Best Cheap Car Insurance
Based on In-Depth Reviews
- 160+Hours of Research
- 20+Sources Used
- 19Companies Vetted
- 18Features Reviewed Options
- 9Top
Picks
- Look for companies that offer a variety of discounts
- Discount percentages and availability vary by state
- If you don’t drive often, opt for pay-as-you-drive insurance
- Learn about the different factors that influence the cost of your premium
How we analyzed the best Cheap Car Insurance Providers
Our Top Picks: Cheap Car Insurance Reviews
Although car insurance is required in every state, that doesn’t mean you need to spend all your money on it, especially if you’re on a limited budget. However, you also wouldn’t want to go without sufficient coverage for you and your vehicle.
Since various factors influence car insurance premiums, chances are you're paying more or less than your neighbors. So, what can you do to secure adequate insurance at a lower price?
After more than 160 hours of research and vetting 19 companies, we’ve put together a comprehensive guide to help you get the cheapest car insurance rates possible. When narrowing down the best cheap car insurance companies for customers, we took into consideration these three factors.
Progressive review
Best for High-Risk Drivers
Progressive stands as the best option for high-risk drivers due to their student discounts and accident forgiveness policy. The company offers good student, teen driver, multi-car, and distant college student discounts for high school and college students as well as their respective parents.
The good student discount applies as long as students keep at least a B average, while the distant college discount applies if a student is 22 or younger and goes to school over 100 miles away from their home. Progressive also offers ten additional discounts for adult drivers, including safe driver, homeowner, online quote, and paperless.
Additionally, thanks to their free Loyalty Rewards Program, Progressive offers small accident forgiveness the moment you sign up. This program rewards customers with discounts and other benefits the longer they stay with Progressive. Small accident forgiveness prevents rates from going up if you have a small claim of $500 or less, no matter who’s at fault, while the large option prevents rate increases from any type of accident.
Screenshot Progressive.com July 9, 2019
Pay-As-You-Drive Option: Snapshot Discount
Progressive offers a usage-based insurance option through their Snapshot program. With Snapshot, you pay based on how and much you drive instead of just traditional factors.
This program is among the best on our list, with an automatic $26 discount, on average, just for signing up, and a $145 discount for completing the program. To complete the program, customers need to use the Snapshot app or telematics device for six months, after which they can receive additional discounts.
Screenshot Progressive.com July 9, 2019
Useful Features
Progressive has an array of useful features to help customers with their policies. The most popular tools are “Coverage Checker”—great for comparing coverage options and benefits— and “Name Your Price”, a tool that lets you select how much you’d like to pay for insurance and the company matches you with available coverage options that stick to that budget. Additionally, since your ID is available online or through Progressive’s app the moment you sign up, you benefit from instant coverage.
Progressive also offers protection against pet injuries through their collision coverage, meaning the company will cover your vet bills for up to $1,000 if your pet is harmed in a car accident.
Rideshare insurance is another great add-on feature. The plan can be useful for customers looking for cheap car insurance or who want to use their vehicle for services like Lyft or Uber. However, the plan isn’t available in the following states: Arkansas, Kansas, Oregon, California, Wyoming, Nevada, Montana, Hawaii, Alaska, North Carolina, South Carolina, Delaware, Maryland, New Jersey, New York, Connecticut, Vermont, and New Hampshire.
Low NAIC Score
Among our top choices, Progressive has the third-lowest complaint ratio with a 0.89, which is way lower than the national median of 1.15. That means that although they have 85 total complaints on record, customer satisfaction is higher for Progressive than for other companies.
Drawbacks
Although we found Progressive to be one of the best cheap car insurance providers, there are some drawbacks to working with them. First of all, Progressive offers the second-lowest number of discounts on our list, with 13 discounts in total.
In addition, the company’s large accident forgiveness feature is only available for customers who’ve been enrolled in their plans for five or more years and have been accident-free for at least three years. This means that new customers who enroll won’t benefit from this type of accident forgiveness for a long time.
Finally, Progressive’s “Name Your Price” tool also has its drawbacks, as the matching process doesn’t really guarantee the best coverage for your needs. Depending on how low you set the price, there’s a chance the policy you’re matched with won't provide sufficient coverage or the deductible amount you want.
