If you drive a car or truck in the United States, statistics say that you’re probably paying too much for insurance. Drivers who don’t shop around for their insurance end up paying an average of $417 more for their insurance every year; that means that Americans as a group pay a whopping $21 billion more in auto insurance than they need to.
When was the last time you got a quote for car insurance? If you haven’t changed your insurance provider in years or even asked about a lower rate, you’re probably paying more than you should. Here’s how you can find a cheap car insurance policy online that fits your needs at a lower price.
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Online Auto Insurance
If you drive in any one of the states in the U.S. except New Hampshire, you are required to maintain at least some level of auto insurance coverage to protect yourself if you’re involved in an accident. Having car insurance is essential because it helps protect you from financial ruin if you are in a collision and need to pay for necessary repairs or if you are found to be at fault for the injuries of another driver if you are involved in an accident.
Three of the most common types of insurance packages include:
Liability Insurance: Liability insurance protects you in the event that you are found to be at fault for a collision. It covers the medical expenses and car repair bills of the other driver or drivers involved in the accident. It will not cover any medical or auto repair bills you incur. Liability insurance is considered to be the bare-bones minimum coverage needed to keep you legally on the road in most states; other types of insurance are recommended and can often be packaged alongside your liability insurance or a lower rate but are not required by law.
Collision Insurance: Collision insurance covers your car in the event that you are involved in an accident. Collision insurance usually includes damage resulting from collisions with other vehicles as well as collisions involving stationary objects and property like lampposts or mailboxes.
Comprehensive Insurance: Comprehensive insurance (as its name suggests) provides more robust coverage than liability or collision insurance. Comprehensive insurance coverage provides compensation to repair vehicle damage if the car or truck is damaged in a way other than through an accident with another driver.
Some of the most common comprehensive insurance claims include damage resulting from wild animals, fire, break-ins and even riots. Before you sign up for a comprehensive policy, make sure to read about what perils are covered. Most policies exclude damage from nuclear accidents, acts resulting from war, and damage that is intentionally caused.
Car Insurance Add-ons
Medical Bill Coverage: Medical bill insurance covers your medical bills if you are involved in an accident. If you don’t have health insurance, you may want to consider picking up a medical bill inclusive policy.
Uninsured Motorist Coverage: Uninsured motorist coverage protects you in the event that you are involved in an accident with a driver who is on the road illegally without insurance or who has cheap insurance that will not cover the entirety of your medical and auto repair bills.
Rental Car Coverage: Rental car coverage pays for the cost of a rental vehicle in the event that yours requires major repairs and needs to stay in a mechanic’s shop.
Roadside Assistance: Roadside assistance coverage provides compensation for things like emergency towing expenses, roadside breakdown expenses and battery jump-starts.
How to Get Cheap Car Insurance Online
Step 1: Shop around for quotes
Most people end up overpaying for their car insurance policies because they don’t bother to regularly search for quotes. Every car insurance provider uses its own unique formula to determine how much you’ll pay in premiums, which means that it’s possible to get the exact same coverage from seven different providers at seven different price points.
You usually qualify for lower car insurance rates the longer you’re safely on the road because most premiums are calculated using your age and driving record as major factors.
If you haven’t gotten a car insurance quote in a while, gather at least three quotes from your insurance provider’s competitors. Most car insurance companies now allow you to request a quote online or over the phone without the need for an in-person visit. Some even offer online quote estimation tools that will instantly tell you how much you can expect to pay annually.
The best car insurance providers will tell you how your premium is calculated, and they may even offer you tips on what you can do to secure a lower rate, like bundling your home and auto insurance together or installing an aftermarket anti-theft device in your car. The more quotes you can find, the more likely you will be to find the lowest rate available to you.
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Step 2: Consider how you can lower your rate
Taking steps to lower your car insurance rate can help you secure a lower quote from insurance companies. Some steps you can take to lower your rate include:
Raise your credit score: Most drivers aren’t thrilled about it, but car insurance companies often use your credit score to determine your rate. Pay your credit card bills on time, keep a low balance on your cards and limit the number of cards that you apply for can raise your credit score over time, making you a more appealing customer to secure a lower rate.
Choose a vehicle with a higher safety rating: If you’re shopping for a car right now, consider more than just gas mileage and color. View crash-test data from the Insurance Institute for Highway Safety and consider choosing a vehicle with higher safety ratings to see a lower car insurance premium.
Ask for a higher deductible: Your deductible is the amount that you are expected to pay before your insurance kicks in after an accident or another incident. As a general rule, the more you pay for your monthly premium, the less you’ll be expected to pay for your deductible. Taking on a higher deductible can help you secure a lower monthly rate.
Interested in learning more about how to lower your car insurance premium? Check out our guide here.
Step 3: Negotiate with your current insurance provider
Car insurance companies know that it’s much less risky and less expensive to keep a current driver on their policy than it is to recruit a new one. Call your insurance representative if a competing car insurance provider has offered you a lower rate than what you’re currently paying.
Most car insurance providers have a policy in place that allows them to negotiate a lower rate for customers who have been on their policy without incident for a certain number of months. Many insurance providers try to do anything they can to keep paying customers, including matching or beating a competitor’s prices.
Step 4: Switch your policy
If you can’t reach an agreement with your current insurance provider, you may want to switch to the most affordable provider. Contact your new insurance provider online and explain that you’re ready to make the switch. Your new insurance agent will guide you through the specifics of getting your new coverage started.
After you’ve signed onto your new policy, call your current insurance company and explain that you want to cancel your coverage. Ask about any fees that will be applied to your account for canceling your policy mid-term and request that a representative send you a written confirmation that your coverage has been terminated via email or registered mail.
Do not cancel your insurance before you have chosen another provider — otherwise, you may be left with a dangerous and illegal gap in coverage.
Step 5: Drive carefully
Obviously, you want to remain alert and aware on the road at all times. However, most car insurance policies include a caveat that allows them to easily drop you from coverage if you are involved in an accident within 30 days of signing on. Drive especially carefully during the beginning of your policy.
Make the Decision
You don’t want to find out that you’re overpaying for your car insurance policy. However, cheap car insurance policies often cost less than competitor policies because they limit your coverage. Choosing the wrong policy may leave you exposed in the event of an emergency. Before you sign onto a policy, make sure that you read and understand exactly what your policy does and does not protect you against.
The last thing you want when you sign up for your car insurance policy is to hit an animal on the road, only to find that your new policy doesn’t cover deer accidents when you submit a claim.
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Frequently Asked Questions
1) Q: By law, what types of car insurance do I have to have?
(almost all — not NH) All states require you to carry liability insurance on your vehicle. Your state may require additional auto insurance coverage. Limits are expressed: Amount for injuries per person/amount for injuries total per accident/amount for property damage per accident.
2) Q: Should I have just the minimum amount of car insurance required by my state?
It’s a good idea to purchase more than the state minimum of any type of insurance. State minimums are set relatively low to keep insurance affordable, but in the case of an accident, you can deplete your minimums quickly with expensive medical and property damage costs. Once your bills extend past the minimums, you’ll personally be liable for additional costs and damage. Get the coverage that makes sense for you here.
3) Q: How does my personal credit play a role?
Insurance carriers run credit scores to help determine policy premiums. Your insurance rates will likely be lower if you have an excellent credit score. On the other hand, your insurance rates may be higher if you have a poor credit score. Insurance companies believe credit scores are an indicator of whether you’ll make your insurance payments on time and credit scores combined with other data can be predictive of risk. Check out the best companies for all credit scores now.
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