Cheap Car Insurance Premiums (Rates)

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Daniel Walker
Licensed Insurance Agent

UPDATED: Apr 3, 2020

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Things to remember...

  • Your premiums are what you pay to purchase your car insurance policy.
  • The type of policy you purchase affects your premium rates.
  • Insurance providers charge different rates because they use different formulas for calculating risk.
  • An insurance comparison tool can help you find a policy you can afford.

If we’re being honest, car insurance is probably not something we like to think about a lot, let alone pay a lot for. That’s why we created this guide to help you find the cheapest car insurance policy for you and your family armed with the best research out there.

We all love a good deal, it’s true. We all love a good deal so much that since 1963, Americans have tuned in to watch the hit game show Let’s Make a Deal.

But buying car insurance for you and your family shouldn’t be choosing blindly what’s behind door one, two or three.

So if you want to find affordable car insurance and to find out more about what you’re actually buying, read on.

Part of this comprehensive guide to finding the cheapest car insurance premiums for you and your family is such a comparison tool, which you can use simply by entering your ZIP code. We’re here for you.

What is a car insurance premium?

Excellent question. In the words of Fraulein Maria from The Sound of Music, “let’s start at the very beginning, a very good place to start.”

So let’s take a step back and ask: what is an insurance premium?

According to the financial experts at Investopedia, “an insurance premium is the amount of money an individual or business pays for an insurance policy. Insurance premiums are paid for policies that cover healthcare, auto, home, life, and others.”

Thus, an auto insurance premium is the amount you pay for your auto insurance coverage. These premiums can be paid up-front for the entire length of the policy or divided and paid over a period of months, usually six.

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How are car insurance premiums calculated?

Car insurance premiums can seem like a mystery at first, but with a little knowledge, you can understand how they’re calculated and even how you can work towards lowering the amount you pay for coverage.

According to the Insurance Information Institute (iii), “The amount you’ll pay for car insurance is impacted by a number of very different factors — from the type of coverage you have to your driving record to where you park your car.”

GRAPHIC

Our research shows that the following elements are the most common factors insurance providers will use to help determine your car insurance premium.

Driving Record

Driving records are like credit scores: the worse the driving records, the higher your car insurance premium will be. Maintaining a clean driving record is the best way to bring those auto insurance premiums down.

Specifically, what you have on your driving record will also play into those auto insurance premium calculations. A minor speeding ticket will weigh less than a drunk driving arrest will, for example. It is just a good idea to avoid any issues and drive safely and drive smartly.

But it’s also important to know: having a bad driving record won’t follow you around all of your life. Many states will start dropping accidents and speeding tickets off your driving record in a matter of a few years.

Commute Distance and Car Use

According to the Insurance Information Institute (iii), “The more miles you drive, the more chance for accidents so you’ll pay more if you drive your car for work, or use it to commute long distances. If you drive only occasionally — what some companies call ‘pleasure use’ — you’ll pay less.”

Location

Time and time again, our research shows that car insurance premiums vary not only state by state, but also by where you live within that state. For instance, across-the-board car insurance premiums are more expensive in Michigan and Louisiana than they are almost anywhere else, urban or rural.

Again, the Insurance Information Institute (iii) explains that “due to higher rates of vandalism, theft, and accidents, urban drivers pay a higher auto insurance price than those in small towns or rural areas. Where you park your car (on the street or in a secure garage) and anti-theft features may impact the bottom line as well.”

Age

You’re probably not surprised to learn that teen drivers pay more than any other age group In car insurance premiums. As we age, our car insurance premiums generally decrease. That’s good news: when all else fails, getting more time behind the wheel is the easiest way to drop insurance premiums.

Young drivers are put into higher-risk categories, where older people are considered safer drivers due to more time behind the wheel.

Gender

In most places, gender discrimination is still legal in determining car insurance premiums. However, we’re happy to report that this is changing. Six states currently have laws banning gender discrimination in car insurance premium calculation.

These states include California, Hawaii, Massachusetts, Montana, Pennsylvania, and North Carolina. Our hope is that more states follow suit with legislation.

Marital Status

This one may surprise you: single people generally pay more in car insurance premiums than married people. CNBC reports “that being married could help you save money on car insurance in most states. As it happens, the difference between married and single rates is fairly large.”

Type of Vehicle

Car insurance premiums vary not only by who you are and what kind of driver you’ve proven to be, but also by what kind of vehicle you drive.

