Auto insurance is a necessity for every driver, but the cost can vary significantly. The quest for affordable auto insurance is a common concern among motorists. In this exhaustive guide, we will explore the ins and outs of securing cheap auto insurance without sacrificing essential coverage. From understanding the factors affecting premiums to comparing quotes effectively, we’ll equip you with the knowledge and tools to make informed decisions and save on your car insurance.
Table of Contents
- Understanding Auto Insurance
- Why Cheap Auto Insurance Matters
- Factors Affecting Auto Insurance Rates
- Understanding Types of Coverage
- Discounts and Savings
- Comparing Auto Insurance Quotes
- Tips for Lowering Auto Insurance Rates
- Auto Insurance FAQs
- State-Specific Considerations
Understanding Auto Insurance
Auto insurance pays for injuries or property damage after an accident, at least up to the policy’s limits. That financial protection is why insurance is usually required by state law in order to own or drive a car.
Medical bills and car repair costs can add up when multiple vehicles and drivers are involved, which can quickly become overwhelming. And because the cost of car insurance depends on many different factors (like where you live and what kind of car you drive), it can be difficult to understand how much you’ll pay and how much coverage you’ll need. All of this means that shopping for the right insurance can be difficult for anyone.
Types of Auto Insurance Coverage
Understanding your options for available types of insurance coverage is important when you are purchasing a new car or shopping around for insurance. Some coverages protect you, your passengers, and your vehicle, while others protect you if you cause injuries or damage to another party. According to Allstate Insurance, the six most common types of coverage you can purchase are:
According to Progressive Insurance, some of these coverage types are mandatory, while others are optional. Familiarize yourself with your state’s insurance regulations so you can narrow down your options when insurance shopping.
- Collision Coverage
Collision coverage will cover damage to your vehicle while driving. If you hit another vehicle or a stationary object, collision coverage will cover the repairs to your vehicle. For example, if you need your windshield repaired because your vehicle flipped over, collision coverage will apply. However, the collision will not cover anything related to the other property damage you caused. Collision is not necessarily a state-mandated coverage, but Wallet Hub points out that your financing company might require it if you have an outstanding car loan.
- Comprehensive Coverage
Many people purchase comprehensive and collision coverage together, but they are distinctly different. For one, comprehensive doesn’t cover accident-related damage to your vehicle. Comprehensive covers damage from causes such as natural disasters including hail, earthquakes, fires, and floods, among others. If your vehicle is stolen or vandalized or is damaged by contact with animals, comprehensive will cover the damage.
- Liability Coverage
Liability insurance protects you from any accidents that are your fault. If someone else needs medical attention or has property damage, your liability coverage will cover their damages. Liability coverage is required in most states. Liability coverage has three main aspects, and each has a different policy limit:
- The maximum coverage amount that any one person can receive in an accident.
- The total amount of coverage for all injured parties in an accident.
- The maximum amount of coverage for any property damage in an accident you cause.
To better understand the breakdown of limits, use the example of 15/30/5. What that means is that $15,000 is the maximum for only one injured person, $30,000 for all injured parties, and $5,000 for property damage.
- Uninsured and Underinsured Motorist Coverage
Uninsured motorist (UM) and underinsured motorist (UIM) coverage is usually sold together as a bundle. UMBI will cover your injuries if an uninsured motorist hits you. UMPD will cover your vehicle damages if you’re struck by an uninsured motorist. UIM will provide additional coverage if the at-fault party doesn’t have high enough policy limits to fully compensate you for your damages.
- Medical Payments (MedPay)
Medical payment coverage is similar to personal injury protection but is much more limited in its coverage scope. MedPay will cover medical expenses for you, your passengers, household members, and any other policyholders. It can serve as a supplement for those who have health insurance that covers accident-related expenses. For those who do not have health insurance, it’s a good substitute. MedPay can also cover your deductibles and co-pays for other policies you have, such as your health insurance.
- Personal Injury Protection (PIP)
Personal injury protection (PIP) is often referred to as no-fault insurance. PIP is mandatory coverage in states with no-fault accident laws. PIP will cover your injuries and expenses in the event of an accident, regardless of who is at fault. Coverage will extend to other drivers you list on your policy, household members, and other passengers. PIP coverage is more expansive than MedPay and may cover loss of earnings, child care, funeral expenses, and more.
Legal Requirements and Minimum Coverage
Although insurance carriers will not sell you a policy with less coverage than the state-mandated minimum coverage level, it may still be a good idea to review your state’s minimum coverage requirements. Also, remember that you can always purchase more coverage than required if you want additional financial protection. Most insurance professionals recommend getting quotes for multiple coverage levels before choosing the minimum amount of car insurance coverage available in your state to save on auto insurance premiums.
The table below includes the minimum car insurance requirements in all 50 states and Washington, D.C.
|Bodily injury liability and property damage liability
|UM/UIM, PIP and MedPay
|25/50 UM; 50 UIM
|Six PIP options: minimum $50,000 for insureds on Medicaid
Below are the coverage types that are often required with minimum car insurance:
- Bodily injury (BI) liability: If you cause an accident with another driver or pedestrian, bodily injury liability coverage will help pay for medical expenses related to the other person’s injuries. It may also cover your legal fees if the other person sues you for their losses.
