How to Save on Car Insurance

You can save on car insurance by shopping around and finding a provider that rewards you for good driving. However, first you have to see what insurance companies use to determine your rates.

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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 29, 2020

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Here's what you need to know...

  • How can you save on car insurance? By shopping around you can find a provider that rewards you for good driving
  • First, you must understand how insurance companies determine your rates
  • There are certain factors that all insurance companies take into consideration

For drivers who need to save money, low car insurance rates are a great place to start.

Who has the cheapest car insurance? By entering your zip code into the free rate tool you can compare car insurance quotes now!

Factors that Determine Insurance Rates

 

Your monthly premiums will mainly be based on factors like your age, gender, and occupation as well as your driving record.

There are some other things that will be taken into account:

  • History of any previous claims that you have made
  • Your vehicle (make, model, year, value)
  • Your location (some places have higher rates of auto theft)
  • The type and amount of coverage that you select

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Drive Safely to Save Car Insurance Rates

What are some ways you can save on car insurance? Avoid getting tickets for traffic offenses, such as speeding.

Insurance companies consider drivers that have committed numerous traffic violations as high-risk drivers and charge them more.

Getting numerous tickets shows that you frequently disregard traffic safety rules.

Being involved in an accident where you were at fault will likely cause you to pay higher amounts of money for car insurance as well.

Drive a Car That Is Cheaper to Insure

 

Certain vehicles cost a lot more money to insure than others. Usually, more expensive cars cost more to repair or replace if damaged in a road accident or stolen.

Insurance companies also keep statistics on which cars are frequently stolen in your area and which ones are commonly involved in accidents.

Sports cars usually top the list in both categories, as they are an attractive target for thieves and are often used by irresponsible drivers in street racing.

Before you make a decision on which car you want to buy, you should research how much it would cost to insure it.

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Carefully Choose the Type of Coverage That You Need

With any type of insurance, the more coverage you take out, the more you will have to pay each month.

Remember that while third-party liability insurance is mandatory in most jurisdictions, collision or comprehensive coverage is not.

If you drive an inexpensive, used car that is only worth a couple of hundred dollars, you may not need to insure the value of your own vehicle.

You probably will not be driving the same car in a few years and the insurance premiums could add up to more than what the car is actually worth.

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Consider Taking a Policy With a Higher Deductible

If you do opt for collision coverage, think about what would be the maximum amount that you would be willing to pay out of pocket should your car be damaged in a collision.

This amount of money is called a deductible.

The higher the deductible you select, the lower your monthly premiums will be.

Car insurance is a very competitive industry. Therefore, it is always a good idea to compare different rates from different providers to see which insurer is offering you the best car insurance.

You can start comparing car insurance quotes right away, simply by putting in your zip code in the free tool available on this website.

References:

  1. https://www.iii.org/article/what-determines-price-my-auto-insurance-policy
  2. https://www.statefarm.com/simple-insights/saving/these-7-factors-determine-car-insurance-premiums
  3. http://traffic.findlaw.com/traffic-tickets/misdemeanor-amp-felony-traffic-offenses.html
  4. https://www.esurance.com/info/car/top-10-most-commonly-stolen-cars
  5. https://www.investopedia.com/terms/l/liability.asp

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Average Monthly Car Insurance Rates by State