The Insurance Information Institute (iii) explains well that “the cost of your car is a major factor in the cost to insure it. Other variables include the likelihood of theft, the cost of repairs, engine size, and the overall safety record of the car. Automobiles with high-quality safety equipment might qualify for premium discounts.”

Credit History

Your credit score is used by some car insurance companies in an effort to determine how likely you will be to file a claim and how reliably you will be to pay your car insurance premiums. Like gender discrimination, however, this might be changing. CBS News reports that California, Hawaii, and Massachusetts have banned insurance companies from using credit histories in determining insurance premiums.

Amount of Car Insurance

The more car insurance you need or want, the more you’ll likely end up paying in car insurance premiums. According to the Insurance Information Institute (iii), “The limits on your basic auto insurance, the amount of your deductible, and the types and amounts of policy options (such as collision) that are prudent for you to have all affect how much you’ll pay for coverage.”

What does not go into calculating car insurance premiums?

Conversely, it’s also important to know what factors will not go into calculating your car insurance premiums.

Many of these factors are guaranteed by federal or state consumer laws. For instance, car insurance providers are not allowed to discriminate in determining your car insurance premiums based on:

  • race
  • religion
  • sexuality

As we’ve already discussed, California, Hawaii, Massachusetts, Montana, North Carolina, Pennsylvania, and some parts of Michigan ban gender discrimination in determining car insurance premiums. California, Hawaii, and Massachusetts have banned insurance companies from using credit histories in determining what you will pay for car insurance.

And interestingly, Montana has banned the use of marital status in calculating car insurance premiums.

What discounts are available to make car insurance cheaper?

One of the best things you can do to lower your car insurance premium is to know what discounts your provider offers and which ones you and your family might be eligible for.

GRAPHIC

It is important to note that not all discounts can be “stacked.” That is, some discounts cannot be combined with others, and it’s important to speak with your car insurance agent to get a full grasp of your insurer’s stacking policy for discounts.

The table below provides a comprehensive list of 68 discounts we’ve identified for the United State’s biggest car insurance providers.

Discounts21st CenturyAAAAllstateAmerican FamilyAmeripriseAmicaCountry FinancialEsuranceFarmersGeicoLiberty MutualMetLifeNationwideProgressiveSafe AutoSafecoState FarmThe GeneralThe HanoverThe HartfordTravelersUSAA
Adaptive Cruise Controlxxxx
Adaptive Headlightsxxxxxxxx
Anti-lock Brakesxxxxxxxxxxxxxxxxxxxxxx
Anti-theftxxxxxxxxxxxxxxxxxxxxxx
Claim Freexxxxxxxxxxxxxxxxxxxxxx
Continuous Coveragexxxxxxxxxxxxxxx
Daytime Running Lightsxxxxxxxxxxxxxxxxxx
Defensive Driverxxxxxxxxxxxxxxxxxxxxxx
Distant Studentxxxxxxxxxxxxxxx
Driver's Edxxxxxxxxxxxxxxxxxxxx
Driving Device/Appxxxxxxxxxxxxxx
Early Signingxxxxxxxxxxxxxx
Electronic Stability Controlxxxxxxxxx
Emergency Deploymentx
Engaged Couplex
Family Legacyxxxxxx
Family Planxxxxx
Farm Vehiclexxxx
Fast 5x
Federal Employeexxxx
Forward Collision Warningxxxxxxx
Full Paymentxxxxxxxxxxxxxxxxx
Further Educationxxxxxxxxx
Garaging/Storingxxxxxx
Good Creditxxxx
Good Studentxxxxxxxxxxxxxxxxxxxxxx
Green Vehiclexxxxxxx
Homeownerxxxxxxxxxxxxxxxxxx
Lane Departure Warningxxxx
Life Insurancexx
Low Mileagexxxxxxxxxxxxxxxxxxx
Loyaltyxxxxxxxxxxxx
Marriedxxxxxxxxxxxxxx
Membership/Groupxxxxxxxxxxx
Militaryxxxxxxxxxxx
Military Garagingx
Multiple Driversxx
Multiple Policiesxxxxxxxxxxxxxxxxxxxxx
Multiple Vehiclesxxxxxxxxxxxxxxxxxxxxx
New Addressx
New Customer/New Planxxx
New Graduatex
Newer Vehiclexxxxxxxxxxxxxxxx
Newly Licensedx
Newlywedsx
Non-smoker/Non-drinkerx
Occasional Operatorx
Occupationxxxxxxxxxxxx
On-time Paymentsxxxx
Online Shopperxx
Paperless Documentsxxxxxxxx
Paperless/Auto Billingxxxxxxxxxxxxxxxxx
Passive Restraintxxxxxxxxxxxxxxxxxxxxxx
Recent Retireesxx
Renterxxx
Roadside Assistancexx
Safe Driverxxxxxxxxxxxxxxxxxxx
Seat Belt Usex
Senior Driverxxxxxxxxx
Stable Residencexxxx
Students and Alumnixxxxxx
Switching Providerxxxxxxxxxxx
Utility Vehiclexxxx
Vehicle Recoveryxxxxxxxxxxxxxxxxxxxxx
VIN Etchingxxxxxxxxxx
Volunteerx
Young Driverxxxxxx
Discounts Provided #21212927182726343432383835362230202022382828
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Our research shows that Liberty Mutual and MetLife offer the most discounts at 38 apiece.