State Farm review
Best for Ridesharing
During our vetting process for cheap car insurance, we found that State Farm offers great ridesharing coverage. This coverage extends your personal car policy to your passengers when you work as part of a transportation network company (TNC), and includes medical, emergency roadside assistance, and rental car reimbursement.
Screenshot Statefarm.com July 8, 2019
Although it’s an optional add-on that costs around 15 to 20% more than your overall premium, this coverage is an excellent option for Uber or Lyft drivers wanting to protect themselves and their passengers.
Additionally, U.S. News found that State Farm offers the third-cheapest national average rates ($3,260), so chances are you’ll end up paying less than you would with other companies.
Discounts and Pay-How-You-Drive Options
State Farm has 11 discounts available for customers, most of which involve safe driving. Out of the discounts they offer, nine rely on how safe you drive and how safe your vehicle is, with the remaining two dealing with customer loyalty. Additionally, the company has two different pay-how-you-drive (PHYD) programs aimed at young and older drivers.
For drivers over 25, State Farm offers their telematics program, Drive Safe & Save, to help customers qualify for more discounts. Just like other pay-how-you-drive programs, Drive Safe & Save uses your smartphone or your vehicle’s OnStar communication service to evaluate your driving habits and calculate your savings. With Drive Safe & Save, customers get an initial discount of 5% on average, and can earn as much as 30% off.
On the other hand, State Farm offers the Steer Clear driver program, which aims to teach good driving habits to motorists under 25 years of age. To qualify for this program, drivers must be within the age limit, have no driving violations for the past three years, and earn a program certification by completing a training course. Just like with Drive Safe & Save, young customers earn a 5% discount just for signing up and can get as much as 30% off their premium.
Screenshot Statefarm.com July 8, 2019
Lowest Complaint Ratio
State Farm also stands out for having the lowest NAIC complaint ratio out of the companies we've reviewed, with a 0.57 out of an average of 1.15. This speaks highly of the company's products and services, especially considering the fact that some companies on our list have scores of 1.5 or higher.
Drawbacks
Even though State Farm is our top pick for ridesharing, their policy is not available nationwide. Statefarm only offers rideshare insurance to 46 states, leaving Massachusetts, New York, North Carolina, and Rhode Island without this feature.
Secondly, with 11 discounts, State Farm is the company with the lowest number of savings opportunities on our list. Although they have reasonable average premiums, not having enough discounts to choose from limits how much their customers can save.
Liberty Mutual review
Best Discount Variety
Liberty Mutual stands out on our list for offering an impressive 17 discounts that range from driving-related discounts like accident-free to policy discounts like pay-in-full. With such a large number of discounts, Liberty Mutual’s customers have a better chance of lowering their total insurance costs, especially since they can easily qualify for most discounts.
Liberty Mutual also offers discounts that aren’t usually offered by other companies, such as their military discount and their alternative-energy discount. However, these and a few other discounts, like their good student discounts, are aimed at specific customer segments, so chances are you won’t qualify for all of them but are likely to qualify for several.
Here’s a list of all the discounts Allstate offers:
- Homeowner
- RightTrack
- Early Shopper
- Multi-Policy
- Military
- Multi-Car
- Good Student
- Preferred Payment
- Student-Away-at-School
- Pay-in-Full
- Advanced Safety Features
- Online Purchase
- Alternative Energy
- Paperless Policy
- Anti-Theft Device
- Accident-Free
- Violation Free
Pay-how-you-drive (PHYD) and Pay-as-you-drive Options (PAYD)
Liberty Mutual offers two telematics options designed for customers who either don’t drive that much or are safe drivers looking to save on insurance premiums. Customers who rarely drive, such as seniors, stay-at-home parents or students, can opt for State Farm’s ByMile program, which charges a premium that consists of a base rate plus a per-mile rate based on how many miles you drive. Since ByMile only focuses on distance driven, your premium won’t increase from driving habits.
For constant drivers, Liberty Mutual’s RightTrack ® program is also a great option. Customers must install the State Farm’s RightTrack app to apply, and they’ll receive up to 30% in discounts depending on how well they drive. Liberty Mutual’s website states that you’ll receive a discount just for signing up for RightTrack, but this initial discount varies by state.
