The average American driver spends $1,355 annually on insurance, according to CarInsurance.com.
Your auto insurance rates are affected by many constants, including gender, age, and occupation. Even where you live affects your premiums.
Fortunately, there are many factors that you can more easily control to secure the cheapest car insurance.
7 ways to find the cheapest car insurance
A 30-year-old married woman driving a relatively older yet safer car in a rural area is the most likely driver to score the cheapest auto insurance. But whether you fit that caricature, you could lower rates with these seven strategies.
1. Drive a car that your insurer likes
There’s a common myth that the color of your car affects your insurance premium. A red car is more expensive to insure than a blue one, the myth says, because red is more likely to attract unwanted attention.
Although that’s not true, some characteristics of your ride do impact your rates. They include the car’s:
- Safety record: A car that’s less likely to be totaled is cheaper to insure.
- Safety features: Airbags and alarm systems can lower your rate.
- Age: Newer cars are typically more expensive to insure because they’re more valuable.
- Theft record: Used cars are more likely to be stolen than new cars with anti-theft devices, making an older model potentially costlier to insure.
Whether you own or lease the car also comes into play. A dealership might require you to fully cover a leased car while you might opt to skip comprehensive and collision coverage for a car you own.
If buying makes more sense than leasing, insurers encourage you to involve them in your search for a car. State Farm, for example, said that its representatives could provide quotes for different car models. You could also undertake this by researching car models’ safety ratings via the Insurance Institute for Highway Safety.
2. Increase your deductible (when it makes sense)
The deductible of your policy is how much you’d be expected to pay for car repairs before coverage kicks in. Say your deductible is $500, and an accident causes $3,000 worth of damage. The insurer would cut a check for $2,500 only after you chipped in the initial $500.
By increasing your deductible, you take on more financial risk in exchange for a lower rate. It’s important to consider whether this choice makes sense for your situation.
Choosing a $1,000 deductible, for example, would lower your short-term payments. But you should have $1,000 saved in cases where you have to make a claim.
3. Decrease your coverage types or limits
Just like increasing your deductible, decreasing your coverage could help you find the cheapest car insurance. But it’s not a decision to be taken lightly.
Your state sets a minimum threshold for your coverage. Although it’s likely to require liability insurance, which covers other drivers and their cars, it might not call for:
- Collision: Covers your car (or replacement car) in road accidents like hitting another driver or object
- Comprehensive: Covers your car (or replacement) in non-road accident events like natural disasters
Skipping collision and comprehensive insurance might make sense for an older car on its last legs. That’s because the coverage maxes out at the car’s value. You could look up the value of your vehicle using Kelly Blue Book (KBB) to help decide whether liability coverage is all you need.
No matter what combination of liability, collision, and comprehensive insurance you elect to keep, you could also enjoy shorter-term savings by lowering your coverage limit. You might lower your $20,000 limit, for example, if you drive a car with a KBB rating closer to $10,000.
4. Don’t let your coverage lapse
There might be times in your life when you won’t need to insure a car. Letting a policy lapse is one way to save money, but it could cost you when returning to the road.
Insurers look at your history as a customer to determine whether you’ve been uninsured. They might see a gap in your coverage and classify you as a riskier driver. You might be quoted higher premiums for six months or more before qualifying for better rates.
Having continuous coverage keeps your rates lower in the long term. If you’re in school and looking to avoid costly student car insurance, being bumped down to an occasional driver on your family’s policy could be a wiser option than leaving the policy altogether.
5. Find discounts that fit your profile
In trying to attract lower-risk drivers to their products, insurance companies have developed a wide variety of discounts. Here are some examples that might be a fit for you:
- Students who earn high GPAs or test scores
- Teachers, police officers, and others working in low-risk professions
- New customers who shop for quotes before a current policy expires
- Returning customers who renew a policy before a lapse in coverage
- Seniors who take a refresher course
- Owners of new or fuel-efficient cars
- Homeowners, even if you insure your home elsewhere
There are also discounts available to customers who:
- Make biannual or annual payments instead of monthly
- Take out multiple policies, such as homeowners or renter’s, with the same insurer
- Add a second driver or vehicle to an existing policy
- Take a driver education or defensive driving course
- Drive fewer miles (if switching to pay-as-you-go car insurance isn’t an option)
Your savings for each discount depends on your eligibility and your insurer. Travelers, for example, said it offers up to 8 percent off on multicar policies, while State Farm advertises up to 20 percent off. Ask your current insurer about its perks, or shop around for discounts.
6. Drive safely and smartly
Discounts can be particularly useful when your rates have risen as a result of getting into an accident or receiving a moving violation. But driving conservatively can keep them lower to begin with.
To assess the risk of insuring you, companies will consider your:
- Traffic tickets for speeding, DUIs, and other moving violations
- Accidents even if you weren’t at fault
- Other claims filed in the past
If you live in a state that uses a points system to track your infractions, ensure the reporting is accurate. If points are due to fall off your record after a certain timespan, for example, make sure your insurer is aware of the change.
Remember that these factors are considered together, not individually. If you have a clean driving history but receive one speeding ticket, your rates are unlikely to raise. If on the other hand, you’ve been in an accident or two, that new moving violation could motivate an insurer to increase your rates.
7. Boost your credit score
Just as your credit history can affect the rates you can receive on a loan, it can change your auto insurance premiums.
If you’re a new customer shopping around, be aware that companies are considering your credit score when quoting you a rate. For those of you who are current insurance customers, alert your insurer about a dramatic increase in your credit score.
Not all states allow insurance companies to use credit scores to quote rates. States that do check credit, however, use it in a big way. Single drivers with poor credit scores in Kansas, for example, see an average jump of $1,301 on their premiums, according to Consumer Reports.
You can put the power back in your hands by doing everything you can to improve your credit score. The rewards go beyond finding the cheapest auto insurance. A strong credit history can also help you when taking out a loan for a car or home, for example.
Then go shopping for the cheapest car insurance
You can’t change your age or driving experience level, and you might not be able to change your job. But now you know of at least seven alterations you can make to secure the cheapest auto insurance possible.
Once you’ve done that, you’ll need to shop around knowing that one insurance company might reward you more than the other.
That’s the last secret to snaring the cheapest car insurance: After taking a hard look at yourself, you’ll have to take a hard look at insurers. Do this by receiving quotes online, negotiating with agents, and considering both national and local companies.
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1 Important Disclosures for SoFi.
2 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.54% APR (with Auto Pay) to 7.27% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of March 18, 2019, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 0318/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
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3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.5% effective February 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
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|2.54% – 7.27%1||Undergrad & Graduate|
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|3.23% – 6.65%2||Undergrad & Graduate|
|2.69% – 7.43%5||Undergrad & Graduate|
|2.98% – 9.72%6||Undergrad & Graduate|