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What states have the cheapest average car insurance premiums?

Where you live certainly has an impact on how much you’ll pay for car insurance — sometimes more than anything else.

According to U.S. News & World Report, the ten states with the cheapest car insurance premiums and their average annual premiums are:

  1. Maine – $861.37
  2. New Hampshire – $896.57
  3. Ohio – $941.36
  4. Virginia – $945.68
  5. Idaho – $952.10
  6. North Carolina – $997.72
  7. Indiana – $1,000.57
  8. Iow – $1,027.23
  9. Washington – $1,052.45
  10. Alaska – $1,077.50

As you can see, there’s a lot of variety on this list. Cheap rates can be found in both heavily populated states, like Ohio and Virginia, and thinly populated states, like Alaska and Maine.

But what about the opposite of states with cheap car insurance premiums?

What states have the most expensive average car insurance premiums?

According to Forbes, the ten states with the most expensive car insurance premiums and their average annual premiums are:

  1. Louisiana – $2,536
  2. Oklahoma – $2,047
  3. Michigan – $2,013
  4. West Virginia – $2,002
  5. Washington, D.C. – $1,866
  6. Montana – $1,856
  7. Rhode Island – $1,830
  8. Wyoming – $1,732
  9. California – $1,709
  10. Georgia – $1,694

We don’t think folks should make a decision on where to live based solely on car insurance premiums, but knowing what the average rates are where you live can certainly help you maintain a healthier financial lifestyle.

Compare car insurance rates in your neighborhood simply by entering your ZIP code below.

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How can you lower your car insurance premium?

As you can already tell, we know one of the best ways to lower your car insurance premiums is to shop around and to come to your purchase armed with as much information as possible.

We’ve also covered a large number of discounts across a wide variety of car insurance providers.

But beyond these things, what else can you do to lower your car insurance premium?

It’s a good question. And one a lot of folks are asking as the car insurance market becomes more and more diverse. Here are some tips we’ve found to lower your car insurance premium.

Don’t Drive Like a Jerk

This tip should come without any surprise. Aggressive driving has a huge correlation to higher auto insurance rates. You know the aggressive driver as the person who is cutting everyone off, tailgating, going 90 in a 25, and various other maneuvers that cause everyone around them a headache.

And it’s important to remember: aggressive driving is not only a large reason for accidents on the road, but also a reason everyone has such high premium rates

Instead of causing yourself unnecessary stress, drive a bit less aggressively, arrive alive, and help everyone keep their auto insurance rates lower.

Combine Policies

According to Investopedia, combining policies is a great way to help reduce your car insurance premium. Many people enter into a relationship with multiple policies. It is time to sit down with your better half and work out what policy is the best for you and your family.

Combining policies does not stop at just auto insurance policies, though. Adding your auto to homeowners, renters, boat, motorcycle, or life insurance policy will often help reduce costs all around.

Many auto insurance companies specialize in insurance of all types. Swing on into your agency and find out what other services they may offer.

Check Your Coverage Levels

Do you know how much car insurance is required in your state? Especially if you’re a historically safe driver, you might be paying too much for car insurance premiums simply by carrying around too much car insurance coverage.

Knowing how much car insurance is required where you live will help you know how much to buy. The table below offers the car insurance minimums for each of the 50 states.