Drawbacks
There are a number of downsides to doing business with Liberty Mutual. First of all, according to the NAIC’s 2018 complaint ratio trend report for private passenger auto insurance, the national median complaint ratio for insurers in the U.S. is 1.15, while Liberty Mutual’s stands at a concerning 6.24. That means that Liberty Mutual has received more than the average share of complaints for a company of its size.
Additionally, although Liberty Mutual’s ByMile program sounds like a solid option for customers, it is the weakest pay-as-you-drive alternative on our list, since it’s only available in the state of Illinois.
Finally, while the company offers accident forgiveness, the feature is only available as an add on and not as part of their rewards program. The company’s Customer Advantage rewards program does offer minor violation forgiveness for free, but only after being a Liberty Mutual customer for seven years, meaning that you really have to stick with the company to qualify.
Runner-Up: Allstate
Just like Liberty Mutual, Allstate has an impressive number of discounts, totaling 18. However, many of these discounts revolve around your payments and your policy, such as online purchases, paperless, and pay-in-full discounts to name a few.
Allstate also offers a pay-as-you-drive and a pay-how-you-drive option called drivewise and milewise, respectively.
Screenshot Allstate.com July 9, 2019
Even so, the company is a runner-up on our list due to a variety of factors. Firstly, Allstate’s NAIC complaint ratio is the highest on our list, standing at 54,520.63, way over the 1.15 average. That means there is a high number of customers dissatisfied with Liberty’s services, something that consumers should be aware of before doing business with the company.
Second, although the company has a good number of discounts available, a study by U.S. News found Allstate had the most expensive average rate among all the other companies in their study, with an annual average of $4,888. Although rates will always vary per individual and per state, having the highest average means there is a chance you’ll be paying more for your insurance through Allstate than with other companies.
Finally, customers should know that Allstate has been known to meddle with customer rates, increasing them through price optimization. The company was brought to court in Illinois through a class-action lawsuit that alleged that the company used price optimization on long-standing policyholders. So far, the appeals court has ruled against Allstate.
Root review
Best for Safe Drivers
Telematic programs usually save customers around 5% from the get-go and up to 30% in total. With Root Insurance, the discount cap is even greater depending on how well you drive, of course.
To apply for Root, customers need to download the company’s app and drive for two to three weeks. The better you drive, the higher the discount. If things go smoothly, you can save up to 52% off your total premium, which is the highest savings percentage out of all the pay-how-you-drive services on our list.
Screenshot joinroot.com July 9, 2019
Useful Features
Customers who sign up with Root Insurance also get extra perks with their service. For starters, the app also lets you file claims, allowing you to take photos and report the accident all in the same place.
Additionally, the app lets you control your coverage and deductibles by letting you change your coverage and deductible amounts at any time. To do this, you just need to click on the coverage section of the app and access each one individually to set your limits and deductibles or cancel them altogether.
Another useful feature is Root’s refer-a-friend policy. If you’re a current customer, you can send your friends a referral link, and once they start and finish the test drive, you and the person you referred get a cash bonus.
Finally, every policy comes with roadside assistance for services under $100. There is a limit to this, however, since the plan only covers up to three incidents per vehicle for each 6-month policy term.
Screenshot joinroot.com July 9, 2019
Low NAIC Complaint Ratio
Although approaching the national median ratio of 1.15, Root’s NAIC complaint index score is still low at 1.04 based on 7 complaints on record. Although the number of complaints seems small, the score is proportional to the company’s size and annual premium.
Drawbacks
Root’s service is only available in 24 states, meaning that among the companies on our cheap car insurance list, it is the second company with the lowest policy range. Root states that their policies can be transferred from state to state, but only if the state is covered.
Second, since Root takes into account driving behavior, the company doesn’t insure bad drivers. Customers who take the driving test and don’t receive a quote are considered bad drivers and won’t be able to take the test again. And even then, since Root considers other factors when pricing policies, there will be some situations where receiving a high score on their driving test won’t get you a quote.
Finally, Root doesn’t cover Uber or Lyft drivers when they are on duty, making it an inefficient option for those who are considering using their vehicle for ridesharing.
