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The Least Expensive Way To Insure a Vehicle

The cheapest car insurance might not be the best car insurance for you.

When you're looking for the cheapest car insurance, you should always keep in mind one thing: The least expensive car insurance might not be the best car insurance for you. In fact, the rock-bottom cheapest car insurance might not provide nearly enough coverage to protect you, your family and your financial stability. Instead of looking for merely the least expensive car insurance, the savvy shopper looks for the best, most affordable car insurance that fits their needs and budget.

This article explores the factors that affect your car insurance rate, the different insurance products that are available and pro tips for finding lower car insurance rates. You probably won't end up getting the cheapest car insurance in the entire United States of America, but you can definitely snag the car insurance that's the least expensive for you.

How Do Car Insurance Companies Calculate Car Insurance Rates?

Your car insurance premium—that is, the dollar amount you pay for your auto policy—is affected by many factors: the financial health of the U.S. economy, the financial health and methods of your insurance carrier, your state's auto insurance laws, the number and types of claims made in your neighborhood, the make, model and year of your vehicle, and certain facts about your life, among others. Let's drill down on that last one, taking a look at some of the personal factors that most auto insurance companies take into consideration:

  • Age
  • Gender
  • Marital status
  • Education
  • Occupation
  • Homeowner or apartment renter
  • Credit score
  • Insurance history
  • Driving history
  • Annual mileage

What's interesting is that many of these personal factors change over time. For example, if you get married and buy a house or maintain a clean driving record for five years or more, your vehicle insurance will most likely go down in cost.

In other words, your insurance rate is not written in stone, and it always pays to shop around for cheaper car insurance. With a little research, you can lower your car insurance cost!

A Note on Your Credit Score

California, Hawaii, Massachusetts, and Michigan have forbidden auto insurance companies from using credit scores to deny applications, set premiums, refuse renewals and cancel policies. (Due to the pandemic, Washington state has temporarily banned auto insurers from using credit scores in the same ways.) Further, Maryland, Oregon, and Utah severely restrict carriers' use of credit-based insurance scores.

In the other 42 states, auto insurance companies are actively using credit scores to calculate car insurance rates. If you want to get on the good side of the Big Three credit agencies—S&P Global Ratings, Moody's and the Fitch Group—you can take steps to improve your credit score. If you have good credit, your financial biography will have these earmarks:

  • A long, established credit history

  • Accounts are all open and in good standing

  • All bills are paid on time

  • Not a large amount of debt

  • No payments that are past due

  • No accounts that are in collections

But no matter which state you live in, you want a solid credit score, right? While a good credit score can help you get cheaper auto insurance, it can also help you to buy a car, buy a house, refinance loans and secure better interest rates. Generally speaking, most reported items disappear between two and 10 years after they are initially noted.

See if you can get an affordable car insurance rate

One Great Way To Lower Your Car Insurance Cost

Almost every state stipulates a bare minimum of car insurance that its licensed drivers must have before getting behind the wheel. So, the easiest, simplest way to find the cheapest rates in your state is to purchase only the state-mandated minimum of insurance for your vehicle. Most states require its drivers to purchase three separate products for liability protection:

  • Bodily injury liability coverage per person

  • Bodily injury liability coverage per accident

  • Property damage liability coverage per accident

These liability insurance products offer you financial protection if you cause an accident that results in the injury or death of a third party or damages to their property. However, each state requires a different dollar amount for coverage limits. (A "coverage limit" is the maximum amount your insurance will pay out for a covered claim.) Further, some states require other insurance products in addition to the standard liability protection. Let's look at two examples, New York and Kansas:

New York

Bodily injury per person: $25,000

Bodily injury per accident: $50,000

Property damage: $10,000

Kansas

Bodily injury per person: $25,000

Bodily injury per accident: $50,000

Property damage: $25,000

Uninsured motorist bodily injury per person: $25,000

Uninsured motorist bodily injury per accident: $50,000

Personal injury protection (PIP): $4,500 medical expense per person, $900 per-month income loss for one year, $25 at-home services per day, $4,500 rehabilitation expense per person and $2,000 funeral expense per person

As you can see, both states require the same types of liability protection, although at slightly different liability limits. However, Kansas requires four additional kinds of protection, partly because it is a no-fault state.

