How to choose the right cheap car insurance for your budget
With insurance costs increasing almost everywhere, more drivers than ever are looking for budget car insurance. Although insurance premiums vary by company, most insurers look at personal factors to set your rates. Bankrate’s insurance editorial team explains these factors and offers strategies that could help you improve factors you have control over so you can get the right insurance policy at a price that won’t break the bank.
How to choose the right, cheap car insurance
If you are looking for the cheapest car insurance, price may be your top priority. However, knowing how to choose the right car insurance company often requires considering more than just your premium. The following tips may help you find budget auto insurance that meets your coverage needs.
1. Consider your vehicle and driving record
Your car insurance premium is based on many factors, including the age, make and model of your vehicle, its mileage and its safety features. Because older vehicles usually have a lower value, they are often cheaper to insure than newer cars with more expensive parts and repair costs. Plus, you may be able to forego full coverage if the value of your car is close to what you would pay for full coverage car insurance for a couple of years. Speaking with an insurance agent may help you determine which coverage options are right for you and your vehicle.
In addition, your driving record (i.e., at-fault accidents and moving violations) has a significant impact on your car insurance rate. Generally speaking, safe drivers pay the lowest car insurance rates. If you have serious violations on your driving record that require you to get an SR-22 certificate, you might be required to purchase high-risk auto insurance , which usually demands a much higher premium.
2. Consider your personal factors
Besides your driving record, other personal factors will also impact your car insurance premium. These include where you live and, depending on your state, your age, gender and credit history.
Car insurance quotes can vary significantly based on your driver profile, so it may be valuable to compare quotes from a handful of carriers to see which could offer you the best rates. Each insurance company calculates rates differently and weighs driver and vehicle characteristics according to its own proprietary formula. For example, one carrier may surcharge rates significantly for a speeding ticket conviction, while another may put more emphasis on your age and credit history when calculating rates.
3. Compare quotes based on coverage options
When shopping, comparing car insurance quotes may be one of the most helpful things you can do. In addition to your driver profile, your chosen coverage limits, endorsements and deductibles will also determine your rate. Requesting quotes for the same coverage types and policy limits may help you get the most accurate comparison across carriers. It could even be worthwhile to speak with an independent insurance agent who can gather multiple quotes for you and provide personalized customer service with your best interest — and budget — in mind.
The amount of car insurance coverage you need has a direct impact on your premium. As a general rule, the higher your coverage limits are, the more your policy will cost. But higher coverage limits also provide greater financial protection if you need to file a claim. On the other hand, choosing high deductibles may help you secure a lower rate, but you’ll be required to pay more out of pocket if you were to file a claim.
If you lease or finance your car, you will probably need to purchase a full coverage policy, which typically includes collision, comprehensive and liability. If you own your vehicle, you may have the option to purchase a cheaper minimum coverage policy that includes only the minimum coverage requirements for your state, but it will not offer as much financial protection.
Adding insurance endorsements may allow you to tailor your policy to meet your unique needs, but add-ons usually come at an additional cost. Insurance endorsements vary by company, but some common options include:
- Gap insurance: This covers the “gap” between what you own on your car loan or lease and the value of your vehicle in the event it is totaled or stolen and nonrecoverable.
- Custom equipment coverage: If you added custom equipment to your vehicle like lights, spoilers or wheels, this endorsement offers coverage for those additions.
- New car replacement coverage: If you have a fairly new vehicle that is deemed a total loss following a covered event, this coverage would pay to replace your car with a brand-new model of the same vehicle.
- Rideshare coverage: If you drive for a rideshare service, this coverage adds extra financial protection when transporting passengers for commercial purposes.
Finding local and regional insurers can be a serious boon when looking for cheap car insurance. While not always, these companies are often well-geared toward local coverage needs, sometimes with specialized perks, discounts or other features that would be difficult to find in larger insurance companies. Working with an independent agent or broker can help when seeking a regional insurer that caters to your specific needs while offering a competitively low rate.
4. Understand which discounts may apply to you
When choosing car insurance on a tight budget, you may want to pay close attention to the discounts offered by each company. Many car insurance companies offer discounts to help drivers get a better rate, but the discounts available depend on the carrier. Here are some commonly available car insurance discounts:
- Multi-policy: Purchasing two or more policies from the same company, usually as a home and auto insurance bundle, may help you get a cheaper premium with some carriers.
- Multi-vehicle: If you insure more than one vehicle on your auto insurance policy, many insurance providers will lower your rate.
- Claim-free: Drivers who have no insurance claims on their record within the last several years can sometimes qualify for a claim-free discount.
- Paid-in-full: If you can afford to pay your annual or six-month premium up front and in full, you might save on your rate with certain carriers.
- Good student: Drivers who get good grades in high school or college might qualify for a student car insurance discount.
- Telematics: Many carriers offer telematics programs, which monitor driving habits for both safe and risky behaviors behind the wheel. Safe drivers can often save on their premiums, but some companies may raise your rates if the program uncovers risky habits.
- Affiliation: Some insurance companies offer affiliation discounts for students or professionals. Examples of potential affiliations include professional organizations, alumni groups, businesses and military service.
If you qualify for multiple discounts, most insurance companies allow them to be stacked together, which lets you maximize savings if you qualify for more than one. You can ask about the discounts that are available so you know what you may qualify for when choosing a company. Applying discounts may help lower the cost of car insurance so you can get the policy you need without compromising your coverage.
5. Research trusted third-party ratings
Once you’ve found some carriers that could offer you the coverage you’re looking for at an affordable rate, you may want to look at third-party ratings for the providers you are considering. Some of the most notable and trustworthy organizations are J.D. Power, AM Best and Standard & Poor’s (S&P). By considering third-party ratings, you may better understand each company’s overall customer satisfaction and financial stability. These metrics may also give you an insight into digital tools offered by each carrier.
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Powered by Coverage.com (NPN: 19966249)
Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in states where it is licensed. Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.
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