How to Find the Cheapest Basic Car Insurance

Find the cheapest car insurance rates by (1) checking financial ratings, (2) reading customer reviews, and (3) comparison shopping for multiple quotes online.

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: May 14, 2020

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Here's what you need to know...

  • Know your state’s requirements for car insurance
  • Comparison shop
  • Get advice from family and friends
  • Check the financial stability of insurance companies
  • Regularly review your policy

Finding the cheapest basic car insurance can be a challenge these days, especially since there are so many selections. You really need to have a good idea of what you are looking for in terms of price, service, and availability.

To find the cheapest basic car insurance, you will need to do these 3 things: research, comparison shop and consider the stability of the company.

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Just because the price is cheap does not mean the service will be acceptable or the staff will be available in your time of need.

The really good car insurance companies will offer great rates without compromising their integrity and reputation. For these reasons, you must apply three basic tools when looking for the cheapest basic car insurance.

Do Your Research

Before you even start looking for cheap, basic car insurance, you need to know the rules of your state.

Car insurance is not governed nationally, but on a state level.

This means each state dictates the requirements for their residents. If you are not knowledgeable about what your state deems acceptable, you can find yourself in a world of trouble. This includes purchasing more car insurance than you need.

Here are some tips:

  • Check out the National Association of Insurance Commissioners website.  This group provides information for every state in the U.S. Go to their website and click on your state. You will find the requirements there.
  • Liability insurance is required at a minimum.  Regardless of where you live, if you drive a motor vehicle, you must have liability coverage. This is the most basic level.
  • Some states require more. These extra requirements could include comprehensive and collision coverage. If you do not realize these requirements, you may not be able to register your vehicle.  For example:
    • You will be unable to report to the Motor Vehicle Commission in New Jersey, North Dakota, California, and elsewhere to obtain a registration if you do not have state accepted insurance. They will match your level of insurance with the type of vehicle you have and against the state requirements. If anything looks out of the ordinary, your request will be denied.
    • Some states, like New York, even require you to obtain two insurance identification cards before they give you a valid vehicle registration. When you report to the MVC, you must hand over one of the cards for them to retain. If you are unable to give them an identification card, they will deny your vehicle registration application.

Take heed to the facts your state provides and save yourself from wasted time, resources, and money. Complete the proper research in advance of contacting any automobile insurance provider for quotes or general information.

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Comparison Shop

It is always a good idea to compare prices, service, and availability when looking for cheap, basic car insurance. Here are some helpful ideas to follow in your search:

  • Find three companies -Unfortunately, with so many car insurance companies offering the best prices possible, it can be a challenge to know where to begin. A good rule of thumb is to find at least three companies that can meet your personal expectations.
  • Ask friends and family – Use those you know to help you gather the information, especially if they are paying low rates for their car insurance. Word of mouth from reliable sources is always a good place to start.
    • It is much better than completing a blind search on the Internet. After all, practically every car insurance site you visit will promise you everything under the moon to become their customer.
    • People you trust will be more honest and upfront about their previous experiences. They will tell you what they like and what rubbed them the wrong way. Of course, they will tell you right away if they are getting a great deal because they want to help you as much as they can.
    • Having this type of information is crucial to building your list. You can then start checking out the companies that have the most solid reputation based on real-life reviews, not anonymous accounts from folks in forums or those review-based websites.

Check the Stability of the Company

It is essential that you check the stability of the company you plan to give your business and money to since they will be responsible for maintaining your car insurance coverage.

If your choice of providers is unstable financially, your rates may fluctuate greatly when it comes time to renew.

Here are some pointers for figuring out company stability.

  • First, check with A.M. Best to see how well each company on your list has performed over the past year or so. Their financial information is posted on this site and they are given a specific grade. A++ is the best.
  • If you are researching a company with a lower rating, this means some or many of their financial obligations were not met in a timely manner. They may be in trouble or looking to shut down altogether; some may merge with larger companies to avoid a total loss. Either way, this is never a good sign.
  • A company with a high rate shows a positive outlook for future growth. They have the capital and know how to balance things for optimal earnings.
  • You can also go to JD Power and get the facts about several of the larger car insurance companies. See who ranks the highest in a number of categories, including price, customer satisfaction and more.

Know How Quotes are Set

Another way to help you find the cheapest basic car insurance is to educate yourself in the ways of the car insurance industry; learn their little tricks and tactics to keep yourself aware. You accomplish this if you know what they are looking for and which type of customer they desire.

  1. Age matters. Most car insurance companies are looking for safe, reliable drivers over the age of 26. Anyone under this age typically has higher rates simply because they do not have enough experience on the road yet. It is not unheard of for someone around 19 or 20 to pay twice as much as a 35 or 40-year old driver.
  2. Vehicle matters. It plays a huge role in the way your rates are calculated. High-performance vehicles, including sports cars, often have higher premiums because their drivers often speed, thus, they consider them risky. They are also usually more costly to repair.
  3. Credit score matters. Finally, your credit score can affect your car insurance rates. This is something that more and more car insurance companies are looking into as a way to judge your financial stability. The credit to debt ratio paints a rather interesting picture for them to examine.

For example, if your credit score is below 700, you will be seen as a higher risk than a person with a good score of 720 and above. Your rates will be higher as a result.

While this is not always the case, it does look as though many are beginning to consider this and assume that if you cannot pay your debts in a timely manner, you increase the risk of defaulting on a financial obligation.

Therefore, you may not pay your car insurance premium when the bill is due.

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Review your Car Insurance Policy During the Renewal Period

You should also review your policy during the renewal period. There are some things you can check for.

  • Changes in your life -Lifestyle changes or other issues can influence your car insurance rates. If you are removing a high-risk driver from your policy, you may see a drop in your rates.
  • Traffic violations – This is one that many tend to overlook. Traffic violations, even the smallest infraction can be documented with the MVC and your car insurance provider will receive this information. They may even increase your rates before you are able to notify them of the problem.
  • Driving history – If you were quoted a higher car insurance rate due to problems from the past and you have taken the necessary steps towards improvement, you need to share this with your car insurance company during your renewal time period. It may place you in a less risky group.

Follow Your Instincts

Always follow your instincts. If you are researching a car insurance company and their rates seem too good to be true, listen to your inner voice.

At times, car insurance companies offer substantially lower rates to compensate for something. This means you may pay dirt cheap prices, but suffer in areas of support or availability.

If you are involved in a traffic accident or major collision, you want to make sure you are fully covered and have the ability to reach out to them during times of need.

A cheap rate for basic car insurance is great and can definitely save you money each year, but it should not come at the expense of something else. Look for balance in your policy and you will benefit in the end.

All great car insurance rates are here right now; just enter your ZIP code into the FREE toolbox!

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Enter your ZIP code below to view companies that have cheap car insurance rates.

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