- Property damage (PD) liability: Property damage liability coverage is designed to pay toward property damage that you cause to others. For example, if you hit another vehicle on the road, your property damage liability insurance could help pay for the other vehicle’s repairs.
- Uninsured/Underinsured motorist coverage (UM/UIM): Uninsured and underinsured motorist coverage offer financial protection in the event that you get into an accident with a driver who is uninsured or does not have enough coverage to pay for your losses.
- Personal injury protection coverage (PIP): Personal injury protection is a requirement in states that have no-fault laws. If you get into an accident, PIP can pay for your medical bills, lost wages, rehabilitation costs and related expenses, regardless of who caused the accident. This coverage can also be purchased in some at-fault states.
- Medical payments coverage (MedPay): Medical payment coverage may help pay your medical expenses following an accident and is not typically as robust as PIP. It is generally considered an optional coverage. However, a few states do require drivers to carry medical payment coverage.
The minimum amount of coverage per person and per accident is different depending on your location. To find the exact minimum coverage requirements in your state, you can visit your state’s Department of Insurance website or contact your auto insurer.
Why Cheap Auto Insurance Matters
Reading an auto insurance definition isn’t quite the same as understanding why you need it, because if you’ve been in an accident, you’re probably more interested in how it works and what exactly it does.
Car insurance is required in most states, so the first reason you need it is to meet your state’s minimum insurance requirements. But perhaps more importantly, car insurance provides financial protection. It keeps you from having to pay out of pocket for expenses that come up after a wreck, so long as they fit within your policy’s maximum limit.
The cost of an accident can quickly add up. For example, the average cost of property damage after an accident is $5,700 per vehicle, according to 2021 data from the National Safety Council. But if injuries or death occur, expenses can climb to more than $120,000 per person. So unless you have $120,000 stashed in your sock drawer, a car accident could result in serious financial ruin.
Here’s an example of how much an accident could cost you:
Scenario: You’re driving through an unfamiliar part of town and hit another vehicle at an intersection. Your car costs $3,000 to fix, and the other driver’s repairs are $2,000. The other driver also needs surgery because of the accident, and the medical bills come out to $30,000.
Total out-of-pocket cost without car insurance: $35,000
Because you were at fault in the accident, you’re responsible for paying all of those bills out of pocket if you don’t have auto insurance. But that’s not the only version of this story.
Let’s say that in this scenario, your car insurance policy covers $25,000 in medical bills per person, $50,000 for total medical bills and $15,000 for total property damage. You’re responsible for repairing your own vehicle, but your insurance covers the other driver’s car repairs and $25,000 of their medical bills. After your insurance pays out, you’re responsible for paying $5,000 for the other driver’s remaining medical expenses, plus $3,000 for your own car repairs.
Total out-of-pocket cost with car insurance: $8,000*
*Based on a liability-only car insurance policy with limits of $25,000 in bodily injury liability per person, $50,000 in bodily injury liability per accident, and $15,000 in property damage liability.
Benefits of Affordable Coverage
Here are five major car insurance benefits.
- 1. Damage or loss to insured vehicle
In case your vehicle is damaged due to an accident, fire, or self-ignition, you are protected. Furthermore, if the car suffers losses due to burglary or theft, strikes, riots, or terrorism, your insurance policy covers these. Another benefit of car insurance is that it covers loss or damage while in transit by rail, inland waterways, air, road, or lift.
- 2. Personal accident cover
Another advantage of car insurance is that it offers personal accident cover for a pre-determined amount. Personal Accident cover provides protection against permanent total disability and death due to an accident. Furthermore, this cover can be taken for other passengers on unnamed basis (maximum as per the vehicle’s seating capacity) for a pre-determined amount under the car insurance policy.
- 3. Large network of garages
HDFC ERGO Car Insurance maintains a large network of garages across the country. This ensures you receive cashless services in all these locations, in case the need arises. This feature makes it convenient to avail of repair services in case of any damage to your vehicle.
- 4. Third party liabilities
If your car is involved in an accident that results in damage or loss to the property of any third parties, it is covered under the car insurance. Furthermore, if you face any legal liabilities in case of any bodily injury or death of a third party, your car insurance protects you against the same.
- 5. No claim bonus
One of the major advantages of having car insurance is the no-claim bonus (NCB). The customer is eligible for this benefit for every claim-free year. This may be available as a discount on the premium, which makes car insurance even more affordable.
Avoiding Common Pitfalls
When it comes to auto insurance, everybody tries to save money. Insurance is the one thing you have to buy that you hope you never use. And you just don’t want to pay too much for something you don’t want to use!
Here are the top 6 mistakes people make when buying their auto insurance.
