How To Get the Lowest Car Insurance Rate: All You Need To Know

Understanding how car insurance works could help you get a lower rate.

From increasing your deductible to taking advantage of discounts, you can take various measures to make your auto insurance more affordable. In this article, we’ll discuss how to determine your car insurance rate and what you can do to keep it low.

What Are the Factors That Can Affect Your Car Insurance Premium?

Auto insurance doesn’t cost the same for everybody. Your insurance provider calculates your premium based on the risk of insuring your vehicle. They assess this risk by evaluating your personal information, data claims, and other factors. Here are some of the factors that can influence your car insurance rate:

Make, Model, and Year of Your Vehicle

When determining your premium, one of the things that your insurance company will consider is your vehicle’s type and age. Typically, newer and more expensive vehicles with the latest technologies and features are costlier to repair or replace.

If you own such a vehicle, be ready to pay a higher insurance rate. On the other hand, an older, entry-level model with a lot of miles is cheaper to insure.

Additionally, your insurer will look at your vehicle’s chances of getting into an accident. For example, a sports car is considered a high-risk vehicle, so it comes with a higher insurance premium than a station wagon or minivan. In contrast, a vehicle with advanced safety equipment may qualify you for discounts.

Your Age

Car insurance rates also vary depending on the age of the driver. If you’re under 25 or over 70 years old, you can expect to pay more to have your vehicle insured. Statistically, young and inexperienced drivers have a greater tendency to make mistakes and take unnecessary risks on the road, making them more vulnerable to accidents.

Older drivers run a higher risk of getting into an accident because they may have poor eyesight or other health problems that can lead to slow response times.

Zip Code

The place where you live and park your vehicle overnight also matters to your auto insurance provider. If you routinely drive and park in a big city, you’ll likely have to pay more for car insurance than someone in a rural area.

This is because living in a big city can increase your chances of being in a car accident due to heavy traffic and make you more susceptible to car theft and vandalism. Also, urban drivers often park their vehicles in uncovered and unprotected spaces, leaving them more susceptible to damage.

The state where you reside can also affect your auto insurance premium. Car insurance is state-regulated, meaning you must meet your state’s minimum coverage requirements. If your state requires higher liability limits or additional coverages, you may pay considerably more for car insurance than people in other areas.

According to USA TODAY, drivers in Florida and Michigan face the highest auto insurance premiums, while those in Wyoming and Iowa enjoy the lowest rates.

Driving Record

One of the most effective ways to get cheap auto insurance is to keep a clean driving record. Auto insurance providers offer discounts or incentives to encourage customers to drive safely. So, it pays to try to avoid tickets and accidents.

Of course, even the most careful drivers aren’t immune to collisions. However, different types of accidents and traffic violations have different risk ratings, so they may not have the same impact on your car insurance rate.

Generally, the time an accident or citation remains on your driving record ranges from three to five years, but it may vary from one state to another. However, certain violations, such as driving under the influence (DUI), tend to stay on your record longer.

Gender

Another factor that can influence the cost of your auto insurance is your gender. Male drivers usually have higher premiums than their female counterparts because they tend to take more risks behind the wheel and get into accidents more often.

However, insurance companies in several states aren’t allowed to take gender into account when determining car insurance rates. These states include Massachusetts, California, Hawaii, Michigan, and Pennsylvania.

Credit Score

In most states, your credit score can affect your car insurance rate. Your insurance company will view your credit history like they check your driving record.

Drivers with unfavorable credit scores are regarded as higher-risk drivers because they’re more likely to make risky decisions while driving. Nonetheless, California, Massachusetts, Hawaii, and Michigan have banned using credit history as a factor in setting premiums.

Types and Levels of Coverage

The best way to get cheap car insurance is to purchase a policy that meets the bare minimum of coverage required in your state. However, getting higher coverage limits or extra coverage is a good idea to better protect yourself from unexpected events.

From collision coverage to gap insurance, you can purchase many types of coverage to tailor your car insurance policy to suit your unique needs and lifestyle. These add-ons will cause your premium to go up, but they can be a lifesaver when you need them.

How to Get the Lowest Car Insurance Rate

As there are so many factors that can cause your auto insurance rate to go up, getting an affordable policy may seem like a daunting task.

However, if you’re willing to do some homework, you’ll find that you can save on your premium in many ways. The following are some helpful tips on how to get the lowest car insurance rate:

Do Comparison Shopping

Auto insurance rates can differ greatly from one insurance company to another. As such, you’ll have to shop around to find the cheapest car insurance companies. Other than national insurance companies, such as Geico, Allstate, and Progressive, you should get quotes from smaller, regional providers, such as Erie Insurance and Auto-Owners Insurance. These lesser-known insurers often have higher levels of customer satisfaction and may offer lower rates as well.

