Whether you are shopping for auto insurance for the first time or trying to get insurance to reinstate your license, you want to get the best coverage for the cheapest rate. The first step is figuring out exactly how much coverage you need. Next, get quotes from different companies and compare the rates. Look for ways to keep your auto insurance rates low, such as qualifying for discounts, bundling insurance policies or lowering your deductible.
Putting Together the Right Amount of Coverage
Verify your state’s minimum coverage requirements. Almost every state requires drivers to have liability insurance, which covers damage you may cause to another person’s property or injury to another person if you are at fault for an accident. Some states make drivers purchase a minimum amount of auto insurance. Agents or brokers who are licensed in your state will be familiar with the state’s minimum requirements. If you want to research your state’s requirements on your own, visit your state’s Department of Motor Vehicles website (sometimes called a Department of Driver Services or Division of Motor Vehicles).
Understand the different types of auto insurance coverage. Research or talk to an insurance agent about all your options when it comes to car insurance. Some may be mandatory, and others may be optional. The amount of coverage and the cost depends on the terms set forth in your policy. If you are interested in keeping your auto insurance costs low, purchase only the coverage you really need.
Bodily injury liability coverage pays for injuries you cause to others if you cause a car accident.
Property damage liability pays for damage to others’ property if you are responsible for an accident.
Medical payments coverage covers you and your passengers for injuries sustained in an accident.
Uninsured or underinsured motorists coverage pays your expenses if you are injured by a driver who does not have insurance.
Collision coverage pays for damage to your car if it hits another object or overturns.
Comprehensive coverage pays for your car if it is stolen or damaged by something other than an accident, such as the weather, a fire or vandalism.
Choose coverage that fits your needs. If you are trying to reduce your auto insurance costs, purchase only the minimum amount of coverage you need. Consider your risk tolerance and the needs of your family when making these choices, as well as any other insurance protection you may already have. Your insurance agent can also help you to consider which coverages you need and can do without.
If you have a high salary or a lot of money in savings or assets, you have a lot to lose if you are ever found liable for an accident. If this is the case, you may need more liability coverage.
Also, if you have children of driving age, you may want to purchase more liability coverage. Young, inexperienced drivers have a higher risk of getting into an accident.
In the above examples, it may be cheaper to buy an umbrella liability policy that becomes effective after the auto or home liability coverage is maxed out.
If you have an older car and you own it outright, you may not need to pay for collision and comprehensive insurance. The value of your car may not warrant the expense of the coverage.
If you are financing your leasing your car, you may be required to purchase collision and comprehensive insurance.
If you have your own health insurance, you may be able to skip the medical payments coverage on your auto insurance policy.
Shopping Around for Car Insurance
Understand the factors that may affect the cost of your insurance. Age, gender, marital status, driving record, vehicle type and model, previous claims, where you live, how often and how far you drive, and sometimes your credit score can all have an effect on how much you pay for car insurance. Talk to different agents and research how these variables will influence your premium.
For instance, a car with a high safety rating can lower your your premium, while a car with a low safety rating or a car that is a known target for theft may raise your premium.
Men tend to pay more for auto insurance than Women because studies found male drivers tend to have more accidents compared to female drivers. In California and Michigan, in fairness to non-binary and transgender drivers, state laws prohibit auto insurance companies from using sex in calculating premiums. In all other states, your sex (not gender) is one of the factors used to determine how much you’ll pay.
Most insurance companies consider drivers under the age of 25 to be more inexperienced and more prone to accidents, and therefore will have higher premiums.
Research car insurance companies. Research the different insurance companies to make sure they are reliable and effective. Even if a company offers the lowest premium, don’t purchase that policy if you think they are untrustworthy. If you ever need your auto insurance company, you want to be able to trust that the coverage you purchased is there for you.
Your state’s Department of Insurance (DOI) website compiles customer complaint ratios for all auto insurance companies that operate in that state. You can use this information to evaluate a company’s customer service record.
Evaluate how easily you can contact your company. Consider their hours of operation, whether they offer the convenience of a mobile site, and how you can contact them during off hours.
Read the company’s Facebook page and Twitter feeds to see how customers interact with the company and what they have to say.