- 1. Setting Your Deductible Too High
As you raise the deductible on your auto insurance policy, you can expect your premium rates to go down. This can be very appealing to many auto owners looking to save some money. The problem arises when you have an accident or damage your car and need it repaired.
Before you can have your vehicle repaired, you will have to pay the deductible out of pocket first. If the repairs are going to cost more than you have available, you could be in big trouble when it comes to getting your car fixed and back on the road.
Setting your deductible too high can leave you shocked when you have to pay the deductible before having your vehicle repaired.
- 2. Setting Your Coverage Limits Too Low
The state of Pennsylvania requires very low limits when it comes to auto insurance. You only have to carry $15,000 in liability and $5,000 in property damage coverage on your auto insurance policy by law. Low liability limits do lessen the amount of your auto insurance premiums.
The problem with this solution for saving money on auto insurance becomes evident after you cause an accident. Most accidents today will cost more than $5,000 in property damage. In 2021, the average vehicle cost over $42,000.
Read Also: Choosing Long Term Care Insurance Companies
If you total someone else’s car, do extensive damage to their property, or even take out a telephone pole, you can be held responsible for paying for the damage. If you have state minimum limits on your auto insurance policy, you may not have enough to cover the damage.
If you do not have enough insurance to cover the damages, you can be sued to cover the remaining amount. Your assets can be taken to cover the damage.
- 3. Lying On Your Car Insurance Application
Lying on an insurance application is a big deal. If you are not truthful when you fill out your application, the insurance company could ultimately deny your claims.
In terms of auto insurance, the two areas in which individuals are prone to dishonesty are when it comes to listing young drivers on the policy and disclosing how the vehicle is being used.
Everyone knows that adding a teenage driver to your car insurance significantly increases your premium. So, you may be tempted not to add a young driver to your policy.
However, if your teen driver uses your vehicle and causes an accident, the insurance company may deny the claim. You can also have your policy terminated for leaving out such information.
More commonly, individuals don’t disclose how they use their vehicle. If you use your vehicle for any business use, you need to inform your car insurance company.
For example, if you are a salesman and use your vehicle to go on sales calls, you are using your vehicle for work purposes. If your vehicle is not designated as being used for work and you have an accident on your way to a sales call, your insurance may not cover the claim.
- 4. Not Looking for Discounts
Did you know that most insurance companies offer discounts to their policyholders? You may qualify for a discount if:
- You purchase your home insurance, life insurance, or other insurance products from the same insurance company.
- Only use your vehicle seasonally.
- Own a vehicle that includes safety features like assisted parking or lane assist.
- You set up automatic withdrawal for your insurance premium.
- You pay in full the annual premium amount on your auto insurance policy.
- You willingly use a telematic device to record your vehicle’s usage.
A top-notch insurance agent will seek out discounts for you. They should help you find ways to save money on your insurance.
- 5. Buying Insurance with a Large On-line Company
Large national online insurance companies have increased in the past decade. These insurance companies may offer the coverage you need at a lower price than you might get at your local independent insurance agency.
The biggest reason they switch back to a small insurance agency is the care they get when they have an insurance problem.
When you buy your insurance from an independent insurance agency, you are typically assigned to a specific agent. That agent represents you to the insurance company. That agent helps you navigate claims and negotiate your insurance premiums.
With a small independent agent, you will talk to the same agent whenever a need arises instead of a person answering calls at a call center. You are not just a claim number or policy number when working with an independent agent. Most independent agents know their clients and build a lasting relationships with them.
- 6. Switching Insurance Companies Every Year
One final tactic that people often use to save money on their insurance policy is by getting quotes from multiple companies each year and changing to the best price. This might seem like a wise way to do your insurance shopping, but it usually leads to higher insurance premiums in the end.
Insurance companies appreciate and reward customer loyalty. Insurance companies also see your insurance record when they review your application. They can see how long you have kept your insurance at each company.
Practically here’s what I mean. Let’s say after three or four years with ABC Insurance Company, and your rates have a significant increase. Maybe you added a teen driver to your policy. Maybe the rates just went up, and you don’t know why.
You decide to shop around for better rates. When you apply to XYZ Insurance Company, they can see that you have had your insurance with ABC Insurance Company for multiple years.
Even though you will be new to XYZ Insurance Company, they will recognize you as a loyal customer since you kept your insurance at the last company for multiple years. They will discount your policy accordingly. If you had only been with ABC Insurance Company for a year, XYZ Insurance Company would not give you their most favorable rate.
Factors Affecting Auto Insurance Rates
The state in which you live and drive will impact which factors can be used to determine your car insurance rates, as certain states ban the use of several factors. However, some of the most common factors that affect car insurance rates include:
- Your age: Younger drivers have less experience than older drivers, making them riskier to insure. However, the rates for seniors also go up, so those who are under the age of 25 and over the age of 65 tend to have the highest rates when age is a significant factor.
- Gender: Most states allow insurance companies to differentiate between female and male drivers, charging men more than women when they’re younger and women more than men as they age. However, data presented by The Zebra shows that certain states do not allow gender to impact insurance costs.
