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 22, 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...

  • A great deal on automobile insurance starts with comparison shopping between the most reputable and best auto insurance companies
  • All insurance costs are based on the perceived risk that would result in possible insurance claims
  • Insurance companies have the right to refuse to underwrite high-risk auto policies because of the impact on the cost of insurance for the entire pool of drivers
  • Drivers who spend some time shopping around will find that the insurance companies offer good rates to low-risk drivers

A great deal on automobile insurance starts with comparison shopping between the most reputable insurance companies.

Cheap auto insurance is different than affordable auto insurance. Any company can offer poor coverage at a low rate and deny claims to save the company money.

Most consumers want the best possible coverage for their personal situation while leveraging every possible discount.

Careful comparison will reveal which insurers are offering good coverage and the other guys.

Make sure you compare the best rates with our free insurance comparison tool above!

Insurance Coverage Components

Every driver can decide which types of insurance to carry on the automobile. If the car has been financed and the loan is outstanding, the bank may require certain auto insurance coverage.

Wise decisions must be made to avoid paying too much for insuring a car that is not worth the cost. Insurance companies will not pay more than the vehicle is worth, so the driver will lose money on the insurance.

All but one of these following components are optional:

  • Collision – If the vehicle strikes a stationary object or is hit by another car, the resulting damage is covered under this category. Sufficient collision insurance must be underwritten to pay the cost of repairs. State laws do not require collision insurance.
  • Comprehensive – Damage to the vehicle that is not related to a collision is covered under comprehensive. Sufficient coverage must be underwritten for expensive vehicles, but older vehicles might not be worth the cost. Storm damage, theft, vandalism and fire damages would be covered in this category. State laws do not require comprehensive coverage.
  • Liability – Every licensed driver is required, by state law, to carry a minimum level of liability insurance to cover the cost of damages to the property belonging to others. Each state has a different minimum requirement, but most insurers recommend carrying more liability car insurance coverage. Litigation costs are covered under the liability component.
  • Personal Injury – When other people sustain injuries in an accident, the personal injury component will pay their expenses up to the limit on the policy. Sufficient coverage in this category is essential to prevent financial hardship.
  • Medical – Drivers will choose to carry this component if major medical insurance is not available from another source. The driver’s personal injuries are covered under this category, which is not required by law.

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Discounts for Responsible Drivers

All insurance costs are based on the perceived risk that would result in claims. The insurance companies encourage certain behaviors that reduce the risk, which lowers their costs.

Drivers who meet certain criteria are rewarded with lower annual premiums.

Obscure automobile insurance discounts have been developed to create pools of drivers that have incurred fewer auto claims over the years. Every driver should ask about every possible discount from each insurer during the comparison process.

  • Low-mileage – When a driver does not spend much time in a given week on the road, the insurance company incurs lower risk. Each company has a certain threshold of miles that can be driven in a week to qualify for this discount. Some insurers offer a discount of 50 percent to drivers whose cars are driven fewer than a certain number of miles in a month.
  • Group discount – Insurance companies have grouped professionals into risk categories that have been tracked over the years for actual claim statistics. Certain groups are less expensive to insure and are given discounts. Direct questions must be asked to find these discounts.
  • Anti-theft device – Electronic ignition keys, steering wheel locks, kill switches and armored collars were invented to prevent car thefts. If a car must be kept in a high-crime area, consistent use of these devices can result in a discount that makes car insurance more affordable. Each insurer must be asked about the devices they recommend. Check out these most stolen cars.
  • Multiple-vehicle – Insurance companies reward loyalty in their customers with multiple car insurance policies. If the driver has multiple cars to insure, placing all the policies with one insurer will be less expensive.

Driving Profile

More than any other factor, the driver’s profile will impact the cost of insuring a vehicle. One misstep can cause auto insurance rates to jump dramatically, so careful driving habits must be practiced at all times.

Insurance companies have the right to refuse to underwrite high-risk auto policies because of the impact on the cost of insurance for the entire pool of drivers.

Moving violations and accidents must be absent from the driving record for three consecutive years to prevent high premiums.

  • Credit history – When a driver has a good credit history, the insurance company perceives the risk of accident to be lower. The reward for this responsible act in managing the finances is rewarded by insurance companies through lower insurance premiums.
  • Senior citizens – Many years of experience behind the wheel of a car is rewarded by insurance companies when the driving record is clean. Most insurance companies will remove this discount at the age of 80 when the perceived risk of accidents increases.
  • Driver trainingDefensive driving and other types of classes, like inclement weather, will enhance the driving skills, which reduces the risk of accidents. One day in training can result in a discount of 20 percent on the annual auto insurance premium. Each insurance company will offer a different discount, so research is required.
  • Driving record – Many years without moving violations or accidents is rewarded by the insurance companies. The actual discount will vary because the risk pools are different with each insurance company.

Cheap car insurance is not the same as good coverage at a great price. Drivers who spend some time shopping around will find that the insurance companies offer good rates to low-risk drivers.

Sufficient auto insurance coverage is important to prevent financial hardship if an accident occurs.

Compare auto insurance online for free by entering your ZIP code in our free comparison tool!

References:

  1. https://wallethub.com/edu/comprehensive-vs-collision/10023/
  2. https://en.wikipedia.org/wiki/Liability_insurance
  3. https://www.yourmechanic.com/article/how-to-choose-an-anti-theft-device-for-your-car
  4. http://www.consumerreports.org/cro/car-insurance/credit-scores-affect-auto-insurance-rates/index.htm
  5. http://www.nsc.org/learn/Safety-Training/Pages/defensive-driving-driver-safety-training.aspx