Add-on insurance adds to the cost of your state's mandated liability coverage. 

Once again, the best way to get the best car insurance rates is to purchase only your state's required, bare-bones insurance package. In your particular jurisdiction, every other kind of vehicle protection product is called "add-on" insurance, which is insurance that's voluntarily purchased and not required by law.

Find the Best Cheap Car Insurance in New York and Kansas

The average auto insurance rates in New York and Kansas are $204 per month and $101 per month, respectively. According to SmartFinancial, the lowest average rate in New York is $199.70 (USAA), and the town with the lowest-cost auto protection, on average, is Elmira ($82.35). In Kansas, the lowest average rate is $90.78 (USAA), and the town with the lowest-cost auto protection, on average, is Manhattan ($79.91).

As you may have deduced from these raw numbers, your zip code obviously has a lot to do with getting cheap auto insurance rates. Let SmartFinancial find you the cheapest rate with a good company. Just enter your zip code on this page to begin answering a few questions about your driving history and car.

A Note on Quotes

When you compare quotes from multiple insurers on auto insurance policies and auto insurance costs, it is important to keep in mind that those initial quotes are not indicative of the final cost of car insurance premiums. Think of insurance providers' quotes as a really good ballpark figure: To find out the exact dollar amount of a policy from a particular insurer, you'll have to sit down with a licensed agent and ask a lot of questions to hash out the details. After that, you well may change your mind about which coverage products you want to purchase and for how much.

It is important to remember that the cheapest car insurance companies for one individual may not be the cheapest car insurance companies for another individual. What's more, what one person may consider to be cheap auto insurance quotes may be quotes that are out of someone else's budget, even though both people have identical salaries! Everyone is different, and everyone has their own priorities.

Of course, the only way to find the cheapest car insurance is to shop around, especially if you have poor credit, a sad driving record, young drivers living in your household or other industry-recognized liabilities. Let SmartFinancial compare rates for you for free. Enter your zip code on this page to get started.

The Best Car Insurance May Not Be the Cheapest

If you're looking for the best cheap car insurance, your idea of "cheap" car insurance may clash with your idea of the "best" car insurance. Like many drivers looking for the cheapest car-insurance-company policy, you'll probably want more than the state's mandated minimum liability protection.

After all, the average driver gets into about four accidents in a lifetime of driving, and just one accident can result in catastrophic losses that minimum coverage would not even come close to compensating. When your minimum coverage runs out, you could be on the hook for tens of thousands of dollars. Let's take a look at the add-on coverage that many drivers opt to purchase.

Comprehensive and Collision Insurance

Together, comprehensive and collision are called "full coverage" insurance. Comprehensive insurance helps to pay to replace your vehicle if it's stolen and repair your vehicle if it's damaged by a falling tree limb, a dashing elk, vandalism or mob violence, for example. Collision coverage helps to pay to repair or replace your auto after it collides with an object (a light pole, a fence) or another vehicle.

Full coverage is an attractive purchase because your state's bare-bones liability protection will not cover any damage to your vehicle. You can think of comprehensive insurance as protecting your vehicle against damage that you didn't cause and collision coverage as protecting your vehicle against damage you did cause. Of course, full coverage protection will make more sense for folks with new or expensive cars.

Average repair costs vary according to the type of vehicle, the extent of the damage, and the cost of parts and labor. Comprehensive and collision make sense because high repair costs are not uncommon:

Bumper damage: up to $1,200

Smashed windows: up to $500

Minor dents: up to $200

Major dents: up to $1,000

Of course, the ideal is to have a clean, no-claims-filed driving history. If you have even one at-fault accident, even the cheapest company may well raise your premium above the average cost for insurance in your area.

