How to Lower Your Car Insurance Cost

cheap auto insuranceAuto insurance is one of those necessary evils of owning and driving cars. Most states require at least some liability  insurance to protect other people in case you cause an accident. Although the laws don’t require you have collision or comprehensive coverage, most auto loan companies and banks do.

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, 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.

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