STATEBODILY INJURY (PER PERSON)BODILY INJURY (TOTAL)PROPERTY DAMAGE (TOTAL)
Alabama$25,000$50,000$25,000
Alaksa$50,000$100,000$25,000
Arizona$15,000$30,000$10,000
Arkansas$25,000$50,000$25,000
California$15,000$30,000$5,000
Colorado$25,000$50,000$15,000
Connecticut$20,000$50,000$25,000
Deleware$25,000$50,000$10,000
FloridaNot requiredNot required$10,000
Georgia$25,000$50,000$25,000
Hawaii$20,000$40,000$10,000
Idaho$25,000$50,000$15,000
Illinois$25,000$50,000$20,000
Indiana$25,000$50,000$25,000
Iowa$20,000$40,000$15,000
Kansas$25,000$50,000$25,000
Kentucky$25,000$50,000$25,000
Louisiana$15,000$30,000$25,000
Maine$50,000$100,000$25,000
Maryland$30,000$60,000$15,000
Massachusetts$20,000$40,000$5,000
Michigan$20,000$40,000$10,000
Minnesota$30,000$60,000$10,000
Mississippi$25,000$50,000$25,000
Missouri$25,000$50,000$20,000
Montana$25,000$50,000$20,000
Nebraska$25,000$50,000$25,000
Nevada$25,000$50,000$20,000
New Hampshire$25,000$50,000$25,000
New Jersey$15,000$30,000$5,000
New Mexico$25,000$50,000$10,000
New York$25,000$50,000$10,000
North Carolina$30,000$60,000$25,000
North Dakota$25,000$50,000$25,000
Ohio$25,000$50,000$25,000
Oklahoma$25,000$50,000$25,000
Oregon$25,000$50,000$20,000
Pennsylvania$15,000$30,000$5,000
Rhode Island$25,000$50,000$25,000
South Carolina$25,000$50,000$25,000
South Dakota$25,000$50,000$25,000
Tennessee$25,000$50,000$15,000
Texas$30,000$60,000$25,000
Utah$25,000$65,000$15,000
Vermont$25,000$50,000$10,000
Virginia$25,000$50,000$20,000
Washington$25,000$50,000$10,000
District Of Columbia$25,000$50,000$10,000
West Virginia$25,000$50,000$25,000
Wisconsin$25,000$50,000$10,000
Wyoming$25,000$50,000$20,000
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Two notes on this table:

  1. In New Hampshire, coverage is optional, but these are the minimum coverage levels if you choose to purchase car insurance.
  2. In Virginia, insurance is also optional, and you must meet these coverage levels if you choose to purchase car insurance. And unlike in New Hampshire, if you choose not to purchase car insurance at all, the Commonwealth of Virginia will require you to pay a $500 annual uninsured motorist fee.

Use a Script

Ramit Sethi, the author of I Will Teach You to be Rich, offers a great script for negotiating a lower car insurance premium with your current provider. He explains:

“Now it’s finally time to call up insurance reps — including the one you currently have — and negotiate an awesome deal with scripts.

This is the meat of how to lower car insurance payments.

Before you do that, though, there are two things to keep in mind when speaking to a representative.

  1. Stay polite — but firm. Don’t just call up the rep and scream, “give me lower car insurance!!!!” (I’ve tried, it doesn’t end well). You need to handle the negotiation with finesse and civility — even if the representative is short with you. Nothing throws a wrench into negotiations quite like pissing off the one person who can help you.
  2. This is not a win/lose situation. You can’t just make a demand and expect the person to give it to you. However, insurance companies are willing to offer discounts to make or keep high-value customers. Prepare to make your case as to why you’re such a good customer and you’ll see results.

Keep those two things in mind when you call up the representative and I promise you, you’ll find a great deal.

Renegotiate Your Current Policy

If you already have a car insurance policy but just want to negotiate for better rates, use the following script.

ACME INSURANCE: Hello, Acme Insurance. How may I help you today?

YOU: I’d like to negotiate a policy. [Other insurance company] is offering to insure me for $XXX less for [coverage]. I’d like to know if there’s a better deal from you, please.

Wait for their response. Negotiating with this technique is much harder to do with car insurance companies than banks — but it is possible. If they’re stubborn and try to shoot you down, keep pressing at it. Don’t make it easy for them to say no.

ACME INSURANCE: Sorry, but our rates are fixed at this time, and we can’t change it due to [some BS excuse about why they can’t give you a lower rate].

YOU: Well, I’ve been a good driver for X years now and would love a lower rate. What else can you do to help me?

ACME INSURANCE: Hmm, one second sir. I see that you’re a really good customer. I’m going to check with my supervisor. Can you hold for a second?

[hold]

I was able to check with my supervisor and can lower that policy by X percent. Does that work?