Get car insurance quotes. You can shop for car insurance online or in person. Many insurance companies offer free rate quotes online. But if you want to be able to speak to someone who can answer your questions, go to an agent or broker. An agent works for a specific company and can give you detailed information about coverage and rates from that company. A broker, or independent agent, works with different companies and can help you to compare quotes.
Brokers may charge you a fee for their services.
Get at least three quotes so you can compare rates and coverages to find the best policy.
Be prepared to provide your Social Security number, the VIN number of your car, your car’s make and model and your daily mileage.
Compare auto insurance quotes. Don’t focus solely on the bottom line expense. Compare the amount of coverage the companies are offering you. The least expensive policy may not provide you with adequate coverage. Also, evaluate how the deductibles are affecting the premiums quoted by different companies. You may be able to afford a higher deductible with a company who charges you a lower premium. In addition, compare coverage limits. In general, you pay more for higher limits. Compare quotes to see which company offers you the highest coverage limits for the best price. Finally compare discounts. Some companies offer discounts which expire after a certain amount of time.
Reducing Your Car Insurance Costs
Choose higher deductibles. The deductible is the amount you have to pay towards any necessary repairs to your vehicle before your insurance kicks in. The lower of a deductible you want to pay, the larger your insurance premiums will be. If you want to reduce your auto insurance costs, consider opting for larger deductibles.
Increasing your deductible from $300 to $500 may reduce your premium by as much as 30 percent.
Increasing your deductible to $1,000 may reduce your premium by as much as 40 percent.
Purchase the minimum medical coverage. Your insurance policy may offer coverage for personal injury protection and medical expenses. However, if you have health insurance, you may not need to purchase this coverage. Paying for the coverage in your auto insurance may be an unnecessary duplication of expenses. Check with your health insurance company and find out if they pay for injuries from an auto accident. If they do, then you don’t need to purchase this coverage with your auto insurance.
Some states require that you carry a certain personal injury amount in your auto insurance policy.
Opt for a lower-risk vehicle. Some vehicles are more likely to either be in an accident or be stolen. If you own such a vehicle, you can expect to pay higher insurance premiums. Your insurance agent will ask you for the make, model, year, body style and engine size of your car. If it falls into the sports car category, expect to pay higher premiums than you would for a sedan.
Cars with two seats, high-performance engines, and racing tires generally fall into the sports car category.
Insurance companies charge higher premiums to insure these cars because they have a higher risk for accidents due to unsafe driving, and they are more expensive to maintain and repair.
Bundle your coverage. Many insurance providers offer discounts for bundling, or combining, your auto insurance with other policies. For example, if you purchase your homeowners or life insurance policies from the same provider as your auto insurance, you may qualify for a multi-line discount on your premiums. Also, some providers combine deductibles, which can save you money if you make more than one claim in a year. It is usually more expensive to insure your house and car separately with different companies than it would be to bundle the coverages with the same company.
Install safety features. Safety features not only make your car safer to drive, but they also reduce the potential for theft. Most cars come equipped with safety features like anti-lock brakes, automatic seat belts, and airbags. However, you may qualify for discounts on your auto insurance if you install other optional safety features. These include alarm systems, anti-theft devices, daytime lights and passenger seat airbags.
Drive safely. Maintaining a clean driving record is one of the best ways to keep your insurance premiums low. Drivers who get tickets for traffic violations, such as speeding or reckless driving, usually face increases in their insurance premiums. This is because insurance companies view these drivers as a higher risk for getting into an accident. Also, if you do get into an accident that is your fault, your premiums will increase as a result. Avoid accidents in order to keep your auto insurance expenses down.
Ask for discounts. You may qualify for discounts of which you may not be aware. For example, if you are over 50 or 55 years of age and have a clean driving record, you may qualify for a discount. Similarly, some companies offer discounts to students with good grades. Teens who have completed a defensive driving course or an approved driver education program also may qualify for discounts. Also, if your college-age children do not take their cars to college with them, your premiums may be reduced. Ask your provider about these discounts.
Purchase the minimum required coverage. You may not need to purchase full collision and/or comprehensive coverage. Depending on the age of your car and its market value, it may not be worth it to pay for the most expensive, comprehensive coverage. You may be paying for more than the car is worth. Some banks require you to purchase full collision coverage if you are still making payments on the car. Before you opt out of this coverage, check with your auto loan provider.