicle, leading to lower accident rates for owners with ABS-equipped vehicles.
- Passive Restraint Systems – Many vehicles come standard with a passive restraint system, like airbags or factory-installed seatbelts. Airbags more often than not will get you a discount on your insurance premium.
- Good Student Discount – Cheap insurance for young drivers is hard to come by, but, if you're a good student, it's possible to get a discount. Insurance companies have found that people with good grades often pose a lower risk than those who have bad grades, which means good grades = discount!
- Senior Citizen Discount – Over 65? There's a discount for that. Insurance companies know that older people drive far less than younger drivers, leading many insurers to offer a discount.
- Hybrid Cars – Going green not only helps save the environment, but it can also you some cash. Some insurers even offer up to 10 percent off your premium!
- Good Driver Discounts – If you ever watch TV, you've likely seen insurance providers advertise about rewarding good drivers with discounts. So, if you're a good driver, this is definitely a discount to keep your eyes peeled for.
When it comes to discounts, there's an excellent chance you'll qualify for one. However, in the rare chance that you don't, consider other ways to save money each month or even make extra money using money making apps.
Ways to get the cheapest car insurance premiums possible
Nobody wants to spend a whole lot of money on auto insurance premiums especially when you have a clean driving record.
Here are some of the ways to get the cheapest car insurance you can get:
Use pay-per-mile insurance
If you don’t drive a lot or drive less than 10,000 miles per year, you could save money going for a mileage-based insurance program such as Metromile, Nationwide’s SmartMiles.
Metromile insurance charges a monthly flat-rate fee plus a mileage fee. You may pay $30/mo plus 5 cents per mile, for example. That means if you drive 500 miles a month, you would only pay $55/mo. That’s not bad at all.
As with any other insurance companies, your rate is based on your age, where you live, and your driving record.
Raise your deductible
If you’ve got a clean record or have never been in a car accident (knock on wood), you may want to consider raising your deductible. This alone can help you save money.
That’s because higher deductible means a lower insurance rate than what you would normally pay if you’re deductible isn’t high.
Don’t ignore the locals and regionals
While you’ll see a lot of big companies advertising in different advertising platforms, there are up-to-par local and regional insurers that can provide you the same or even better services at a much lower cost.
Never assume one specific company provides the cheapest rate
Each insurance company has its own secret formula on how to come up with an insurance rate for its customers. Of course, they will never reveal this.
One insurance company may be the cheapest in one state but could be the most expensive in the neighboring state.
Don’t be fooled by commercials and companies touting themselves as the provider of the cheapest car insurance.
Boost your credit score
Except for three states namely California, Hawaii, and Massachusetts, all other states use your credit score as a factor in determining your car insurance quotes. That’s a fact.
The real deal is that insurance companies state that customers’ credit has been shown (in studies) to correlate with their chances of filing insurance claims.
To monitor your credit score and make easy steps to further increase it, one great site to use is Credit Sesame. It not only offers FREE credit report but also offers tips on how to increase your credit scores for good.
Check premiums before buying a car
One good rule is to never buy a car without checking how the premiums would cost. You’ll be surprised that some type of car or model are more expensive (premium wise) than others and vice-versa.
You don't buy a Mustang and expect low insurance just because it's a car and not a truck or SUV.
Choose liability over comprehensive
If you’ve got an old car that’s worth less than what comprehensive insurance coverage would pay when repaired, then, it’s best to choose liability coverage.
If your car is old and has a low value (market), it may not always make to get a more expensive coverage.
Click here to find more information about liability vs. full coverage.
Why cheap car insurance isn’t always the best
Sure. It’s nice to pay for cheap auto insurance, but there’s more to it than just the affront costs. When choosing less expensive auto insurance, you also need to think of the protection it provides.
Here are some reasons that the cheapest car insurances may not always work for your best interest.
- Minimal limits and protection. If you go for the bare state minimum requirements for insurance coverage and you get into an accident, chances are you are going to shell a lot of money as your insurance will only cover a couple of hundred dollars, depending on the case.
- Fewer coverages and increased repair costs. Some coverages will be impacted if you opted for cheaper insurance.
- More out-of-pocket expenses. Before your coverage begins, you need to pay your deductible, which is your out-of-pocket expense. In most cases, the lower your insurance premium is, the higher the deductible will be. While you can save money now on paying for cheap car insurance, you’d be shelling out more money if you get into an accident and need to pay your deductible.
Why cheap car insurance may be best for you
While some people think that less expensive auto insurance isn’t the way to go, there are benefits of having one. Here are they:
- Savings. As you can guess, cheaper auto insurance means more money saved for you. You can use this savings for other purposes such as to pay off debt fast, build your emergency fund, etc. If you can't pay bills off, now, you can with your savings.