Getting a response like that is the best-case scenario. However, there might be a chance that they deny you a discount based on this tactic alone. If this happens, I suggest you do the following:

  1. Don’t stop until you get a yes. Persistence is integral in negotiations. If you keep at it and make a strong case, they’ll be backed into a position where they’ll want to give you what you want.
  2. Try again later. Like the Magic 8-Ball says, sometimes you just have to try again later. If the first car insurance rep keeps shutting you down, thank them for their time, hang up, and dial again for a new rep. This one might be a little more amenable to your suggestions.
  3. Refocus your negotiations. If they won’t give you a discount because their competitors are offering better rates, don’t worry. There are still other ways to get fantastic deals — which I’ll go into in the next section.

This isn’t the only way to get a lower car insurance rate, though. By asking certain questions, you’ll be able to unlock deals you didn’t even know existed.

That’s some helpful advice, and certainly helps you know how to speak with a car insurance representative.

However you negotiate, don’t follow the model of Michael Scott from The Office.

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What are the major types of car insurance?

There are three major types of car insurance coverage:

  1. Liability
  2. Collision
  3. Comprehensive

Let’s take a look at these three types of car insurance a bit more in-depth.

What is liability car insurance?

In most states, the bare minimum of car insurance you are required to consistently carry is called liability insurance. According to Investopedia, “liability insurance provides the insured party with protection against claims resulting from injuries and damage to people and/or property.”

According to the Insurance Information Institute (iii), “nearly every state requires car owners to carry the following auto liability coverage:

  • Bodily Injury Liability – This covers costs associated with injuries and death that you or another driver causes while driving your car.
  • Property Damage Liability – This coverage will reimburse others for damage that you or another driver operating your car causes to another vehicle or other property, such as a fence, building or utility pole.”

What is collision car insurance?

The next step up in car insurance above liability, collision insurance will cover you and your vehicle regardless if you are the at-fault party or not. The Insurance Information Institute (iii) explains that collision insurance “reimburses you for damage to your car that occurs as a result of a collision with another vehicle or other object — e.g., a tree or guardrail — when you’re at fault.

While collision coverage will not reimburse you for mechanical failure or normal wear-and-tear on your car, it will cover damage from potholes or from rolling your car.”

What is comprehensive insurance?

The name of comprehensive insurance is not misleading — this is literally the most comprehensive insurance policy you can carry. Comprehensive insurance covers you for a variety of things beyond car accidents themselves.

According to the Insurance Information Institute (iii), comprehensive insurance “provides coverage against theft and damage caused by an incident other than a collision, such as fire, flood, vandalism, hail, falling rocks or trees, and other hazards — even getting hit by an asteroid!”

Understanding these three major types of insurance policies can help you determine how much car insurance you need, and thus, provide ways to save you and your family money.

Who are the biggest car insurance companies, and what is their average annual premium?

The 10 biggest car insurance companies in the United States and their nationwide annual premiums are:

  • Allstate – $3,545
  • American Family – $2,041
  • Farmers – $4,280
  • Geico – $2,158
  • Liberty Mutual – $3,228
  • Nationwide – $2,293
  • Progressive – $2,393
  • State Farm – $1,737
  • Travelers – $3,017
  • USAA – $1,307

USAA is certainly an attractive car insurance provider based solely on their low average premium. But it’s also important to know that the insurer is only available to military members, current or former, and their immediate family.

How do I get a car insurance quote?

We understand that shopping for car insurance is perhaps an intimidating experience. But now you’re armed with a wealth of information about how to get the best and cheapest insurance for you and your family’s vehicular needs.

So, how do you get an insurance quote?

Well, you can begin today simply by entering your ZIP code below.

But you can also obtain comprehensive quotes by visiting a local insurance agent, going to a car insurance providers’ website, or by calling a car insurance company directly.

No matter how you choose to get your car insurance quotes, we’re here to help. That’s why we’ve not only created this guide to cheap car insurance premiums, but also this guide on how to get an accurate auto insurance premium estimate.

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Cheap Car Insurance Premiums: The Bottom Line

As we have already discussed, car insurance is probably not something we like to think a lot about, let alone pay a lot of our hard-earned paychecks for.

But buying car insurance for you and your family shouldn’t be done blindly, without the requisite knowledge you need to make a smart and safe consumer decision.

Remember, a car insurance premium is the amount you pay for your auto insurance coverage, and car insurance is required in most states. We created this guide to help you know not only those minimum requirements but also a myriad of ways you can lower your car insurance premium in the first place.

What part of this guide was the most helpful? Is there something we could explain more clearly?

Use our handy online tool below to get started on your car insurance journey today simply by entering your ZIP Code.

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