- Marital status: Wallet Hub reports that many major insurance companies offer lower rates to married drivers than single, separated, widowed, and divorced drivers.
- Location: Each state has its own regulations on car insurance, resulting in varying rates between the states. For example, Allstate reports that rates in Louisiana and Michigan cost an average of four times more than the same coverage for drivers in Maine and North Carolina. Your zip code is also a major factor in your rates, as is your neighborhood. Your location determines the potential risk of your vehicle being vandalized or stolen, while drivers in bigger cities with heavier traffic are more likely to be involved in crashes.
- Credit history: Your credit history is another factor used to determine what you will pay for car insurance coverage. Paying your bills on time and maintaining a high credit score will significantly impact your rates in most states, although certain states ban the use of credit history when setting insurance rates. If you live in a state where an insurance company can assess your credit score as a factor in your coverage cost, you could pay as much as double the average if you have poor credit, according to information presented by Nerd Wallet. Money Crashers reports that the reasoning behind this increase in rates is that people with lower credit scores are more likely to file a higher number of claims and more expensive claims than those with higher scores.
- Driving record: Nearly every auto insurance company uses your driving record as a significant factor when setting your rate. Drivers who have violations, including at-fault accidents, traffic tickets, and DUI or DWI will pay more than drivers with clean driving records. Those who are particularly high risk may only be able to obtain coverage through insurance companies that specialize in working with high-risk drivers.
- How much you drive: Those who drive fewer miles on average can often qualify for lower rates since the risk of being involved in an accident is lower. A 40-year-old male who drives an average of 5000 miles in each calendar year can qualify for a rate that is about 6 percent lower than someone of the same age who drives an average of 12,000 miles in a calendar year. Some lower-mileage drivers also choose coverage that allows them to pay per mile, which will track the actual mileage and charge accordingly.
- Your car: When assessing the cost of car insurance, a company will look at other drivers who drive the same vehicle as you and the risk associated with that particular model. If you drive an expensive and/or imported car, the cost to repair it will be higher, resulting in higher rates. If you drive a fast sports car, you might pay more because of the increased risk of a speeding ticket. Additionally, the extent of damage a particular vehicle can cause to another vehicle may also be a factor in car insurance rates.
- Coverage: Not surprisingly, the level of coverage you choose impacts your overall cost. Full-coverage auto insurance policies can be double the cost of policies with more minimal levels of coverage. A full-coverage policy includes comprehensive and collision coverage, which are options designed to cover your car if it is stolen, damaged in a crash regardless of fault, or vandalized. Other add-ons, such as new car replacements or emergency roadside assistance, will increase the cost as well. It’s up to you to determine whether the benefits provided by additional coverage are worth the added cost.
- Occupation: Those working in certain positions or roles may pay higher insurance rates as they are generally more likely to file claims. However, some states have banned the use of occupation in setting insurance rates and other states are considering similar bans.
- Where you park: If you park your car in a garage regularly, it is less likely to be damaged or vandalized than it would if you parked it on the street. The location of where you park your car may impact your auto insurance rate.
- Driving experience: As mentioned, age is a factor in car insurance rates partly because it reflects driving experience. The number of years you have been driving can play a role in what an insurance company will charge you for coverage, and as you continue to rack up more driving experience, your rates can decrease.
- Previous insurance claims: When you file a claim on your insurance policy, your rates may increase when the policy comes up for renewal. A driver with a recent at-fault accident will pay an average of 50 percent more than a driver without an at-fault accident on their record. You may be able to qualify for an add-on known as accident forgiveness, which means your insurance company won’t increase your rates after your first accident. However, this add-on will usually come at an additional cost.
- Trim level: The trim level of your car is another factor that insurance companies consider when setting rates. Models with high-end features, such as a premium sound system or integrated navigation, may cost more to insure because they cost more to replace.
Car insurance rates vary depending on several factors. Be sure to check with multiple companies to determine which one can provide the best rates for your individual situation.
Understanding Types of Coverage
The six types of car insurance you can get each serve a different purpose, in terms of what they protect against. Some cover your vehicle or another driver’s, while others cover property damage or personal injury. Here’s a closer look at how each one works.
- Bodily Injury Liability Insurance (BI)
Bodily injury liability insurance is designed to pay expenses for someone else if you injure them in an accident where you’re deemed to be at fault. This coverage can apply to you and to anyone else who’s listed as a driver on your policy.
In terms of what this coverage can pay for, the list includes:
- Medical expenses
- Lost wages
- Pain and suffering
State law can determine the minimum level of bodily injury liability insurance coverage you need.
- Property Damage Liability Insurance (PD)
Property damage liability insurance also covers you in accidents in which you’re at fault. It pays for repairs to the other driver’s vehicle or other property you may damage.
For purposes of this coverage, “other property” can include:
- Equipment, including mailboxes
Property damage liability coverage can also pay for damages to someone else’s home. For instance, say you’re driving through a neighborhood and your brakes suddenly fail. Your car leaves the roadway, traveling into someone’s yard and eventually stopping after colliding with their front porch.