Runner-Up: Esurance
With 16 different discounts and a telematics option, Esurance stands out as a great alternative for those interested in a pay-how-you-drive (PHYD) program. In addition to offering a variety of discounts that include good driver, defensive driver, and anti-theft devices, the company also rewards customers through their DriveSense pay-how-you-drive feature.
DriveSense can help customers save up to 8% when they sign up, the second-highest discount percentage for a pay-as-you-drive option on our list. However, we chose Esurance as a runner-up because their DriveSense services are only available in 22 states, making their coverage area more limited than Root’s. Additionally, the company has an NAIC complaint ratio of 1.30, which is higher than the 1.15 nationwide average.
Screenshot Esurance.com July 10, 2019
quote wizard review
Best Marketplace
As the largest independent insurance lead company in the U.S., QuoteWizard is a middleman between insurance companies and customers. The company connects you with the insurance carriers that best meet your needs.
To match you accurately, QuoteWizard asks 13 questions that narrow down your car insurance needs. The company asks you to provide personal details such as name, age, gender, marital status, and vehicle information like make, model and year. However, unlike other marketplaces and aggregators, the company doesn’t ask your social security number and driver’s license number.
In total, QuoteWizard has 29 different insurance company partners, including seven mentioned on our list, with the exception of Root Insurance.
Useful Tools
QuoteWizard stands out from other marketplaces by providing detailed breakdowns each of their partners and highlighting their pros, cons, J.D. Power ratings by region, complaint data, financial ratings, and claims process.
The company's website is also insightful and lets you read side-by-side comparisons of different companies, emphasizing useful information related to discount availability and claims satisfaction.
Another great feature is the company’s state and city car insurance guide, an interactive map that lets you explore local insurance rates by state. The guide breaks down rates by coverage type as well as monthly and yearly costs, and highlights the state’s most popular insurance companies and all valid insurance laws from that state.
Screenshot Quotewizard.com July 16, 2019
Drawbacks
Since Quote Wizard is a marketplace, it doesn’t provide direct quotes. Instead, the company sends your information to its insurance partners, who in return reach out to provide you with personalized quotes. This means that, by requesting a quote, you consent to receive emails, phone calls and/or texts from insurance companies you've matched with, which might be a deal-breaker if you don’t want to be contacted directly.
When researching reviews, we noticed that most of QuoteWizard’s complaints dealt with this aspect, with customers mentioning they were being contacted by more than one company at a time.
Screenshot Quotewizard.com
Additionally, since QuoteWizard only matches you with partner carriers, there’s a chance that you’ll have to provide your personal information on the partner's website all over again before you can receive a rate quote.
Travelers review
Best For Hybrid-Electric Vehicles
We found Travelers to be the best company for hybrid and electric vehicles. The company offers savings for vehicles that are either owned or leased, so chances are you’ll get a 10% discount if you drive a hybrid or electric car. This discount is accompanied by 11 others, including new car, multi-car, early quote, driver training, and homeowners.
Intellidrive
Customers can save more if they apply for Travelers’ Intellidrive plan, which works as a pay-how you-drive (PHYD) option. Customers download the Travelers’ phone app and drive for 90 days, during which the app will monitor their driving behavior. Afterwards, customers usually save up to 20% off their insurance, with the exception of Florida drivers, which can only save up to 15%.
It’s also important to note that risky driving behaviors might result in a higher premium, although Travelers mentions that Washington DC, Pennsylvania, Montana, Maryland, and Virginia are exempt from this increase.
Drawbacks
Travelers has the second-lowest number of discounts on our list, offering only 12. As mentioned before, more discounts mean more savings.
In addition, Travelers isn’t the best option for customers with penalties or DUIs on their license, since a study by U.S. News found the company had the highest penalty for drivers with violations on their record. Based on these factors, it's safe to say that customers with a not-so-great driving record might do better with a different provider.
Finally, customers should know that Travelers has the highest NAIC complaint score on our list, standing at 6.38, which is 5.23 higher than the 1.5 national median.
