Mathew B. Sims is Editor-in-Chief and has authored, edited, and contributed to several books. He has been working in the insurance industry ensuring content is accurate for consumers who are searching for the best policies and rates. He has also been featured on sites like UpJourney.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. He reviews content, ensuring that exis...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Apr 21, 2020

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It’s all about you. We want to help you make the right coverage choices.

Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We partner with top insurance providers. This doesn’t influence our content. Our opinions are our own.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.

Things to Remember...

  • Every state has a minimum liability requirement for car insurance
  • A deductible is the amount of cash you are willing to pay out-of-pocket after an incident occurs
  • Your driving history, where you live, and gender all play a part in determining your premium

Auto insurance is required if you want to drive a car legally. Every state requires a minimum level of liability coverage for every motorist, so each person will be striving to find coverage that fits their lifestyle, budget, and needs.

Just because every person around is shopping for auto insurance does not mean every person understands the ins and outs of finding affordable premiums.

To find rates and premiums that can fit your budget and needs, enter your zip code into the FREE box located on this page!

How Rates are Calculated

Most insurance companies use the same factors to calculate premiums, and a few of those factors are incredibly important to understand when finding quality, cheap auto coverage.

The reason for this is that some factors are outside of your control. Understanding those first will prevent you from getting disappointed when you keep finding premium rates that are more expensive than you think they should be.

First off, every insurance company uses a driver’s history to calculate coverage. Your insurance premium is mostly based on how much of a risk the company thinks you are to insure.

For example, if you have a couple of moving violations on your driver’s license, like speeding tickets and accidents that you are responsible for, you can guarantee you will have higher premiums than the average Joe.

Other things like age, gender, and where you live dictate your premiums. Sadly, these things are relatively outside your immediate control when purchasing auto coverage.

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Free Auto Insurance Comparison

Enter your ZIP code below to view companies that have cheap auto insurance rates.

 Secured with SHA-256 Encryption

Steps to Lowest Possible Rates

If you need to find further information about the basics of auto insurance rates, there are a few handy resources available for consumers.

The Insurance Information Institute is a great place to start researching basic information about types of auto insurance, how premiums are calculated, and a variety of other topics related to auto insurance.

Another place you can find trustworthy information about your insurance policy is at your local department of insurance websites.

Each state has its own department of insurance, and every department will have a web page filled with useful information.

For example, the South Carolina Department of Insurance has a great page covering the basics of auto insurance in that state. Research your local state department for specific information.

Look at the Deductible

The first step is to take a look at your deductibles. A deductible is the amount of cash you are willing to pay out-of-pocket after an incident occurs.

For example, if you get into an accident and it is not your fault, you would probably file a claim with your insurance provider. They would then cover repair costs after your deductible is paid.

Understanding your own budget is the first step. Look at how much cash you would be willing to spend on a repair and make that the deductible on your policy.

Deductibles can be an easy method to find the lowest premium possible because of how deductibles influence rates. Basically, the higher the deductible, the lower your monthly premium will be.

If you can afford to pay $1,000 before your insurance kicks in, you can guarantee your premium will be significantly lower. This is the fastest and easiest way to lower your premium.

Types of Coverage

A second step in lowering premiums is to evaluate the types of coverage you are willing to pay. For example, having collision and comprehensive coverage on an older vehicle is probably not necessary. Both of those types of coverage will only pay based on the current value of your vehicle.

If you have an older car and it has a relatively low market value, paying for collision and comprehensive coverage is a waste of money. However, if your vehicle is newer and has a high market value, collision and comprehensive coverage would be worth the money.

Before considering the types of coverage, you need to know how much your vehicle is worth.

Guessing is a very bad idea, so there are a few resources that are very valuable when pricing out your car. Kelley Blue Book is the most common resource, but Edmunds is another great resource. Both companies will provide you will accurate prices of your vehicle.

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Vehicle Type

A third method that can influence your premium is the actual vehicle you own. If you can, consider purchasing a vehicle that is relatively safe, not commonly stolen, and has great safety ratings.