In that case, your property damage liability coverage would pay for repairs to the home, up to your policy’s coverage limit. The homeowner could then use their homeowner’s insurance policy to cover any remaining amount needed to finish the repairs.
- Medical Payments or Personal Injury Protection Insurance (PIP)
If you or a passenger in your vehicle are hurt in an accident, medical payments coverage can pay for any resulting medical bills. Benefits are paid out up to the limit stated in your policy and can reduce any amounts that need to be paid by your health insurance coverage.
Adding personal injury protection coverage to your policy can help to replace lost wages if you or an injured passenger are unable to work or funeral expenses if someone in your vehicle dies because of an accident. The amount of coverage you’re required to have can depend on where you live.
In Michigan, for example, drivers can opt out of PIP coverage if covered by Medicare Parts A and B. However, it’s also possible to get unlimited PIP coverage for yourself and all passengers in your vehicle at the time an accident occurs.
- Collision Coverage
While property damage liability insurance pays for damage to someone else’s vehicle or property following an accident, collision coverage pays for damage to your own vehicle or property. That can include damages caused by a collision with another vehicle or hitting a stationary object, such as a tree or fence.
Whether you need to have collision coverage can depend on the state you’re getting insured in and if you have a loan on the vehicle. Your state insurance department may not require collision but if you’re borrowing money to buy a car, the lender might require you to have it until the loan is paid off.6
- Comprehensive Coverage
Comprehensive coverage reimburses you for loss, theft, or damage to your vehicle caused by something other than a collision with another vehicle or object.
For example, comprehensive coverage can protect you from damage related to:
- Falling objects or projectiles
- Windstorm or hail
- Malicious mischief
- Civil unrest
- Contact with a bird or animal
- Glass breakage
Again, whether you’re required to have this coverage or not can depend on where you live and if you still have an outstanding loan on the vehicle.
- Underinsured/Uninsured Motorist Coverage
Underinsured motorist coverage can protect you if you’re involved in an accident where the driver who’s at fault doesn’t have sufficient insurance. Uninsured motorist coverage is meant to protect you if you’re in an accident with a driver who has no insurance at all.
Either type of coverage can pay for medical bills or repairs to your vehicle. You might consider adding on this type of coverage if you live in a state with a high number of uninsured or underinsured drivers.
Discounts and Savings
Safe Driver discounts are given to policyholders who practice safe driving behaviors and take proactive steps to improve their driving abilities. Having a clean driving record, wearing seatbelts, and taking educational courses that teach safe driving habits and offer an understanding of traffic regulations and signs are all part of this.
- Safe Driving Discount
Safe driving discounts are offered to policyholders with a clean driving record, free from accidents and traffic violations. Insurers typically require a specific number of years without incidents to qualify for this discount. For example, if you’ve maintained a clean driving record for five consecutive years, you may be eligible for a safe driving discount. Most widely available car insurance companies offer this discount, including Allstate, Auto-Owners, GEICO, Progressive, State Farm, Farmers, Travelers and USAA.
- Defensive Driving Discount
Defensive driving discounts are available to individuals who have completed an approved defensive driving course. These courses provide drivers with additional knowledge and skills to navigate challenging situations on the road. Eligibility requirements may vary, but completing an accredited course can help you qualify. GEICO, Nationwide, USAA and State Farm offer defensive driving discounts.
- Driver’s Education Discount
Driver’s education discounts are designed for young drivers who have completed a driver’s education course. These courses provide comprehensive instruction on safe driving practices and may be required to obtain a driver’s license for young individuals. Completing a recognized driver’s education program can make you eligible for this discount. Providers like Allstate, GEICO, Travelers, USAA and State Farm.
- Seat Belt Use Discounts
Seat belt use discounts reward policyholders who consistently wear their seat belts while driving. Insurers encourage responsible behavior and promote safety by offering this discount. Eligibility requirements usually involve confirming that all occupants of the insured vehicle wear seat belts. This discount is available from GEICO.
- Home and Auto Bundle Discount
Home and auto bundle discounts are offered to policyholders who bundle their car insurance with other insurance policies, such as homeowners, renters or condo insurance. Combining policies with one insurer can lead to significant savings. Look for bundling options with Farmers, GEICO, Allstate, Auto-Owners, Nationwide, Progressive, USAA and State Farm, who all offer home and auto bundle discounts.
- Multi-Car or Shared Family Car Discount
Multi-car discounts are available to policyholders insuring more than one vehicle with the same insurer. Shared family car discounts apply when multiple members of a family share a single vehicle for their insurance needs. Companies that offer multi-car discounts include Auto-Owners, Farmers, GEICO, Nationwide, Progressive, State Farm, Travelers and USAA.
Farmers offers a shared family car discount for families with a driver younger than 20 years old listed on the policy and if there are more drivers than vehicles.