Personal Injury Protection (PIP)

After your health insurance runs out, PIP will step in to help cover the costs of your medical expenses after an accident, no matter who caused the smash-up. While the claims that are covered vary by state, PIP is known to cover part or all of the following expenses:

  • Ambulance and emergency-room bills

  • Follow-up medical visits and rehab services

  • Prescriptions and X-rays

  • A ride to and from medical appointments

  • Lost wages

  • In-home nursing services

  • Pet care and other essential services

  • Funeral, burial or cremation expenses

  • Death benefit to a survivor

The following states require all their drivers to purchase PIP in addition to their respective mandated minimum of liability coverage: Delaware, Florida, Hawaii, Kansas, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, and Oregon. (Main and Pennsylvania also require that their drivers get medical coverage, but it's not PIP.)

Uninsured/Underinsured Motorist

According to the IRC, about one in eight U.S. drivers were uninsured in 2019.

According to a 2021 study by the Insurance Research Council, 12.6 percent of motorists, or about one in eight drivers, were uninsured in 2019. According to the Insurance Information Institute, Mississippi had the highest percentage (29.4%) of uninsured drivers in 2019.

Underinsured/underinsured motorist coverage comprises an array of individual products, including personal injury and property damage coverage. In fact, many states require their licensed drivers to purchase uninsured motorist coverage: Connecticut, the District of Columbia, Illinois, Kansas, Maine, Maryland, Massachusetts, Minnesota, Missouri, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Oregon, South Carolina, South Dakota, Vermont, Virginia, and West Virginia.  

Gap

Gap insurance will reimburse you for the balance of your vehicle loan or lease when the value you owe is greater than the value of your vehicle, whether your vehicle is stolen or totaled. This coverage type only makes sense if you are leasing a car or you owe more on a car loan than the car is worth. In other words, you don't need gap insurance if don't lease a car or have a car loan.

Umbrella

When the insurance products you purchased reach their liability limits for a covered event, umbrella insurance steps in to help pay the balance.

Discounts Lower Car Insurance Rates

Small and large insurance companies all offer discounts, which serve to lower your insurance costs. However, some discounts only pertain to particular coverage products. For instance, an insurance provider may offer an anti-theft discount only in conjunction with comprehensive coverage, which pays for car theft; in other words, the discount will apply only to your comprehensive bill, not your overall insurance bill.

How Many Discounts Can I Get?

Also, discounts are usually capped, meaning you can snag only so many discounts. Even some of the best car insurance companies limit total discounts to 20%, even if you qualify for more. Not only that, some insurers don't offer all their discounts in every state. But some discounts are required by law: For example, if a New Yorker finishes an approved course on defensive driving, the state demands the smallest and largest insurers discount by 10% that driver's liability and collision insurance.

Contact an Insurance Agent

Discounts can turn affordable car insurance into cheap car insurance, but discounts do not appear out of thin air. You must update your insurance agent when there are changes in your life, then you and your agent can review your car insurance policy to see if your insurance rates can be lowered. If you buy a new car or, say, your kid makes the honor roll, you might be eligible for a discount on your car insurance rate that you weren't eligible for previously.

See if you can get an affordable car insurance rate

Get the Car Insurance Discounts You Deserve

In the U.S., the average annual cost of auto insurance is about $1,500. If you have a poor driving record or poor credit, you still may be available for these money-saving discounts:

Multi-policy

If purchase more than one policy from the same carrier, that carrier will probably give you a discount for the extra business. Usually called "bundling," multi-policies are offered by the most expensive company and the cheapest company. Bundling your car insurance policy and, for example, your home insurance policy, you could save up to 25% on your insurance premium.

Multi-car

If you insure more than one car—two expensive cars and, say, a 2012 Honda CR V—with the same company, a multi-car discount might save you up to 20%. In fact, you might even be able to bundle your car insurance with your RV or motorcycle coverage, for example.