GEICO review
Best Annual Rates
Non-military customers looking for solid, cheap rates should definitely give Geico a go, since the company scored the lowest annual rates on U.S. News’ car insurance study right after USAA, a military service-focused insurance company. Offering annual averages of $2,145 for good drivers and $5,653.55 for teenagers, Geico stands as one of the best companies offering cheap car insurance.
15 Driver Discounts
Geico has the third-highest number of discounts on our list, with 15 in total. These range from basic discounts like anti-theft systems, good driver, driver education, to more specific ones like military discounts and savings opportunities for those employed or affiliated with select companies and organizations.
Geico’s website lists all possible discounts, dividing them by type and discount percentage, so customers can evaluate what discounts they qualify for and how much they could be saving.
Screenshot Geico.com July 8, 2019
Low NAIC Complaint Ratio
With a ratio of .71, Geico stands as the company on our list with the second-lowest NAIC complaint rate, 0.44 points lower than the national median. Although the company has a total of 272 complaints on record, the score proves that, for a company of its size, customer satisfaction is positive overall.
Drawbacks
Geico is the only company on this list that doesn’t have a pay-how-you-drive (PHYD) or pay-as-you-drive (PAYD) option, leaving a huge gap for customers who rarely drive or who want to save more on their premiums.
In addition, their services are only available in 39 states, meaning there will be eager customers who won’t be able to apply for their policies. Geico is unavailable in the following states: Alaska, Hawaii, Nevada, Utah, Texas, Georgia, Kentucky, New York, New Jersey, Washington, and North Carolina.
More insight into our methodology
Car insurance isn’t cheap, especially if you add extra coverage. Two things we learned during our research are that rates depend on a variety of factors—including your personal and vehicle information—and that there isn’t a 100% accurate way to determine a person's insurance rate without taking into account each of these factors.
So, how can we guarantee cheaper car insurance to our readers knowing that annual averages vary from one person to another? By focusing on two main factors: discounts and telematics (usage-based insurance) options.
With this in mind, we spent over 160 hours of research, used more than 20 resources and narrowed down our vetting process to three categories: number of discounts, telematics (pay-as-you-drive and pay-how-you-drive), and any additional coverage and features to help consumers save money on auto insurance.
Discounts
Discounts are essential for getting the cheapest car insurance possible. On average, discounts can save you 3–5% on premiums, but some discounts can give you as much as 30% off. However, discount availability and saving percentages vary by state, so even if you qualify for a discount, there’s a chance that it won’t save you as much or that it won't be available where you live.
Gathering all the information you can about available discounts and determining which ones you may qualify for can help speed up your comparison shopping process and choose the best company offering the lowest rates for drivers like you.
Also, it might be a good idea to contact company representatives via phone or live chat to have a more precise idea of how much can save. Bear in mind that some companies don’t have all their available discounts online, so asking if they have additional or specific discounts can help you avoid overpaying.
As for our methodology, we looked at companies that offered a large and diverse selection of discounts and assessed which discounts were the easiest to qualify for from the perspective of an average consumer.
Usage-Based Insurance
Usage-based insurance also plays an important role in our quest for finding the best affordable car insurance. Also referred to as pay-as-you-drive, pay-how-you-drive or pay-per-mile insurance, usage-based insurance uses telematics devices (either a plug-in device for your car or a phone app) to measure how well you drive and for how many miles, and this information is then sent back to insurance companies for data analysis. If the results are positive, companies usually reward you with extra benefits and discounts.
There are two types of usage-based insurance:
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Pay-How-You-Drive (PHYD): This type of insurance focuses on your driving habits, rewarding you with discounts for driving responsibly. Companies take into consideration the distance and time you drive, any irregular driving or braking, and even distracting habits like checking your phone while on the car. Depending on how well you drive, you are rewarded with a variety of discounts, which can complement other discounts offered by the company.
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Pay-As-You-Drive (PAYD): Designed for customers who rarely drive or who drive a few miles per week, this type of insurance only charges for miles driven. The insurance company uses a telematics device to measure how many miles you drive and sets your rates and plan costs accordingly, including a mileage rate that you pay-per-mile. The service charges you for every mile you drive per day and usually caps at 150.
Since car insurance companies ask you to calibrate your telematics device by testing it for approximately three to four weeks, getting PHYD or PAYD isn’t as quick as signing up. Companies also use this testing period to evaluate your suitability for the program, meaning that any erratic driving on your part can disqualify you.
