Finding Inexpensive Rates for Auto Insurance

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Joel Ohman
Founder, CFP®

UPDATED: Dec 10, 2018

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Here's what you need to know...

  • The definition of “inexpensive” depends on your individual criteria
  • There are ways to reduce your premium
  • Consider a higher deductible to save on your monthly premium
  • Comparison shop to make sure you’re getting the best deal you can

You may be wondering if finding inexpensive car insurance is even possible, especially if you are struggling each month to pay this necessary bill.

The truth is, it is possible to find more affordable rates if you shop around, but don’t expect to get your insurance for next to nothing. That just isn’t possible.

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Whether or not you even find certain car insurance rates affordable, depends on your own perspective.

If you have a high-end sports car or high-performance car, for example, and are paying $350 a month for car insurance, you might think that the person who pays $150 a month has inexpensive car insurance while that person thinks their rates are outrageous.

Considering Your Coverage Type

Many people struggle with making their monthly payments for their car insurance, especially when the economy is struggling.

Some people have simply stopped paying their premiums and live in fear of having an accident or of their state sending them a notice that their license and registration have been suspended.

One way to help manage your payments is by keeping your rates low. You can do this by ensuring that you don’t have any more insurance than necessary.

We aren’t simply talking about switching to liability only; although if this is all you can afford, it is better than nothing. You need to look at what you are paying for your additional services.

Dropping Collision and Comprehensive

For example, many people carry collision and comprehensive coverage that don’t need it. Your insurance company will only pay any claims on your vehicle for the value of that vehicle.

If you are driving an older car that has very little value, it is possible that you are paying for coverage that won’t benefit you down the road.

One way of measuring whether or not either of these coverage types has any value for you is to find out the value of your vehicle. If your comprehensive and collision coverage are half the price of the value of your car, then you should drop this coverage.

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In plainer terms, if your car has a value of $1,000 and your comprehensive and collision coverage costs $500 or more a year, then it doesn’t have any real value to you, especially if you are carrying a $500 deductible.

Both collision and comprehensive plans are best reserved for vehicles that have significant value and that would require thousands of dollars to replace if you were to have an accident or your vehicle is stolen, damaged by weather or vandalized.

Considering Your Level of Coverage

Another thing that you need to think about if you need inexpensive car insurance is to consider what your level of coverage happens to be.

If you are financing a vehicle, then you may not have any choices when it comes to lowering your coverage levels; however, this is something that you need to look into before assuming you have to keep higher levels.

Every state has a minimum liability requirement that you must maintain on your vehicle.

While in most cases this minimum won’t cover a serious car accident, if you can’t afford your premiums, then you should look at lowering your level until you are in a place where you can afford to increase it again.

You should also consider maintaining a higher deductible, which will often reduce your rates drastically. Keep in mind that this is the amount of money that you will have to pay out of pocket when/if you have an accident.

If you can’t afford the deductible, then you need to consider other options.

Where You Buy Your Insurance

Lastly, you need to consider where you are buying your insurance. Many people don’t believe it when they see car insurance commercials from companies that say that they can save them money on their coverage.

The truth, however, is that insurance companies charge different rates for their services. You could easily find yourself saving hundreds of dollars simply because you took the time to shop around for car insurance from multiple companies.

Why people don’t take this step is surprising; after all, it is a free process that doesn’t require any purchase from you. You can fill out the basic information and receive car insurance quotes from several companies, which you can compare side by side.

Enter your ZIP code now for your FREE car insurance quotes!

Free Car Insurance Comparison

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