Car Safety Devices

Airbags, anti-lock breaks, traction control, accident-avoidance systems, daytime running lights, tire-pressure monitors—your car's safety features may qualify you for savings.

New Car

Cars that are less than three years old often qualify for a new-car discount, often between 10% to 15%.

Anti-theft Devices

Kill switches, locking gas caps, time-delay ignitions, hood locks, GPS-based systems, LoJack and other stolen-vehicle recovery systems, VIN etchings—factory-installed or after-market anti-theft devices can score you a discount.

Good Driver

If you are never in an at-fault accident or never file a claim over a certain period of time, your carrier will most likely reward you with a good-driver discount.

Defensive Driver

To snare this discount, you'll have to take a defensive driving course that's approved by your insurer. State Farm, for instance, offers a defensive-driver discount up to 15%. While some states have laws that require a discount for drivers that complete defensive-driver classes, some insurers don't offer it at all. In fact, many carriers only offer this discount to younger and older drivers.

Good Student

If your kid is a full-time high school or college student and meets certain requirements (age, grade average), you might qualify for a discount. Remember, you yourself could be the good student!

Student Away

If your kid is under 25, more than 100 miles away at school and only drives the family car on holiday breaks and during the summertime, you may get a student-away discount.

Payment

You may get a small discount depending on how you pay your insurance company. If you pay your premium in one lump sum or with monthly automatic withdrawals, you may qualify. Further, you could score savings if you go paperless, keeping all your documents and billing If you're willing to go paperless, you'll get your policy documents and billing electronically.

Online Quote

Some car insurance carriers offer a discount just for getting insurance quotes through their website. Some carriers proffer a deduction just for signing up with them for the first time.

Associations and Organizations

If you belong to a college alumni association (fraternities, sororities) or a professional organization (union, bar association), you might be able to save a few bucks. Remember, a few bucks can really add up over a few years.

Of course, there are other discounts—for example, a discount for low-mileage drivers! Whether you have poor credit and expensive cars or great credit and old jalopies, you are probably eligible for some kind of discount. Ask your car insurance company how its discounts affect car insurance rates!

Deductibles Impact Car Insurance Rates

One major factor that will affect the cost of your auto insurance is how much auto insurance you end up buying. If you can only afford the cheapest insurance, buy your state's mandated bare minimum of liability insurance but beware that you may have to dig into your pocket if you have an accident or need repairs on your car after an at-fault accident.

An insurance deductible is the amount taken out of an insurance check when you make certain types of claims, but never for liability coverage, which pays for the other driver's damages if you're at fault. You choose your deductible based on how much of your losses you're able to pay for, before insurance covers the rest.

Here's a breakdown of deductible details for various types of insurance.

Auto Insurance Deductibles

According to the International Risk Management Institute, a deductible is "an amount the insurer will deduct from the loss before paying up to [an insurance product's] policy limits." In other words, a deductible is an agreed-upon amount you pay out of pocket before your coverage kicks in.

Interestingly, a deductible is paid only for collision or comprehensive claims, not liability claims. So, if you have a $250 deductible and a falling tree causes $1,000 worth of damage to your vehicle, you'll pay $250 to the repair shop, and then your comprehensive coverage will pay the remaining $750.

The higher the deductible you choose, the lower your premium. 

You will be asked to choose your deductible amount when you are signing up for an auto policy. These amounts range from $250 to $1,000 or more. In short, the higher the deductible you choose, the lower your premium.

SmartFinancial Knows Car Insurance

It can be a struggle and a headache to find the cheapest car insurance company—that is, the car insurer that has what you want at a price you can't resist. Instead of trying to find cheap car insurance by logging onto multiple insurance-company websites, fill out one form with SmartFinancial and get a free auto insurance quote in just minutes.

Using artificial intelligence, proprietary algorithms and an expert staff of licensed insurance pros, SmartFinancial sorts through all the insurance companies in your area to find the exact right insurance company for your insurance needs and budget.

You can begin by entering your zip code below or call 855-214-2291.

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