One of the easiest ways to shop around for cheap car insurance is through an online car insurance comparison tool. You can find this tool on many insurance and financial websites. Alternatively, consider exploring your options with a car insurance agent.

Claim Your Discounts

If you have a clean driving record or good grades in school, you may qualify for an auto insurance discount. Most insurance providers offer discounts based on policy ownership, driving history, academic record, vehicle security, group membership, and other criteria. Below is a list of car insurance discounts you may be eligible for:

  • Discount for military members and veterans
  • Discount for federal employees
  • Good student discount
  • Good driver discount
  • Defensive driver discount
  • Discount for installing safety and security features
  • Multi-vehicle discount
  • Multi-policy discount
  • Pay-in-full discount
  • Auto-billing discount

Consider Dropping Collision and Comprehensive Coverage

Collision coverage is a type of car insurance that protects against collision damage, whether it’s a single- or multi-car accident. Comprehensive coverage pays for your losses if your vehicle is stolen or damaged due to a non-collision event, such as contact with an animal or a natural disaster.

These two types of coverage intend to cover any repairs needed or reimburse you for your vehicle’s value. They’re optional unless you’re financing or leasing your car, in which case your lender or lessor may require you to purchase them.

If you own an old vehicle with a low value and have already paid off your car loan, it may make more financial sense to opt out of collision and comprehensive coverage. This can help you lower your car insurance premium.

Increase Your Deductible

An auto insurance deductible is the amount you must pay toward a claim before your policy goes into effect. The higher your deductible, the lower your monthly premium. However, you should consider your financial situation before deciding on a deductible. If you choose an overly high deductible, you may face financial difficulties if you need to file a claim in the future.

Consider Usage-Based Car Insurance

If you don’t drive a lot, get cheap car insurance by opting for the usage-based program. With this type of insurance, your car insurance company will track your driving behavior to determine your premium. Through a self-installed plug-in device or smartphone app, they use telematics to collect information on how much, how well, and when you drive.

Available at major insurance companies such as Allstate and State Farm, usage-based insurance can lower your car insurance rate if you’re a safe driver. You can also save money by switching to a pay-per-mile program, which simply lets you pay for coverage according to the number of miles you drive.

Improve Your Credit Score

If you reside in a state that allows insurance companies to use your credit history to set your premium, you should make an extra effort to raise your credit score. You can do this by promptly making your loan and credit card payments and reducing your overall debt. Also, check your credit score regularly to track your progress.

Check Insurance Costs before Buying a Car

When shopping for a vehicle, you’ll most likely look at factors such as fuel economy, maintenance costs, and monthly payments. It’s also important that you consider the cost of your car insurance. Research before buying because some make and models are cheaper to insure than others.

Frequently Asked Questions about Car Insurance Premiums

What Is a Policy Liability Limit, and How Does It Affect My Auto Insurance Rate?

The liability limit of your car insurance policy is the highest amount your insurance company will pay to the victim if you’re the at-fault party in an accident. This limit often comprises three separate dollar amounts, such as $100,000/$300,000/$100,000.

In this case, the per-person bodily injury liability limit is $100,000, while the total payable bodily injury limit for the entire accident is $300,000. The third limit, $100,000, is the total liability limit for any property damage you may cause.

You can choose a lower liability limit to keep your car insurance rate low. Getting a higher limit gives you more protection in an accident but raises your premium. Opting for liability insurance coverage that suits your budget and driving habits is important.

How Can I Lower My Car Insurance Premium after a DUI Violation?

After you’ve committed a DUI violation, your insurance company will consider you a high-risk driver, increasing your auto insurance cost. To reduce your insurance rate after a DUI, you can take a defensive driving course, switch to a usage-based program, or remove unnecessary coverages. Also, you should avoid additional infractions that can further increase your premium.

How Do I Know If I’m Eligible for Any Car Insurance Discounts?

To determine if you qualify for any car insurance discounts, you must consult a representative of your insurance company or a local independent agent. They’ll help you claim all the discounts you’re eligible for to get the best rates.

When you’re purchasing car insurance, it’s essential to opt for a policy that offers good protection for your assets in case of an accident or disaster. Determine the types and limits of coverage you need and shop around to determine which insurance companies offer the lowest rates for your desired plan. Finding the best car insurance deal requires time and effort, but it’s worth your while as it can help you save a lot of money in the long term.

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