Additionally, just like with traditional discounts, PHYD and PAYD availability varies by state, and the amount you can save varies per person.
Extra Coverage & Benefits
When researching car insurance companies, we noticed that some providers were more comprehensive than others in terms of coverage, offering additional benefits such as roadside assistance, rideshare options, accident forgiveness, and gap insurance.
Since every driver has unique needs, optional coverage allows customers to build a plan that works for them. For example, suppose that a driver who works for Uber of Lyft wants cheap car insurance. Regardless of the coverage they're looking for, they'll need to purchase rideshare coverage to protect themselves and their passengers in the event of a collision. Therefore, they need to look for car insurance companies that offer this option.
We also looked for companies that offer inexpensive or free additional features. For example, with the exception of QuoteWizard, all the companies on our list have downloadable apps that let customers view coverages, discounts, pay or change their billing options, report claims and, in most cases, contact a representative.
These apps are free of charge and provide access to almost all of a company’s features without having to call or log in on the website. Additionally, some companies offer reward programs and even accident forgiveness as part of their plans or as add-ons, providing perks and relieving customers from having their premiums increased after an accident.
NAIC Complaint Score
The National Association of Insurance Commissioners is a non-profit organization that promotes the betterment of insurance companies as well as consumers by overseeing the industry. We examined the NAIC private passenger complaint trend reports for every company on our list to evaluate the quality of their services according to customer complaints by year and insurance segment.
NAIC complaint ratio reports are obtained by dividing the total number of complaints by the company's annual premiums. Larger companies with higher annual premiums may receive more complaints, but no matter how big or small a company is, a higher than average complaint ratio may indicate there are strong issues with the products or services they offer.
For example, a large company that has a larger share of complaints, say 200, might receive the same score as a smaller one with only five complaints against them. In both cases, a higher than average complaint ratio indicates that there are possible issues with a company’s products or services.
For example, Progressive is a big insurance company with a total of 85 complaints on their 2018 NAIC report. Even with this high number, they scored a 0.89 ratio on their complaint index, which is lower than the 1.15 national median. On the other hand, Root Insurance, a smaller insurance company, has 7 complaints on their NAIC report, yet their complaint ratio is 1.04, which is lower than the national median but higher than Progressive’s.
Helpful information about Cheap Car Insurance
How to Get Cheap Car Insurance
Getting affordable car insurance is easier said than done. You see, insurance companies base their rates on a multiplicity of factors, some of which are completely out of your control. Before you start comparison shopping for the best possible deal on auto insurance, there are some things you should keep in mind. Let's go over them.
Choose the type and level of Coverage You Need
When buying car insurance, always purchase the type and amount of coverage you need. For example, you might have to pay more for insurance by purchasing the level of coverage required by your state, but you'd pay a lot more if you had an at-fault accident and didn't have enough liability coverage. And that's just one scenario.
Let's go over the different types of auto insurance coverages, keeping in mind that each state requires different coverage amounts for each.
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Liability: This type of coverage pays for injuries, property damage, and legal fees after an at-fault accident. There are two types of liability insurance: property damage liability and bodily injury liability. Coverage can be as low as $10,000 and as high as $500,000, although a higher level for both types is highly recommended, as this will protect you from having to pay for medical and property expenses out-of-pocket.
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Comprehensive: This coverage protects your car from other things besides collisions, including theft, natural disasters, animals, fire, and hail. The amount the insurer will pay out will depend on the car’s value, but since the coverage carries a deductible, you don’t have to decide how much coverage to buy, but what deductible to set. Typically, deductibles are set at $250, but can go as high as $1,000.
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Collision: This coverage pays for the repair or replacement of your car after a collision-related accident, which includes vehicles or objects. Collision also pays depending on the car’s value, and it also includes a deductible you can opt to increase.
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Uninsured/Underinsured Motorist Coverage: This type of coverage protects you if you are involved in an accident, the other driver is at fault, and he or she has little to no insurance. Depending on your state, this coverage can be limited just to bodily injury, but others cover property damage as well. The state sets the limits for this type of coverage.
