How to Get the Cheapest Car Insurance Rates Possible

Don’t pay more than you have to. Here are 8 ways to save money on your new car insurance

How To Get The Cheapest Car Insurance Rates Possible

According to data from Quadrant Information Services, the average annual cost for car insurance is $1,674, or $139.50 a month. For clarity, that rate is for full coverage, but that’s also the safest and most comprehensive kind of insurance you get and it covers just about everything. That is what you can expect to pay for full coverage, but is that the best you can do? Is there no way to make car insurance more affordable?

This is the topic of today’s blog. We’re looking at ways to get car insurance that won’t break the bank, or at least not as much!

1. Shop Around and Compare

The first piece of advice to follow is the oldest rule in the consumer book — never settle for the first quote. Most car insurance quotes will be valid at least a few days, most of them up to a week or more. You should look around the marketplace and compare different offers in front of you.

Websites like insurify.com, nerdwallet.com, thezebra.com, and many others offer free and quick instant comparisons that will flag up the best deals available. You should also not fail to ignore regional insurers. Many people make the mistake of thinking that only “the big boys” like the nationwide providers are the ones that are competitive in price but this isn’t the case. To compete, regional providers may offer better prices than you think, and they also frequently have better, more personalized customer service, which is an added bonus.

2. Inquire After Discounts

It’s an industry reality that many providers will offer incentives to you to secure your business in the face of the cut-throat competition among insurers. When getting a quote and the time comes to contact the insurer, you should ask more about discounts you can get from that provider. With any luck, they will take it upon themselves to let you know, but there’s no reason not to ask yourself.

For example, some providers will give you a better deal on your car insurance if you bundle it together with a policy on home insurance or a similar type. You might think you don’t want to spend more money on more insurance, but if the bundle includes something very practical, then there’s no reason to dismiss it.

Other discounts offered can include getting a better deal if you insure multiple cars on the same policy. In addition, if you have a clean driving record, then you could also ask about any incentives for that.

3. Make Your Car More Secure

There’s a common belief that the huge amount of advanced driver assistance systems (ADAS) will help our car insurance to be cheaper. In fact, this is not true. While cars are certainly getting smarter and more capable, the added equipment, cameras, sensors and other hardware actually makes the car more expensive to insure. So how does making the car “more secure” reduce your insurance cost?

ADAS features may not help in your case for cheaper insurance, but security systems like alarms, tracking devices, immobilizers and similar equipment do. It should be noted however that these savings are usually quite small, but every little bit helps! 

4. Offer a Higher Deductible

One of the frustrating things about car insurance is when you can be relatively certain of general safety in the car but still have to pay high premiums. For example, when you have a secure garage or off-street parking, adequate security measures, you almost never drive in high speed areas, etc. Such circumstances should make you a lower risk, but still your premiums could be too high.

One way around this for people who can count themselves as genuinely low risk — clean driving record, good driving habits, not driving as often as other people, etc. — is to offer a much higher deductible. When you say you’ll pay more yourself in the event of a claim, then you lower the risk in the only way that insurance companies respond to, which is lowering the financial risk.

If you know you could afford the deductible if and when a claim was made, then you can enjoy better premiums in the meantime. It’s a good strategy for those who have a reasonable and justified confidence that the chance of a claim is low in the first place. It’s an easy way to lower insurance costs fast.

5. Sign Up for a Car Tracking Device

There are some providers out there who are proposing an interesting arrangement with drivers. Because it doesn’t make good business sense to simply take your word for it that you’re a good and safe driver, they instead offer you the option to sign up for a safe driver program whereby they install a tracking device in your car that monitors your speed, mileage and general driving standards. If they live up to the high standards you claim, then you can get quick discounts.

There are a number of these programs, one of which is Drive Safe & Save from State Farm. Upon signing up you get an immediate discount of 5 percent or so, and then up to 30 percent more when the tracking period is done. Some of the latest programs, including State Farm’s, no longer require an additional tracking device to be fitted but instead work via smartphone apps. As long as you have your smartphone with you on the journey, it will track the same data.

6. Improve Your Credit score

You might not think that your credit rating is affecting your car insurance rate, but it is. The fact is that the poorer your credit, the more likely you are to have higher insurance premiums, and the difference can be well into the hundreds of dollars. But what is poor credit?

In general, a FICO score lower than 579 is what a car insurance company would generally view as poor credit. The lower it goes, the more serious it becomes. The pattern persists across most states in the US. In Michigan, for instance, the damage to poor credit holders is the most serious. The annual price goes up to more than $5,500 for the annual premium.

Therefore, taking active steps to improve your credit score and get on the right side of the insurance company’s financial prejudice is a good way to get lower insurance costs. How can you increase your credit rating? Below are a few things you can do really quickly to see some results.

  • Work on repaying debt if you have a backlog of repayments
  • Use credit cards and pay them off in full
  • Pay all your bills on time
  • Dispute credit report errors
  • Use a secured credit card

RELATED: How to Get a Car Loan with Bad Credit

7. Go for More Basic Coverage

The prices we have mentioned in today’s blog were all for full coverage, also known as comprehensive coverage. There are times when this kind of insurance policy is just not a suitable choice, such as when the premiums are close to what the entire car is actually worth. If you’re driving an older car, then you don’t need comprehensive coverage or collision coverage, and you can get by with just liability only coverage.

Holding liability only coverage means you are protected from the cost of any damage you do to other cars or property, but not for the damage done to your own car. If the car is old and not even worth the repairs, then it’s not worth the coverage, either. You can just sell the car for scrap and then look at getting a replacement vehicle.

8. Check Insurance Rates Before You Buy the Vehicle

Many people get stuck with higher premiums because they purchase the vehicle before they look into the insurance cost. They then trap themselves within the limitations imposed by that car or other vehicle when it comes to insurance costs. If you take the time to do some research and investigate how much insurance will cost ahead of time, then you can make a smarter and more informed choice.

Let’s say you’re looking at crossover SUVs. You might assume that all of these cars are about the same to insure, but as it happens, the numbers tell a different story. A Subaru Outback, for instance, has an average annual premium of $1,392 and an MSRP of about $26,650. The Toyota RAV4 is definitely in the same family, and is about $600 cheaper in MSRP, but at the same time costs on average $1,555 to insure.

Conclusion: Steer Clear of Certain Cars to Ensure Lower Insurance

One final thought to tie today’s blog together is that while prices will vary for different reasons — geographical location, driving record, home situation, credit score, etc. — the type of car that you’re insuring still has a huge bearing on the price, and you can do a lot simply by not trying to insure a luxury or sports car, an electric car, or any car that is typically targeted by thieves. Start with the right car, and then your other advantage cards will always be more meaningful.

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Written by:

Adam is a car enthusiast who spends his time driving and fixing fast sports cars. He knows everything you need to know about the car market and will definitely help you make good car deals. He also has extensive knowledge in car financing, insurance and leasing.