Seven Tips for Finding Good (And Cheap) Auto Insurance

Tip #1: Decide How Much Auto Insurance Coverage You Need

Depending on your driving habits, it might make sense (or not!) to opt for extra coverage, which can save a lot of money in case of an accident. And it's important to know how much insurance is actually required for you. If you decide to pay for extra coverage, that's fine, but you should know how much coverage you're required to have, and you should know if you're paying for coverage that you don't really need.

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Some states allow no-fault insurance policies, which have some of the lowest insurance payments (a.k.a. insurance premiums). If you are in an auto accident, a no-fault policy will reimburse you up to the insured amount for any covered losses - but it also places restrictions on your ability to file a lawsuit related to the accident. Details may vary from state to state and from policy to policy, but this generally how it goes. States with no-fault auto insurance options include Florida, Kansas, Kentucky, Hawaii, Massachusetts, Michigan , Minnesota, New Jersey, New York, North Dakota, Pennsylvania, and Utah.

Even if no-fault isn't an option for you, it's still possible to save money on auto insurance. Your insurance policy may include separate coverage options for each of the following categories.

For the lowest insurance payment, try to select the lowest possible coverage amount for each of these areas:

Bodily Injury Liability
Covers bodily injury or death caused by you or your automobile in an accident. Protects you against lawsuit claims for bodily injury or death. The minimum required Bodily Injury Liability coverage ranges from $15,000 to $30,000 per person, up to a max of $50,000-$60,000 per accident, depending on the state where your vehicle is registered.
Property Damage Liability
Covers damage to property caused by you or your vehicle. Minimum required Property Damage Liability varies from $5,000 to $15,000 per accident, depending on state laws. Property Damage Liability is required in all U.S. states except Florida, New Hampshire, and Wisconsin.
Medical Payments/Personal Injury Protection
Medical payments or
Personal Injury Protection (PIP) insurance covers medical expenses and, sometimes, lost
wages, for you or your passengers. Most states require that some form of medical or PIP
is included in your auto insurance policy.
Uninsured Motorist Protection
Mandatory in most states, uninsured
motorist protection covers you in case of an accident with drivers who aren't insured,
and often covers your expenses in case of a hit-and-run accident.
Collision Coverage
Collision is an area that can drive up your insurance
premiums. Collision coverage is optional according to the law. If you own an older,
inexpensive vehicle, it is usually best to skip collision coverage altogether
- in these
cases, buying a new vehicle might be cheaper than paying for collision insurance or
repairs. However, if you have a lease vehicle or are making auto loan payments, your
lease or loan agreement will probably require you to have collision coverage on your
insurance policy. But it's still possible to save a few bucks. Collision coverage comes
with a deductible -- the amount of repair costs that you must cover out of pocket.
Collision deductibles can range from $250 to $1,000 or more depending on the policy.
For a lower premium, choose a higher deductible. You'll have to pay more for
collision repairs, but your insurance premium payments will be much lower.
Comprehensive Coverage
Covers a wide range of non-accident-related damage, including theft, floods, fire damage, wind/storm damage, and vandalism. Like collision coverage, comprehensive coverage can really drive up your insurance premium. Also like collision, comprehensive coverage comes with a deductible that will affect your premium - lower deductible = higher premium, and vice versa. Unless you really think it's necessary, consider dropping comprehensive coverage. The expense probably outweighs the benefits, especially if your goal is the lowest insurance payment possible.

Tip #2: Know How Your Situation Affects Your Auto Insurance Quotes

Now that you know about the types of car insurance coverage available, you should also understand how your personal situation might affect your auto insurance quotes. Three things will affect your auto insurance rates:

  1. Your address. First, your state's laws dictate some of the basic requirements about what kind of insurance drivers must carry. Second, insurance companies charge more to insure cars in areas with a higher risk of accidents, such as high-traffic urban areas. This is usually based on zip code.
  2. Your personal characteristics: driving record, age, and credit rating. First of all, your driving record has a big impact on your insurance premium. The more moving violations or accidents on your record, the higher your premium will be. Secondly, fair or not, insurance companies usually charge higher premiums to individuals who, statistically, are a "higher risk" for automobile accidents. In general, single men under age 25 will pay the highest auto insurance premiums, because insurance company statistics have shown that this group is more likely to be involved in automobile accidents. Some states do not allow insurance companies to charge higher premiums based on age or gender; in these states, many experts have noted that this seems to cause higher insurance rates across the board, instead of lowering rates for the young single male demographic. The third personal characteristic that can impact your auto insurance rates is your credit history. In many states (where permitted by law), insurance companies also look at your credit score when determining your premiums. Individuals with problems in their credit history - such as unpaid or overdue bills - may find that their car insurance rates are higher.
  3. The car your drive. If you drive a sports car, expect to pay more for insurance than your friend pays to insure his hooptie. There are several popular myths about the color of the car, or the number of doors on the car, causing higher insurance rates. These popular urban legends are untrue. Premiums are determined by the type of car, the driver, and the address where the car is registered.

Tip #3: Compare Auto Insurance from Multiple Companies; Look for Discounts

Visit websites like and compare rates from various insurance companies. Look for opportunities to lower your coverage amounts for each type of auto insurance coverage. Once you have a few quotes in hand, you might even want to call a few local insurance agents and ask about special discounts or other options. Online or over the phone, you may be able to get discounts for having all of your insurance policies (such as your home/renter's insurance) through a single company.

Tip #4: Choose Insurance That Gives Coverage You Need - And Nothing Else

How much do you drive? Do you drive in high-traffic areas during rush hour, where the risk of accidents is higher? Are you worried about your ability to cover property damage in case of a big accident? If so, it might be cheaper in the long run - especially in the event of an accident - to pay for extra property or bodily injury coverage.

On the other hand, think carefully about whether you really need comprehensive or collision coverage. If you did have a major collision or vehicle damage problem, how much would it cost to replace your vehicle? And, how much would you be paying in increased premiums plus deductibles? Do the math. Unless you're required to have collision coverage due to a lease or loan agreement, or unless you have a really nice car with a high value, you probably don't need collision or comprehensive.

Whatever insurance options you choose, remember that you do have a choice - and you alone are qualified decide on the best car insurance option for your automobile. If you decide that the lowest insurance premium is right for you, then go for it. However, please keep in mind that the real purpose of insurance is to protect you in case of an accident - so it's a good idea to try and strike a balance between liability coverage and premium payments.

Tip #5: Check Auto Insurance Rates Every Six Months

Once you've purchased car insurance, remember to check auto insurance rates whenever your insurance policy renews. Usually, this is every 6 months. Once you've done the hard work of understanding what coverage is available and deciding what kind of coverage you need, it is relatively easy to compare insurance rates online. Honestly, if your situation hasn't changed, most of the time you're not going to find significant savings. But imagine the accumulated savings if you can lower your rates even $20-$50 per month. You owe it to yourself (and your budget) to scout for auto insurance savings regularly.

It is especially important to shop around if you've had a change in your driving status, such as turning 25 (in certain states), if you've moved, or if you have new traffic tickets that are impacting your current rates. In these cases, you may be pleasantly surprised by the savings to be had simply by changing insurance companies.

Tip #6: Keep Your Insurance Rate Low

If you've read the rest of this article, by now you know that there are several things you can do to lower your auto insurance rate and make sure it stays low. They are:

  1. Keep a clean driving record. Moving violations WILL increase your insurance premium, and having fewer traffic tickets is almost guaranteed to lower your premium.
  2. Keep current on your bills. A poor credit rating may increase your rates, and a good credit rating can lower your rates.
  3. Be compliant for any insurance discounts you've received. If you have a discount for multiple insurance policies (e.g. renter's/homeowners plus auto), remember that your rate may go up if you switch to a different company for your auto insurance.

Tip #7: Cheap Car = Cheap Insurance

Still paying too much for car insurance? Maybe it's not you. Maybe it's your car. If you have a lease vehicle, or are paying on an auto loan, this will require you to take out collision insurance. And if your car is new and/or expensive, you'll pay more for collision than you would with a less expensive vehicle. Consider swapping your ride for a cheaper set of wheels. Maybe you could even get out of your loan or lease and buy a used car for what you'd pay in several months of lease/loan payments. Imagine how much you'll save if you can not only get quality cheap insurance, but also reduce or eliminate your car payment!