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Personal Injury Protection (PIP): This type of insurance is required by law in some states and covers you and your passenger’s medical expenses regardless of whether you or another driver caused the accident. Limit requirements are set by the state.
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Medical Expenses: Just like PIP, this option covers medical expenses for you and your passengers after an accident. The limit you set determines how much money the insurance company will pay for you and your passenger’s medical claims, therefore, having a high limit can protect your wallet.
After researching the car insurance industry and looking into state-by-state requirements, we concluded that consumers shouldn't skimp on liability, comprehensive, or collision coverages, as they’ll protect you from every accident scenario. For an extra layer of protection, you may also want to consider uninsured/underinsured bodily injury and/or motorist property damage.
It’s also important to know that uninsured motorist coverage is required in 22 states, and underinsured motorist coverage is compulsory in 14 states, so you need to keep this in mind if you live in one of these states.
Know the Factors that Affect Your Premiums
It’s important to know the different factors that go into determining your car insurance premiums, as there are some that you can influence to your advantage. Simply put, companies use a variety of factors to determine how much risk you pose to insure, and the higher the risk, the higher your premium.
PREMIUM FACTORS YOU CAN'T INFLUENCE:
AGE
Age can be very influential when determining your premiums. For example, teenagers are usually more expensive to insure, since they don't have that much experience behind the wheel and are considered riskier by car insurance companies.
MARITAL STATUS
Married couples are usually seen as safer to insure.
RESIDENCE
Your state and area of residence affect premiums. For example, living in a city will get you higher premiums than living in the countryside, since there are more chances of having an accident in urban areas.
There are also factors you can determine, and these are the ones you need to keep in check to lower your premiums:
PREMIUM FACTORS YOU CAN INFLUENCE:
CREDIT SCORE
Having a high credit score is important because lenders use it to help determine your creditworthiness. Paying your bills on time means you’ve been good on meeting your financial obligations.
DRIVING HISTORY
Having a clean driving record (no tickets or DUIs) will reduce premiums, since it shows companies that you're safer to insure.
COVERAGE AMOUNT
The more coverage you get, the more expensive your premium will be.
DEDUCTIBLE
The lower the deductible, the higher your premiums will be.
Check for Discounts
Besides safe driving and telematics programs, applying for discounts is one of the best ways to lower your premium. You may qualify for several discounts simultaneously, so it's good practice to go through each one to determine your eligibility.
Discount percentages and availability vary per state and can be divided into the following categories:
We spoke to Samuel Klau, one of our colleagues at ConsumersAdvocate, who told us about his experience getting an auto insurance quote from one of the major carriers on our list. According to him, after a frustrating online application that provided few explanations and left him with more questions than when he started, he received a quote for $260, a lot more than what he used to pay with a smaller carrier.
Sam had just but given up on getting insurance through this company when he was asked if he wanted to speak to a representative. He agreed and went through the same list of questions with a rep that explained exactly what each type of coverage entailed and gave him suggestions tailored to his specific circumstances. He told us that "after speaking with the representative, I was able to lower my monthly rate to about $190.”
A simple call helped him score continuous insurance, online quote, and automatic payment discounts. Additionally, to his surprise, “A few months later I got an email from the company saying they had lowered my rates even further” through a paperless discount.
If you’re unsure of what discounts you may qualify for, speak to a company representative and let them know your particular situation. They’ll likely spot discounts that you may have missed. And what have you got to lose besides a few bucks off your premium?
Increase Your Deductible
As with all insurance, the higher the deductible, the lower the premium. Check your budget and see if you can afford to increase your deductible. If you can, you will save much more in the long run, since it shows companies that you’re accepting more financial responsibility per accident. A typical deductible for comprehensive, collision and gap coverage starts at around $200, and you can increase it to $500 or even $1,000.
Reduce Coverage for Older Cars
If your vehicle is old, you might want to consider skipping comprehensive or collision coverages. Why? Because the payout for these policies depends on the value of your car, and since cars decrease in value with time, chances are you’ll be paying more for coverage than what the coverage will pay if you’re in an accident.
Bundle your Homeowners & Car Insurance Policies
If a car insurance company also offers home insurance, chances are they offer a discount for bundling these two policies. Bundling your policies could snag you a 5 to 10% discount, helping you save more on both your car and home insurance premiums.