- Pay-in-Full Discount
Pay-in-full discounts are provided to policyholders who pay their premiums upfront for the entire policy term instead of opting for monthly payments. Though paying in full requires the highest up-front cost, it demonstrates financial responsibility and can lead to lower overall premiums. If you are prepared to pay in full at the start of your policy, look to Allstate, Auto-Owners, Farmers, Progressive and Travelers for this discount.
- Automatic Payment Discount
Automatic payment discounts are given to policyholders who set up automatic payments for their insurance premiums. By ensuring timely and consistent payments, insurers offer this discount as an incentive for policyholders. Allstate, Farmers, Nationwide and Progressive provide discounts for automatic payments.
- Paperless Discount
Paperless discounts encourage policyholders to receive documents and bills electronically, reducing paper waste and administrative costs. Drivers who opt for paperless billing and documentation can qualify for this discount. Allstate, Auto-Owners, Farmers, Nationwide, Progressive and Travelers provide this discount.
You may be able to double up on discounts with automatic payments and paperless billing with Allstate, Farmers, Nationwide and Progressive, as these companies offer both discount options.
- Continuously Insured Discount
Continuously insured discounts are provided to policyholders who have maintained continuous coverage without any gaps or lapses in their car insurance policies. By consistently having coverage, policyholders demonstrate responsible behavior and commitment to maintaining insurance. If you’ve had continuous insurance, you may be eligible for this discount from Progressive.
- Early Sign-Up Discounts
Early signing or sign-up discounts are available to policyholders who sign up for a new policy with an insurer before their current policy expires. This discount from Allstate, Auto-Owners and Travelers rewards individuals for proactive planning and loyalty.
- Low-Mileage Discount
Low-mileage discounts are available to policyholders who drive fewer miles than the average driver. Lower mileage indicates reduced exposure to potential accidents and can result in lower premiums. Eligibility requirements may vary, but generally, driving below a certain mileage threshold qualifies for this discount from USAA.
- Good Student Discount
Good student discounts are one of the most common car insurance discounts and are offered to policyholders who are full-time students and maintain good grades. GPA or academic achievement eligibility will vary by provider. Encouraging education and responsible behavior, Allstate, Auto-Owners, Farmers, GEICO, Nationwide, Progressive, State Farm, Travelers and USAA.
- Distant Student Discount
Distant student discounts apply to policyholders who have a dependent child studying away from home. In general, to be eligible for this discount, the student must be attending an accredited college or university a certain distance away from their primary residence, and the student may be required to maintain a certain grade point average. Allstate, Auto-Owners, Farmers, Progressive, State Farm and Travelers may have unique eligibility requirements for this discount.
- Homeowners Discount
Homeowners discounts are available to policyholders who own a home. Insurers often consider homeowners as lower-risk policyholders, resulting in potential premium reductions. Farmers, Progressive and Travelers offer this discount and may be a great option for those who own their home.
Comparing Auto Insurance Quotes
Shopping around for vehicle insurance rates isn’t something most people enjoy doing, but there are some significant advantages to doing so, some of which you may not have considered. While the majority of individuals shop around to find a better rate, there are several other reasons to compare quotations. With simple online quotation comparisons and several potential benefits, rate shopping is something that everyone should do on a frequent basis.
- Rates Change Regularly
The most obvious benefit of shopping around for car insurance is that you could get a better rate and save a lot of money. This is the reason most people start looking for car insurance quotes, and it’s obviously a big benefit of shopping around.
What a lot of people don’t realize is that car insurance rates change all the time. Just because you couldn’t find a better rate last year doesn’t mean there’s no reason to try again. Car insurance companies adjust their rates regularly to keep up with the latest statistics and other factors that go into rating. The same companies who couldn’t give you a better deal last year might save you money this year.
And it’s not just the insurance companies that change – your situation might change as well. If a ticket or accident has fallen off your record in the last year, or if you have changed vehicles, moved, or just about any other life change that affects rates, it’s a good idea to compare quotes again.
- Discovering Holes in Your Coverage
Shopping around is often the reason people realize there are some gaps in their coverage or that they aren’t covered as well as they thought they were. Often when a new company offers insurance quotes, they may include additional coverage or higher limits, or perhaps a lower deductible. Drivers could wind up getting a better policy in the end. And to sweeten the deal, that new and better policy could even cost less.
Take a good look at the quotes you receive, and see who might be offering you more for your money. Compare the coverage being offered to your current coverage to see if it’s a better deal or a step down.
- You May Realize You’re Better Off Where You Are
It may not be the purpose of shopping around, but sometimes taking the time to get quotes can make it clear you really are getting a great deal with your current company. You may have longevity discounts, great coverage for a good price, and a company you trust. Sometimes it takes shopping around to give you the peace of mind that you really are in the right hands already.
Of course, that doesn’t mean it will be so forever; it’s a good idea to check rates regularly even if past quote comparisons have convinced you to stay. Remember that things change all the time!
- Every Company Views Your Record Differently
Many people think there’s no point in shopping around for car insurance quotes if they have a ticket or an at-fault accident on their record. One of the biggest benefits of shopping around is to see which companies may rate that ticket less harshly than others.