Insurance companies will dictate their rate calculations based on how risky they think your vehicle is to drive. Now, this method is not quite as simple as the previous two, especially if you have already purchased your vehicle, but it is helpful for future purchases.

If you are looking to buy a new car, call your insurance company and get a quote on that vehicle. If you want to do some research before you go to a car dealership, there are a few resources available.

The Insurance Institute for Highway Safety provides a comprehensive list of vehicle safety ratings. You can also research specific vehicles and their safety ratings before purchasing the car. A great resource for researching vehicle safety ratings is Consumer Reports.

Mileage

A fourth way to help lower premium rates is to evaluate how much you drive. The miles you put on your vehicle will drastically affect the price of your insurance.

Companies see a driver with high mileage annually as a higher risk. The more you are on the road, the more likely you will get into an accident.

Because of this, if you can manage it, carpooling or utilizing public transportation a few days a week can be a great way to lower the mileage you put on your vehicle, and in turn, you can save a bundle on your car insurance.

In addition to carpooling and public transportation, be sure to constantly update your current insurance provider on your current driving situation.

For example, if you get a new job that is closer to your home, calculate how many fewer miles you would be driving and call your provider. Most insurance companies offer a variety of low-mileage discounts, and some even offer carpooling discounts as well.

Anti-theft Devices and Safety Equipment

A fifth way to lower premium rates is to consider purchasing anti-theft devices and safety equipment for your vehicle. Almost every insurance company out there offers discounts for vehicles with anti-theft alarm systems and other products that deter theft.

Informing your current provider about devices you have recently installed can save you some cash.

If you do not currently have anti-theft equipment installed in your vehicle, the National Highway Traffic Safety Administration has a variety of information on their website.

The NHTSA has lists of anti-theft devices and the level of protection you get from installing the device in your vehicle.

Free Auto Insurance Comparison

Enter your ZIP code below to view companies that have cheap auto insurance rates.

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Additional Discounts

A seventh and final guaranteed way to reduce premium rates is to ask your provider if there are any other discounts that they offer.

Some companies, especially the smaller insurance providers, offer a variety of specialized discounts, but most of the time, agents will not tell you about those discounts unless you ask them.

Be diligent and proactive with your search for cheaper premiums by inquiring about every possible discount a company offers.

Many common discounts, in addition to multi-policy discounts, are good student discounts for high school drivers, no accident discounts, and defensive driving course discounts. There are even certain discounts for college students who live on campus and do not have a car.

Understanding how policies and premiums work, as well as researching, are the best ways to ensure you are not paying too much for auto insurance.

Combining Insurance Policies

A sixth technique for reducing premiums is to combine all of your insurance policies with one company. Every insurance provider offers fantastic discounts for multi-policy customers.

If you have homeowner’s insurance and life insurance, or you have multiple vehicles to insure, consider combining all of your policies with one company.

You can also get multi-policy discounts for insuring other types of vehicles, like motorcycles, RVs, and boats. Consider every type of vehicle you currently have policies for and ask about discounts for lumping all of your policies together.

If you’re ready to find affordable car insurance, enter your zip code in the FREE box below!

References:

  1. https://www.esurance.com/info/car/the-pros-and-cons-of-high-deductibles
  2. http://www.investopedia.com/ask/answers/09/calculating-premium.asp
  3. http://money.howstuffworks.com/personal-finance/auto-insurance/driving-record-affect-insurance-rate.htm
  4. http://www.iii.org/
  5. http://www.doi.sc.gov/
  6. http://www.rmiia.org/auto/steering_through_your_auto_policy/Filing_an_Auto_Claim.asp
  7. https://www.esurance.com/info/car/comprehensive-and-collision-coverage
  8. http://www.edmunds.com/
  9. http://www.iihs.org/research/default.aspx#hldi
  10. https://www.edmunds.com/g00/driving-tips/commuter-carpools-save-time-money-and-stress.html?i10c.referrer=https%3A%2F%2Fwww.google.com%2F
  11. http://www.nhtsa.gov/Vehicle+Safety
  12. https://www.farmers.com/auto/reduce-premiums/
  13. https://www.allstate.com/auto-insurance/auto-life-discounts.aspx