Consider Usage-Based Insurance
Usage-based insurance can be an affordable option for customers who don’t drive that often as well as those who do. Depending on how well and how much you drive, and if the company offers the program in your state, you can opt to enroll in a pay-as-you-drive or pay-how-you-drive program.
Pay-as-you-drive only charges for the miles you drive, so you can save more on insurance while maintaining the level of protection you need. In contrast, pay-how-you-drive insurance provides discounts based on how well you drive, regardless of miles.
Industry Trends: Price Optimization
As we researched cheap car insurance, we came across this industry trend that is now illegal in 16 states. Through price optimization, companies attempt to increase their profits by analyzing your personal data, including online browsing and social media history, to determine how likely you are to unsubscribe from their insurance policies.
Companies get this information through data mining, a process that analyzes online information for specific patterns.
If the information the company gathers shows that you are less likely to leave them in the long run, then they’ll increase your premium by a small amount each year so you won’t feel inclined to contest it. This might seem harmless at first, but after a few years, you’ll start noticing the difference. Price optimization is still allowed in the remaining 34 states, which is why you should keep a close eye on your premium payments and touch base with your carrier whenever your premium increases.
What To Watch Out For When Buying Cheap Car Insurance
If you're on the market for affordable car insurance, there are some things you need to be aware of. We learned a few things in the course of our research, like industry trends to be wary of, the importance of comparing options and asking questions, and of not discarding any option when comparing auto insurance providers. Let's go over them in detail.
Watch Out for Rate Optimization
As we mentioned above, price optimization is a real threat in the car insurance industry, especially because it affects people who’ve been loyal to a company and have done nothing wrong. If you suspect that a car insurance company is hiking up your bill through price optimization, or if you want to avoid it altogether, there are some steps that you can take to protect yourself.
First, keep an eye on your monthly bills and check for any unjustified premium increases. Since price optimization increases your premiums discreetly, it might take some time before you notice any changes, but if you’ve been a loyal customer and the company can't justify the increases in your monthly payments, there's a chance you've been the victim of price optimization.
Second, you can take the offensive and shop around for car insurance once or twice a year. Since price optimization relies on your loyalty to a company, browsing competitors and getting multiple quotes will signal to your car insurance company that you’re considering other options. You can even get competitive quotes and call your insurance company to ask if they can match those prices. The important thing is to keep your insurer on their toes as this will prevent them from taking advantage of you through this practice.
Ask About Discounts
Never shy away from asking a company if it offers a specific discount. Although their websites tend to list available savings opportunities, sometimes they don’t show the entirety of them. Other companies may even be inclined to match another insurer's discount percentages if that can get them a sale. Remember, discounts are among the best tools you have to drastically lower your premiums.
Don't Skimp on Coverage if You Can Avoid It
Even if you’re looking for the cheapest car insurance available, you should never sacrifice coverage for affordability. Each type of coverage protects you from specific things like liability and theft, and you wouldn't want to be without these if you were in an at-fault accident or your car got stolen.
Liability, comprehensive, and collision coverages are the basic level of protection you need. However, depending on where you live, the distances you drive, and how often you do so, you might want to consider getting uninsured/underinsured motorist, bodily injury liability, and/or motorist property damage, as these protect you from accidents with drivers that don’t have enough insurance.
Always Get 3 Quotes Before Buying A Policy
When buying any type of insurance, we always recommend you shop around before committing to any company or plan. Car insurance premiums vary from person to person and every company has its own list of discounts, so it's always a good idea to get quotes from at least three companies to make sure which one benefits you the most.
You should never settle for one specific company. Also, remember to always give companies the same information when asking for a quote (gender, car information, address, and driving history). This will guarantee that the rates you’re given are legitimately based on your circumstances.
Don't Skip Regional Lenders
Having a reputable name doesn’t necessarily mean that the company has the cheapest car insurance options for you. Sometimes it’s the smaller, local insurance companies that are solely dedicated to a specific region and have the advantage of quality and pricing. Although we didn’t review regional lenders, you should always put them on your list when shopping for car insurance. They might offer better customer care and offer more competitive prices than larger competitors.