Each insurance company can determine how to rate for different types of tickets or accidents. That means that even with infractions on your driving record, you could still be paying a better rate somewhere else. In fact, rates can be vastly different for the same driver with the same ticket at two different companies.
- It Forces You to Review Your Policy
Taking the time to shop for quotes forces you to also take the time to review your current policy. That means you will notice any errors or omissions such as discounts you should be receiving but aren’t, or incorrect information about your vehicle. Staying on top of these things ensures you always have the right coverage and are paying the correct rate.
This may, in the end, be the most important benefit of shopping around for rates. It’s important to always be aware of what your coverage level is, how it matches your current needs, and of course how much you are paying for it.
When your policy renewal comes in is a good time to make a regular point of shopping for rates. That way you will always be on top of your insurance policy.
Tips for Lowering Auto Insurance Rates
According to NerdWallet’s rate analysis, car insurance costs an average of $179 each month. But that doesn’t imply you’ll have to pay this price.
Companies base your cost on a variety of factors, including the type of vehicle you drive and the length of time you’ve been insured. You can acquire adequate coverage without breaking the bank if you understand what factors influence your auto insurance costs.
- 1. Shop around
Although auto insurers use similar factors like age, driving history and location to calculate your car insurance costs, they weigh these factors differently. That’s why it’s important to compare rates.
To analyze the importance of shopping around, NerdWallet compared rates for 35-year-old drivers buying full coverage insurance from the largest insurers in the nation. We found that costs vary by hundreds of dollars a year. Note: Although it’s one of the largest insurers in the country, Liberty Mutual is not included in our analysis because it does not provide rate data.
In fact, nationwide, good drivers with good credit can save more than $207 a month, on average, by switching from the most to the least expensive insurer. And savings can be even bigger for drivers with a recent at-fault accident or poor credit — almost $214 and $153 a month on average, respectively.
But these rates are nationwide. Your rate will vary depending on your location. For instance, a company with the lowest rates in one state might not be the cheapest in another. And the cheapest company for a good driver with good credit might not be the cheapest for someone with, say, a DUI or a recent accident.
To lower your car insurance rates, get quotes from several companies once a year.
- 2. Take advantage of car insurance discounts
Every insurance company offers special ways to save on your car insurance premium. To make sure you’re getting all the discounts you’re entitled to, check out your insurer’s discounts page and ask your agent to review your possible savings.
The car insurance discounts page gives more details on what insurers offer different discounts. But remember to compare quotes based on your own situation. Just because an insurer offers multiple discounts doesn’t mean it offers the lowest overall price.
- 3. Drive safely
Speeding tickets, accidents and other traffic violations drive up car insurance premiums. If you get a ticket, you may be offered the opportunity to go to traffic school to get it dismissed or reduce the number of violation points that go on your driving record. If you can keep the violation off your driving record, the time spent in class could lower your car insurance up to $546 per year on average, according to our analysis.
- 4. Drop car insurance you don’t need
If your car is a clunker, it might be time to drop collision and comprehensive insurance, which pay for damage to your vehicle. Collision insurance pays to repair damage to your car if it crashes into another vehicle or object, or flips over. Comprehensive insurance pays if your car is stolen or damaged by storms, vandalism or by hitting an animal such as a deer.
If your car is worth less than your deductible plus the amount you pay for annual coverage, then it’s time to drop them. Collision and comprehensive never pay out more than the car is worth.
Evaluate whether it’s worth paying for coverage that may reimburse you only a small amount if anything.
But if you drop collision and comprehensive, remember to set aside the money you would have otherwise spent. Put it in a fund for car repairs or a down payment on a newer car once your clunker conks out.
- 5. Drive a car that’s cheap to insure
Before you buy your next car, compare car insurance rates for the models you’re considering. The vehicle you drive affects your car insurance premium, particularly if you buy collision and comprehensive coverage. Safe and moderately priced vehicles such as small SUVs tend to be cheaper to insure than flashy and expensive cars.
- 6. Increase the deductible
You can save money on collision and comprehensive insurance by raising the deductible, the amount the insurance company doesn’t cover when paying for repairs. For example, if you have a $500 deductible and your repair bill is $2,000, the insurer will pay out $1,500 once you’ve paid the $500.
Savings vary by company, so compare quotes with different deductible levels before you decide.
- 7. Improve your credit
Your credit can be a big factor when car insurance companies calculate how much to charge. It can count even more than your driving record in some cases. But this isn’t the case in California, Hawaii, Massachusetts and Michigan, however, where insurers aren’t allowed to consider credit when setting rates.
To build your credit, focus on these three steps:
- Make all your loan and credit card payments on time.
- Keep credit card balances well below your credit limits.
- Open new credit accounts only when necessary. Applying for too many credit cards can hurt your score.
- 8. Don’t drive a lot? Consider usage-based insurance
If you don’t mind having your driving behavior tracked, consider usage-based or pay-per-mile insurance to lower car insurance costs. To participate, you use an app or install a small device in your car that transmits data to the insurance company.
