After monthly payments, auto insurance is the most costly ongoing expense of driving a car.

We all know that we are required to have auto insurance on our cars to comply with state financial responsibility laws and, if we have a loan or lease, to meet finance company requirements.

Insurance laws are in place to make sure we are financially able to pay for damages and injuries that we might cause in accidents for which we are at fault. Banks and finance companies want to make sure they get paid if you damage or destroy a car for which you have a loan or lease. Insurance protects us from financial disaster, even if we think we’ll never need it.

Since insurance is such a large part of the expense of driving a car, insurance rates can make the difference between a good car deal and not-so-good deal. Insurance rates on different automobile makes and models can vary by thousands of dollars. Ideally, we want to choose a car with not only a good price and monthly payment, but also a good low insurance rate.

So, what are the cars with the lowest auto insurance rates?

According to Insure.com, the least expensive 2011 vehicles to insure are the following:

1. Chrysler Town and Country LX
2. Toyota Sienna LE
3. Honda Odyssey LX
4. Nissan Murano SL
5. Jeep Wrangler Unlimited Sport
6. Honda Odyssey EX
7. Ford Escape XLS
8. Toyota Highlander
9. Honda CR-V LX
10. Hyundai Santa Fe GLS
11. Jeep Patriot Sport
12. Jeep Wrangler Unlimited Sahara

You might notice that the above list includes a mix of mostly minivans and small SUVs, who are driven by people who are less likely to have accidents than teenage boys who prefer sportier, faster, more powerful models — and who wreck cars much more often, which creates higher insurance rates, even for middle-age and older drivers of those cars. 

Ignoring pricey luxury cars, which are always more expensive to insure, any car that is not likely to impress teenage males is going to have lower auto insurance rates than those that get the boys excited. In general, SUVs, minivans, sedans, and mini-cars have the lowest rates. Sports cars, or small sporty 2-door coupes with powerful engines will command the highest rates.

When shopping for auto insurance, you should know that rates vary widely from state to state and company to company. There is no such thing as “standard” car insurance rates. Insurance providers are very competitive and are continually adjusting their rates.

Don’t assume that your current insurance company has the best rates. You should check for best rates at least once a year by getting rate quotes from multiple companies. Better yet, use one of the online brokers, such as NetQuote.com, that match you up with up to five different insurance companies that meet your requirements. Simply choose the best deal and sign up right then and there.

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As you may already know, the cost of car insurance can vary greatly between different car makes and models.  If you buy a car that has high insurance premiums, the total of your car payments and insurance payments may be much higher than you expected — maybe even more than you can afford.

Let’s say you got a great price on a brand new Subaru Impreza WRX and also got a nice low-interest loan to create low monthly payments. You then go to your auto insurance company and are startled to find out that insurance coverage on that particular vehicle is higher than just about any other vehicle you could have bought — particularly if you are a teen or young adult.

It’s true that the Subaru WRX is one of the most expensive vehicles to insure, along with other vehicles such as the Scion tC, Hyundai Tiburon, Honda Civic Si, Dodge Charger, and Nissan 350Z/370Z.

Do you see the similarity in the vehicles in this list of expensive-to-insure vehicles?

They are all small, high-performance coupes that are popular with young male drivers — who wreck them frequently. In fact, young male drivers who buy these vehicles can expect to pay outrageous insurance rates — because the risk of having an accident and filing an insurance claim is very high.

But what does that have to do with the cost of auto insurance for drivers who are older, and maybe not even the same gender, who buy these vehicles? Do we also have to pay higher rates?

Yes.

Why?

Because insurance companies must spread the cost around, all customers share in higher rates for a vehicle that is frequently wrecked by young drivers. If they charged young male drivers of these vehicles the entire cost of the increased risk they create, the cost of insurance for them would be prohibitive. They couldn’t afford to pay. They couldn’t afford to drive.

So, to reduce the cost to those at higher risk, insurance companies pass along some of the cost to those of us who are lower risk. Even if you are 60 years old with a perfect driving record, you will pay a much higher car insurance premium for a Honda Civic Si coupe than for a less exciting Toyota Camry 4-door sedan.

Said another way, young male drivers actually get a break and don’t have to pay their fair share because older drivers pay part of the cost for them.

Generally, the cost of insurance increases for vehicles that are most expensive to repair, vehicles that are stolen most often, and vehicles that are wrecked most often (according to insurance industry statistics). Vehicles that primarily appeal to young drivers are more expensive to insure than vehicles that appeal primarily to older drivers.

So, regardless of your age and driving record, you should research the cost of auto insurance on the vehicle you plan to buy before you buy. Your great car deal can easily turn sour if your insurance costs skyrocket.

What is the best way to research insurance costs before you buy?

Simple. Just call your own auto insurance company. But don’t assume your own company has the best rates. It’s always a good idea to get multiple quotes from different companies. The quotes are free, so why not?

It’s easy to get quotes online, from car insurance brokers such as NetQuote.com who gives you quotes from up to five different insurance providers that can match your requirements. With multiple quotes in hand, you can compare and choose the best deal. This is the only way to make sure you are getting the cheapest auto insurance coverage that meets your particular needs.

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Keep in mind that car insurance costs can vary widely between insurance companies for the same car and same individual. And rates change frequently. The cheapest insurance company this year might not be the cheapest next year. The company that has the best rates for a young driver may not have the best rates for an older driver. The company that has the lowest rates in one city and state may not have the lowest rates in another city and state.

So how do find the cheapest auto insurance rates?

Simple. You ask for rates from a number of different companies, compare them, and go with the most affordable. Insurance quotes are free and there’s no obligation to accept any of them.  Then, in about a year, you do it again because rates can change in that timeframe.

Understand that auto insurance companies have a complicated risk-based system that determines rates. Rates are based on the age of the insured, his driving record, where he lives, where he drives, how much he drives, for what purpose he drives, the make/model/age of his vehicle, if he has other insurance with the same company, and his credit score. Yes, many insurance companies have determined that people with poor credit scores are more likely to submit car insurance claims, and therefore should pay higher insurance rates.

How much insurance should you buy?

Many people try to cut costs and only buy the state-required minimum liability coverage. Unfortunately, these minimums were set years ago before cars became so expensive and before big liability law suits became so common. In some state, for example, the minimum coverage is $15,000.

Let’s say you cause an accident and destroy someone’s $30,000 car. After your insurance pays $15,000, you will be held responsible for paying the remaining $15,000. Therefore, you should have a minimum of $50,000 liability coverage — or risk financial disaster.

You should also have collision and comprehensive coverage.

Collision insurance pays for the cost of repairs to your own vehicle. Unless you have a big bank account, having collision coverage is important to avoiding the high cost of damage repairs.

Comprehensive insurance protects you if your car is destroyed by fire, totaled in an accident, or stolen. This is especially important if you have a loan on your vehicle. However, if you are “upside down” on your loan, your insurance will only pay the value of your vehicle, not what you still owe on your loan. For more protection in that situation, you should have “gap” insurance (see What is Gap Insurance for more details).

To summarize, the only way to get the best auto insurance rates is simply to request free rate quotes from a number of different companies.

The insurance business is so competitive that these companies are fighting for your business.

One  of the easiest and quickest ways to get multiple quotes from different companies is to go to a broker web site, such as NetQuote.com, that work with all the major insurers. Fill out your information once, and get quotes back from the companies that would work best for you.