Nobody would like to spend more than what we have to for our car insurance, but we don’t always find the lower rate.
A lot of small and large insurance companies are competing for our business. Many have a variety of dazzling policy options, making it difficult to compare policies and determine who is offering the lowest auto insurance rates.
Here are eight things you can do to make sure you get good coverage at the cheapest possible rate.
1. Don’t assume any one company is the cheapest
Some companies spend a lot of money on commercials to convince you that they offer the lowest auto insurance rates. But no insurer is the low-priced leader for everyone. The insurance company that is cheaper for a person in one place may be the most expensive option for a driver in a different state.
The only way to ensure you’re getting the lowest rate possible is to shop around.
2. Don’t ignore local and regional insurers
Just four companies — Allstate, Geico, Progressive and State Farm — control more than half of the nation’s auto insurance business. But smaller, regional insurers such as Auto-Owners Insurance and Erie Insurance often have higher customer satisfaction ratings than the big names — and they may have lower car insurance rates, too.
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3. Ask about discounts
Insurers provide a variety of discounts, which can mean lower insurance rates for customers who:
- Bundle car insurance with other policies, such as homeowners insurance.
- Insure multiple cars with one policy.
- Have a clean driving record.
- Pay their entire annual or six-month premium at once.
- Agree to receive documents online.
- Own a car with certain anti-theft or safety features.
- Are members of particular professional organizations or affiliate groups.
- Don’t be swayed, however, by a long list of possible discounts. Compare rates from multiple insurers.
4. Pay your bills on time
Your credit score is a significant factor in the car insurance quotes you receive — except in California, Hawaii and Massachusetts, which don’t allow insurers to consider credit when setting rates. Insurance companies say customers’ credit has been shown to correlate with their chances of filing claims.
A NerdWallet analysis found that having poor credit can increase people’s car insurance rates by hundreds of dollars a year compared with having good credit. (In most situations, a FICO score of 579 or lower is considered “poor” credit, but insurers have their own credit models that may have a different cutoff.)
Improve your credit — and get lower insurance rates — by paying your bills on time and reducing your debt. Track your progress by checking your credit score regularly.
5. Check insurance costs when buying a car
You probably already pay attention to factors such as fuel efficiency and repair costs when picking a car to buy, but you should also consider insurance premiums. A NerdWallet analysis of the cheapest cars to insure among top-selling vehicles found the lowest insurance rates are for the Subaru Outback, the Jeep Wrangler and the Honda CR-V.
6. Skip comprehensive and collision coverage for an older car
Collision coverage pays to repair the damage to your vehicle from another car or an object such as a fence. Comprehensive coverage pays to repair vehicle damage from weather, animal crashes, floods, fire and vandalism. It also covers car theft. But the maximum payout under either policy is limited by the value of the car if it’s totaled or stolen. If your car is older and has a low market value, it may not make sense to shell out for these types of coverage.
7. Raise your deductible
If you buy comprehensive and collision coverage, you can save money by opting for higher deductibles. (There is no deductible on liability insurance, which pays for the damage you cause others in an accident.)
8. Consider usage-based or pay-per-mile insurance
If you’re a safe driver who doesn’t log many miles, consider a usage-based insurance program such as Allstate’s Drivewise, Progressive’s Snapshot or State Farm’s Drive Safe & Save. By signing up for these programs, you let your insurer track your driving in exchange for possible discounts based on how much you drive, when you drive and how well you drive.