Every driver and vehicle owner needs car insurance to protect their financial interests. Yet even though car insurance is an essential need, no one wants to pay more than necessary for coverage.
There are lots of ways to reduce auto insurance costs. Shopping around for the best premiums, bundling coverage, working to improve your credit, and maximizing discounts are just a few ways to save money.
Insurance companies are competing for your business, and you can use this to your advantage. Below are tips on how to get cheap car insurance that can save you money every month, along with ways to reduce rates with your existing insurer. You’ll also learn the factors that impact your insurance premiums and other cost-saving measures.
Assessing your coverage needs
One of the first steps to finding cheap car insurance is to take an honest look at how much car insurance you need. From there, you can compare those needs to your current coverage and see how the two align.
Are you paying for more car insurance than you’ll need? Or are you underinsured to the point where you might be financially vulnerable in the event of an accident?
First, it’s important to have a clear understanding of the types of auto insurance and the amount of each type of coverage you’ll need for your situation. Below are some common insurance options to consider.
Liability: This type of insurance covers property damage or medical expenses for other drivers and passengers for accidents you cause.
Collision: Collision coverage can help you pay to repair or replace your personal vehicle if you’re in an accident.
Comprehensive: Comprehensive coverage can help protect you if your vehicle is damaged in ways that don’t involve a collision. Theft, vandalism, and storm damage are examples of potential losses that comprehensive insurance may cover.
Personal injury protection (PIP): PIP may help provide financial coverage for your medical bills (along with your passenger’s medical bills) in the event of an accident.
Full coverage: Full coverage is an unofficial term for a car insurance policy that includes liability insurance, collision, comprehensive, and perhaps more.
When shopping for cheap auto insurance, you can also examine your amounts and determine whether adjusting them may be in order. (Later, when you shop around and get quotes from other insurers, these details will empower you to make sure you’re comparing apples to apples rather than getting prices for different products and different levels of coverage.)
Reducing the types and amount of coverage you purchase may save you money on your insurance premiums. But less coverage can also leave you more exposed to financial damage in the event of an accident. Therefore, it’s important to find a middle ground as you try to cut costs to ensure you still maintain the right level of protection.
Tips for finding cheap car insurance
Obtaining affordable car insurance isn’t a one-step process. You’ll probably need to combine several strategies to get the best car insurance rates possible. Here are five tips.
1. Shop around and compare quotes from multiple insurers.
Each insurer has its own methodology for setting premiums, using factors including your driving history, type and age of covered car(s), marks on your driving record such as moving violations and any other drivers who will be covered (hint: teen drivers are more expensive). As a result, shopping around for quotes from multiple providers has the potential to reduce your auto insurance rates in a meaningful way.
You might get quotes for similar auto insurance policies with annual premiums that are hundreds of dollars apart (sometimes more). In addition to locking in an affordable rate, you want to entrust your coverage to the best car insurance company for the money, meaning one with a history of doing business in your state and a record of covering claims in a timely and fair way.
2. Use online comparison tools and insurance websites.
As you’re searching for quotes from different auto insurance companies, online comparison tools can make the shopping process easier. Some insurance websites will also provide you with quotes from competitors alongside their own rates so you can see how the premiums measure up.
Online insurance comparison tools can save you time by eliminating the need to input your personal details over and over again. Plus, as you select the coverage options you desire, these tools can make sure you’re comparing quotes for similar policies.
3. Consider direct insurers, independent agents, and captive agents.
There are three main options when it comes to buying car insurance — direct insurers, independent agents, and captive agents. It’s important to understand the differences between each choice.
Direct insurers: With direct insurers, you typically buy your insurance straight from the company’s website or app. There’s no intermediary between you and the insurance provider (and no separate agent to offer you personalized advice or answers either). Examples include Geico, Esurance, and Progressive.
Captive agents: Captive insurance agents only sell the products their company offers and cannot provide you with quotes from competitors. Examples in the auto insurance space include Farmers, Nationwide, State Farm, and Farm Bureau.
Independent agents: Independent insurance agents work with numerous insurance providers. As a result, they can sell products from multiple insurance companies and help you shop around for the cheapest rates and hidden discounts. Yet it’s still important to check rates on your own since insurance agents often get paid on commission and may have financial motivation to sell you certain policies over others.
4. Explore discounts and incentives offered by insurance carriers.
Searching for car insurance discounts that different providers offer can be another great way to save money on your premiums. There are many different car insurance discount options and incentives available. Below are some of the most common.
Bundling discounts. You’re often rewarded with better rates when you purchase multiple policies, such as auto, life, homeowners or renters insurance, from one company.
Low mileage discounts
Defensive driving course discounts
Safe driver discounts
Good student discounts (for young drivers)
Paid-in-full insurance premium discounts
Paperless statement discount
5. Beware of potential discount insurance pitfalls.
Everyone loves to save money. But certain types of discount insurance may come with pitfalls that you’re better off avoiding.
For example, some discount insurance policies may not cover permissive drivers (aka someone you gave permission to drive your vehicle) or they might offer reduced coverage instead. With other policies, your coverage level might drop when you drive outside of your state of residence.
It’s important to read the fine print of your auto policy to understand any coverage restrictions. And check out the online reviews and complaints for different insurers you’re considering.
Strategies to save money on your current car insurance
If you don’t want to go through the hassle of changing auto insurance providers, you might be able to save money on your current policy. The cost-cutting measures below could save you money, but it’s important to understand the risks involved.
Ask for discounts: Watching your premiums increase for the same coverage gets old fast. Call your insurance agent or insurance company and ask if you’re eligible for any discounts. If you’re considering changing insurers or you’ve found a better rate with a competitor, mention that.
Increase your deductibles: If you have a solid , increasing your deductibles could lower your car insurance premiums. In return, however, you’d have to pay more out of pocket for accident repairs before your coverage kicks in.
Adjust coverage amounts: If you have an older vehicle that’s paid in full, you might consider reducing your coverage or switching to liability insurance that pays for damage or injuries you cause to someone else. These options could save you money on your premiums, but you should only consider them if you’re comfortable (and financially able) to pay to fix your own vehicle in an accident.
Factors that affect car insurance rates
While premiums vary among insurers, there are some common factors that affect the car insurance quotes you receive from different providers, including the following.
Vehicle make and model: Certain types of cars cost more money than others to insure. As a rule, more expensive cars and higher repair costs will lead to higher insurance rates. If you’re considering buying a new or used vehicle, it’s wise to research the cost of insurance before you make your purchase.
Age: Younger drivers typically pay more for auto insurance due to a lack of experience behind the wheel.
Coverage selections and limits: The types of insurance you choose and your coverage limits have a significant influence over the cost of your car insurance rates.
Credit score: Your credit-based insurance score predicts how likely you are to file an insurance claim. has the potential to save you money on your premiums, although some states limit or don’t allow insurance providers to use credit when pricing auto insurance policies.
Driving record: A clean driving record should save you money on your car insurance. On the other hand, if you have a history of speeding tickets, DUIs, at-fault accidents or other black marks, you should expect to pay higher premiums.
Saving money by switching car insurance companies
According to J.D. Power, close to one-third (31%) of auto insurance customers in the U.S. have experienced a rate increase in the past year. During that same time period, auto insurance premiums have gone up an average of 15.5% to compensate for the record-high losses that insurers have experienced.
Some insurers offer loyalty discounts to discourage customers from changing providers. However, it’s still wise to review offers from competitors at least once every 12 months to confirm you’re getting the best rates available on your car insurance coverage.