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APA: Rivelli, E. (2024, April 03). How to choose the right cheap car insurance for your budget. Bankrate. Retrieved September 05, 2024, from https://www.bankrate.com/insurance/car/how-to-choose-cheap-car-insurance/
Copied to clipboard!MLA: Rivelli, Elizabeth. "How to choose the right cheap car insurance for your budget." Bankrate. 03 April 2024, https://www.bankrate.com/insurance/car/how-to-choose-cheap-car-insurance/.
Copied to clipboard!Chicago: Rivelli, Elizabeth. "How to choose the right cheap car insurance for your budget." Bankrate. April 03, 2024. https://www.bankrate.com/insurance/car/how-to-choose-cheap-car-insurance/.
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Written by
Elizabeth Rivelli
Elizabeth Rivelli is a contributing insurance writer for Bankrate and has years of experience writing for insurance domains such as The Simple Dollar, Coverage.com and NextAdvisor, among others
Edited by
Jessa Claeys
Jessa Claeys is an insurance editor for Bankrate with over a decade of experience writing, editing and leading teams of content creators. She currently covers auto, home and life insurance with the goal of helping others secure a healthy financial future. Her work has been published by several insurance, personal finance and investment-focused publications, including Jerry, BiggerPockets, 401(k) Specialist, BP Wealth and more.
Bankrate logoAt Bankrate, we strive to help you make smarter financial decisions. To help readers understand how insurance affects their finances, we have licensed insurance professionals on staff who have spent a combined 47 years in the auto, home and life insurance industries. While we adhere to strict editorial integrity , this post may contain references to products from our partners. Here's an explanation of how we make money . Our content is backed by Coverage.com, LLC, a licensed entity (NPN: 19966249). For more information, please see our Insurance Disclosure .
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For many drivers looking to save, finding budget car insurance is a top priority. Per data from Quadrant Information Services, the average annual cost of car insurance is $2,542 for full coverage and $740 for minimum coverage, but your rates may vary based on your location, vehicle type, driving record and more. So, how can you choose the right cheap car insurance for your budget? Bankrate’s insurance experts break down the factors that go into rate calculations and strategies that may help you get the coverage you need at a price you can afford.
If you are looking for the cheapest car insurance, price may be your top priority. However, knowing how to choose the right car insurance company often requires considering more than just your premium. The following tips may help you find budget auto insurance that meets your coverage needs.
Your car insurance premium is based on many factors, including the age, make and model of your vehicle, its mileage and its safety features. Because older vehicles usually have a lower value, they are often cheaper to insure than newer cars with more expensive parts and repair costs. Plus, you may be able to forego full coverage if the value of your car is close to what you would pay for full coverage car insurance for a couple of years. Speaking with an insurance agent may help you determine which coverage options are right for you and your vehicle.
In addition, your driving record (i.e., at-fault accidents and moving violations) has a significant impact on your car insurance rate. Generally speaking, safe drivers pay the lowest car insurance rates. If you have serious violations on your driving record that require you to get an SR-22 certificate, you might be required to purchase high-risk auto insurance, which usually demands a much higher premium.
Besides your driving record, other personal factors will also impact your car insurance premium. These include where you live and, depending on your state, your age, gender and credit history.
Car insurance quotes can vary significantly based on your driver profile, so it may be valuable to compare quotes from a handful of carriers to see which could offer you the best rates. Each insurance company calculates rates differently and weighs driver and vehicle characteristics according to its own proprietary formula. For example, one carrier may surcharge rates significantly for a speeding ticket conviction, while another may put more emphasis on your age and credit history when calculating rates.
When shopping, comparing car insurance quotes may be one of the most helpful things you can do. In addition to your driver profile, your chosen coverage limits, endorsements and deductibles will also determine your rate. Requesting quotes for the same coverage types and policy limits may help you get the most accurate comparison across carriers. It could even be worthwhile to speak with an independent insurance agent who can gather multiple quotes for you and provide personalized customer service with your best interest — and budget — in mind.
The amount of car insurance coverage you need has a direct impact on your premium. As a general rule, the higher your coverage limits are, the more your policy will cost. But higher coverage limits also provide greater financial protection if you need to file a claim. On the other hand, choosing high deductibles may help you secure a lower rate, but you’ll be required to pay more out of pocket if you were to file a claim.
If you lease or finance your car, you will probably need to purchase a full coverage policy, which typically includes collision, comprehensive and liability. If you own your vehicle, you may have the option to purchase a cheaper minimum coverage policy that includes only the minimum coverage requirements for your state, but it will not offer as much financial protection.
Adding insurance endorsements may allow you to tailor your policy to meet your unique needs, but add-ons usually come at an additional cost. Insurance endorsements vary by company, but some common options include:
Finding local and regional insurers can be a serious boon when looking for cheap car insurance. While not always, these companies are often well-geared toward local coverage needs, sometimes with specialized perks, discounts or other features that would be difficult to find in larger insurance companies. Working with an independent agent or broker can help when seeking a regional insurer that caters to your specific needs while offering a competitively low rate.
When choosing car insurance on a tight budget, you may want to pay close attention to the discounts offered by each company. Many car insurance companies offer discounts to help drivers get a better rate, but the discounts available depend on the carrier. Here are some commonly available car insurance discounts:
If you qualify for multiple discounts, most insurance companies allow them to be stacked together, which lets you maximize savings if you qualify for more than one. You can ask about the discounts that are available so you know what you may qualify for when choosing a company. Applying discounts may help lower the cost of car insurance so you can get the policy you need without compromising your coverage.
Once you’ve found some carriers that could offer you the coverage you’re looking for at an affordable rate, you may want to look at third-party ratings for the providers you are considering. Some of the most notable and trustworthy organizations are J.D. Power, AM Best and Standard & Poor’s (S&P). By considering third-party ratings, you may better understand each company’s overall customer satisfaction and financial stability. These metrics may also give you an insight into digital tools offered by each carrier.
