Managing Car Costs? How to Find Cheap Auto Insurance to Fit Your Budget

• Author: Jacob Greene
• Posted: 2024-09-08

Car insurance is a compulsory expense that can carve a chunk out of your budget. Although having auto insurance is a requirement, there are ways to ensure that you do not overspend on a coverage plan. The following guide to how to choose the right car insurance can help you select the best plan for your needs.

Consider Your Vehicle and Driving Record

Many drivers feel surprised upon learning that vehicle type can greatly influence car insurance premiums. Factors that can alter a car insurance rate include the make and model of a vehicle, the age and mileage on a vehicle, and the safety features included on the vehicle. Since older vehicles typically have lower monetary value, they are cheaper to insure than newer vehicles. For example, an insurance company may determine that the potential cost of replacing or repairing an older car is less than that of a newer car. If you have a recent model, be sure to notate all safety features to make a case for lower premiums.

In addition to vehicle style, the vehicle owner's driving record can also influence insurance costs. For example, several at-fault accidents or moving violations can increase your overall premiums. After several accidents, some states require such drivers to register for high-risk auto insurance. If you have a poor driving record, consider enrolling in a safe driving course to lower your insurance rates. You can then add the course completion to your driving record as proof of a good faith effort to lower your liability on the road.

Consider Your Personal Factors

Although there are some personal factors that you cannot easily change, these factors represent important considerations that more require you to shop around more than average. These factors include age, state, zip code, and number of miles driven annually. In addition to these factors, you should also check whether credit score affects car insurance rates in your local jurisdiction. While some localities recommend that you improve your credit score to obtain a lower insurance quote, other jurisdictions have passed legislation that prevent private companies from factoring credit score into insurance premiums. States that prohibit insurance price hikes based on credit score include California, Hawaii, Massachusetts, Michigan, and Washington. After checking the rules for your state and local jurisdiction, you should obtain at least five separate direct quotes to give yourself a starting range for comparison.

Consider Necessary Coverage Type

In addition to your driver profile and vehicle type, you can also evaluate your necessary coverage type. Factors such as coverage limits, add-ons, and requested deductibles can all change your car insurance quote. As a rule, a higher coverage limit creates a more expensive insurance policy. On the other hand, selecting a high deductible can result in lower monthly payments. If you already have money saved and specifically earmarked for an auto emergency, you may select the higher deductible option in exchange for a cheaper insurance plan. Similarly, individuals who own their vehicles free and clear usually select the cheaper minimum coverage policy. Drivers who are still financing their vehicles often select full-coverage insurance to reduce financial risks in the event collision or other damage.

Consider Any Discounts That Apply

While shopping for car insurance, read the fine print for any discounts that apply. Auto insurance discounts unique to each carrier, but the most common scenarios include the following:

• Multi-Policy Discount - This refers to purchasing two or more policies from the same company (often called a "bundle"). For example, if you purchase car insurance and home insurance from the same carrier, you can negotiate a lower monthly premium.


• Multi-Vehicle Discount - If you insure more than one vehicle on the same policy, most carriers will lower the monthly rate.


• Claim-Free Discount - If you have made no insurance claims in the past three years, contact the insurance company to inquire about lowering your rate.


• Paid-Full Discount - Some companies apply a lump-sum discount if you can pay the annual premium upfront.


• Good-Student Discount - To ease the cost of insurance for young drivers, several companies offer percentage discounts for responsible student-drivers.

Consider Trusted Third-Party Quotes

While it is important to get quotes directly from the carrier, it is always a great idea to consider an objective source. Before committing to any insurance company, review third-party evaluations from organizations like J.D. Power, AM Best, Better Business Bureau (BBB), or Standard & Poor's (S&P). Obtaining objective information on a potential carrier can help your navigate their track record on customer satisfaction as your work toward your own financial goals.