Metromile, Allstate, Nationwide and Mile Auto all offer pay-per-mile insurance in certain states. With this coverage, you typically pay a base rate plus a per-mile rate. So if you don’t drive long distances or commute daily, it could be a good option.
Several other insurers, including State Farm, Progressive, Safeco and Travelers, offer usage-based insurance programs that track behaviors like speeding and hard braking. They offer discounts or reduced rates for safe driving.
It’s possible to get a discount just for signing up for some of these programs, so they might seem like a no-brainer. However, some insurers may increase your rates if you’re deemed an unsafe driver. Make sure to check what behaviors are tracked and how your rate is affected before enrolling.
Auto Insurance FAQs
- What is Car Insurance?
Car insurance is a concept through which you can safeguard your money in case of damage to your car. The insurance company will pay to repair the damages of your car as per the policy’s terms and conditions. You have to pay an insurance premium to purchase a car insurance policy.
- How to check car insurance availability?
Car insurance is available online as well as offline. You can choose to buy car insurance online yourself via your preferred insurance company’s website or get it through an aggregator website. Through the offline mode, car insurance can be purchased from car dealers, insurance agents and the branch office of insurance companies.
- How to find my car insurance policy number?
Your car insurance policy number is stated in your policy document. You can find it by going through your policy document. If you have a problem locating it, you can contact your insurer to help you out with this matter.
- What is Third-party Car Insurance?
Buying Third-party car insurance online means you are insured against third-party liabilities. Thus, it is also known as Third-party liability insurance. It is also referred to as Act Only insurance. This is because The Motor Vehicles Act makes it mandatory to insure your vehicle with at least a Third-party Liability car insurance policy if you want to drive on Indian roads in a legal manner.
- What is the meaning of the term IDV in car insurance?
The term IDV stands for Insured Declared Value in car insurance. This is the value you shall receive in case you have a Comprehensive car insurance policy and it undergoes total damage. For understanding purposes, this value can be equated with the current market value of your car.
- How to get a duplicate car insurance copy online?
Getting a duplicate car insurance copy online is a simple process. You can simply log in to your account on our insurance company’s website and download the policy. If this is not possible, you can get in touch with your insurance company and they will email the policy to your registered email id.
- How to download a car insurance certificate/policy?
you can download your car insurance certificate/policy by logging in to your account on the insurance company’s website. You can also request the insurance company to email it to you.
The state in which you live has a significant impact on the cost of automobile insurance. Car insurance costs vary by state due to differences in what auto insurance is required, how much repairs cost, and other factors.
According to Forbes Advisor’s review of full coverage car insurance prices, the national average cost for auto insurance is $2,118 per year. New York has the highest car insurance rates, while Idaho has the lowest.
It’s a good thing if your state has a competitive vehicle insurance market, which means there are several national and regional car insurance businesses selling insurance. You may look around for the greatest vehicle insurance and get the best deal.
Average car insurance costs by state
|Average annual cost for full coverage
|Average annual cost for minimum coverage
Purchasing basic coverage automobile insurance results in lower prices but less protection. Minimum coverage automobile insurance may only contain liability coverage, which compensates anyone injured in an auto accident if you are at fault.
Comprehensive and collision coverage are included in full coverage auto insurance, and they protect your vehicle against a variety of hazards, such as theft, fire, vandalism, extreme weather, or damage from an auto accident, regardless of responsibility.
If you want to save money by acquiring the cheapest vehicle insurance possible, you must compare rates from multiple providers. You can quickly shop for cheap auto insurance online by using car insurance comparison tools. You may discover that you currently have the most economical insurance; but, pricing might fluctuate, so check once a year.
Follow these additional tips to get cheap auto insurance rates:
- Ask for discounts. There could be savings from car insurance discounts you’re not taking advantage of. For instance, maybe you now work from home and are driving less frequently than when you bought your policy. Mention that and you might get a low-mileage discount.
- Cash in on major life changes. Certain life events could translate to cheaper car insurance, so shop for quotes whenever something major changes in your life. For instance, many companies offer a lower rate for married couples or domestic partners. Or perhaps you moved to a suburb with lower accident and crime rates. Even if you moved to a more expensive area for car insurance, shopping around can help you get cheaper coverage.
- Revisit quotes after your driving record improves. Shop for cheap car insurance quotes online three to five years after any accidents, tickets or moving violations. They may have dropped off your driving record.
The type of car you drive also affects how much you pay for auto insurance.
Shopping around for car insurance quotes is the best way to find cheap auto insurance. Having good credit and a clean driving record can also keep your rates low. And be sure to ask about discounts you might be missing from your policy.
There is no one “best” car insurance company for everyone. The best auto insurer will be the one that best suits your needs. And while price is important, the cheapest insurer isn’t always the best. After all, the best auto insurance companies provide more than cheap rates. A top-notch insurer will provide a customer-first experience, whether you need help getting a quote or filing a claim.