- Better service. Just because you want to get cheaper insurance doesn’t mean the service you get is cheap, too. Believe it or not, there are instances where the cheaper your premium is, the better service you’d get. How is this possible? Some small companies try to gain market share, and would be willing to compete for your business, and offer you low auto insurance with comparable coverage to that of its competitors.
Family type cars and cheap car insurance
Believe it or not, some of the top cars in terms of low car insurance are family-type cars, and there’s a reason for that.
Family type cars are generally driven by people who are cautious with their driving. Why? It’s because companies typically see these people driving with their young kids in the car.
If you have a family-type car though you don’t have a family, chances are you’re benefitting from this type of family car in the form of lower car insurance.
Want to save money on car insurance? Avoid these cars
It’s not a surprise that owning a specific type of cars often drives up car insurance rates. If you’re searching for a new car and want to save on car insurance, you might want to check out these cars first:
- Sports cars have some of the highest auto insurance rates. That’s not just because they’re expensive, but also because most of the sports car drivers are typically younger, and are more prone to accidents, which drive up insurance rate.
- High-end luxury cars are not just expensive but they are also expensive in terms of repairs or replacement. That’s why the insurance cost for these cars is high.
- Electric vehicles can be costly (insurance rate wise) because: (1) they're expensive, and (2) cost of repair is high, too.
Tips for Avoiding Hidden Fees
Did you know that over 85 percent of Americans have encountered an unexpected or hidden fee over the past two years? That's a staggering number!
If you want to find cheap car insurance, avoid hidden fees. Even if you find yourself asking how to find cheap car insurance with a bad driving record, hidden fees could be the trick to saving some serious cash on your car insurance.
Here are the most common hidden fees:
- Installment Fees – Installment payments are not free with every premium, so make sure to read the fine print. “Installment fees” are sometimes called “convenience fees,” so keep both in mind when reading the fine print.
- Brand Loyalty Costs – A brand loyalty cost usually happens when you choose to stay with an insurance company because it's easier than switching. Insurance companies know this and will charge you more for the same premium. To combat brand loyalty costs, make sure to shop around at least once a year to compare premium prices.
- Higher Deductibles – Make sure to pay attention to your deductible. While a higher deductible means a lower premium, this hidden fee may hit you if you have an accident and can't afford to pay the deductible out of pocket. As ask yourself, “On any given month, can I afford to pay the deductible out of pocket?” If the answer is no, consider paying a higher premium.
Like everything in life, these fees and others are avoidable with a little research. And that research could lead to cheaper car insurance for you!
For some of you, this may be the first step on your journey to stop living paycheck-to-paycheck, and that's great! Keep moving forward and don't be afraid to ask your insurance agent questions, or with a customer service representative, if you're looking to buy cheap car insurance online.
Finally, don't make financial excuses about not finding the best rate. Just like making excuses for not saving, you're only hurting your future self from being financially stable.
How to save money on car insurance FAQs
Here are some questions related to car insurance premiums that people ask from time to time:
How can I get super cheap insurance?
Here's a summary of ways to get cheap insurance, which is detailed above this post:
- Use pay-per-mile insurance
- Raise your deductible
- Don’t ignore the locals and regionals
- Never assume one specific company provides the cheapest rate
- Boost your credit score
- Check premiums before buying a car
- Choose liability over comprehensive
What are the 10 best insurance companies?
The word ‘best' is really subjective. One may consider XXX company better than YYY company. But here is a list of best insurance companies based on how big these insurance companies are. This list from the ValuePenguin.
|Rank||Auto Insurance Company||Premiums Written ($bn)||Market Share|
How do I get the best auto insurance rates?
Here are some of the best ways to save money on car insurance that people tend to overlook:
- Shop around. Never stick with one auto insurance company. There are so many factors involved in the calculation of your premium. So, one company may have better rates on full coverage while another company has better rates on liability coverage, for example.
- Get an insurance quote before buying a car. Never buy a car without looking at the insurance rates first.
- Maintain a good credit record. There's a correlation between good driving record and good credit record. That means the better the credit score you have, the better your insurance rates would be.
- Reduce coverage on older vehicles. There may not be a need to carry full coverage on fully-paid or older vehicles with a market value that's less than what insurance company would cover under the full-coverage umbrella.
Conclusion: How to find the cheapest car insurance
Finding the most affordable car insurance doesn't always have to be difficult. It's easier now than ever with this guide.
So, next time someone asks you how to find one or if you need a refresher on what you need to do to get the most reasonable rates possible, you can always come to this post.
Are you ready to save money on car insurance? What else are you doing to get the most affordable auto insurance you could possibly get?