Are you overpaying for car insurance? Quotes, Discounts 2023

If you’ve ever had that feeling that you might be paying too much for car insurance, you probably are. Unfortunately, most policyholders don’t check more than one or two insurance companies when shopping for auto insurance.

But shopping for competitive car insurance quotes is easier than ever. You can compare car insurance quotes from dozens of companies online. Then, you can choose the best car insurance for your needs and budget.

Car Insurance 101

Insurance is a way to shift the risk of loss (car damaged in an accident, health crisis, house fire) from a person to an insurer. In exchange for accepting the risk, insurance companies require policyholders to pay premiums. With car insurance, a provider promises to pay when any loss covered by the policy occurs.

Every state must approve car insurance prices that insurance companies propose. But each company has different requirements regarding how generous they are to riskier drivers.

Insurance companies evaluate how much risk a driver poses and how likely they are to file a claim. For example, people who have a history of speeding tickets or at-fault accidents pay more for car insurance than good drivers. Likewise, inexperienced and young drivers pay more for insurance because they have not yet proved themselves as safe drivers.

See More: Car Insurance Quotes

Why does car insurance cost so much?

On average, U.S. drivers pay $121 per month for car insurance, according to Insurify’s proprietary data. However, car insurance prices are different for each person based on vehicle, location, and driving history. Types of coverage and state minimum liability requirements also play a role.

Types of Insurance Coverage

Auto insurance premiums depend on how much coverage you buy. If you are willing to take on more financial risk, you might get a lower rate by buying less coverage. Then again, if you want to lower your out-of-pocket expenses, the insurance company will cover more of the costs if you buy more coverage.

Several elements make up a car insurance policy:

• Liability insurance: pays to repair or replace someone else’s property

• Bodily injury insurance: pays medical bills for people in your car or in another involved vehicle

• Comprehensive coverage and collision insurance: pay to repair or replace your vehicle

• Personal injury protection (PIP): pays for medical bills, lost income, alternative transportation, and childcare expenses needed after an accident

• Uninsured/underinsured driver insurance: pays for your medical bills and car repairs if an uninsured driver causes an accident

Some policies include optional extra coverage like:

• Gap insurance

• Rental car reimbursement

• Roadside assistance

• New car replacement

• Rideshare driver insurance

• Classic car insurance

State Minimums

It’s up to you to determine how much car insurance is right for you. However, most states have laws that require all drivers to have a minimum amount of car insurance. Each state has different rules, but most require liability coverage.

For example, your states may require you to have:

• $15,000 to $25,000 of bodily injury liability per person

• $30,000 to $50,000 of bodily injury liability per accident

• $25,000 to $50,000 of property damage liability per accident

• Uninsured/underinsured motorist insurance

The amount you need depends on your state of residence. Of course, these are the state minimums. You can buy more liability insurance to better protect your assets. However, if your car is financed or leased, the lender/lessor may require more coverage to protect the vehicle. Check your finance terms to determine how much car insurance your lender requires.

See More: Best Car Insurance Companies

How Car Insurance Is Priced

Many factors go into determining your car insurance premiums. In addition to how much car insurance coverage you want, rates are also determined by your:

• State of residence: From California to Michigan to Florida, each state has different laws.

• Neighborhood and local crime rate: Higher crime rates translate to higher insurance rates.

• Vehicle: Prices depend on the make, model, year, mileage, daily miles driven, and safety features like anti-theft devices and antilock brakes.

• Demographics: Age, gender, credit score, homeownership, and marital status all affect rates.

• Driving record: Your history of accidents, speeding tickets, and DUIs is a factor.

• Claims history: More claims mean higher rates.

How do you get cheap car insurance with all these elements affecting prices? Fortunately, we have some tips on how to find the best rates on auto insurance.

See More: Cheap Car Insurance

How to Save Money on Car Insurance

Car insurance prices seem inflexible, but you can get away from higher premiums if you know where to look. You might ask for auto insurance discounts, improve your credit and driving history, raise your deductible, reduce coverage, and shop around for the lowest prices on car insurance.

Ask for Discounts

Discounts are a quick and easy way to lower your premiums almost instantly. Most car insurance policies come with discounts, such as:

• Safe driver

• Bundling with other policies like homeowners insurance

• Low mileage

• Defensive driving course

• Professional or employer affiliation

• Homeowner

• Married

• Good student

• Good credit

• Paperless billing

• Automatic payment

• Customer loyalty

They may not be automatic; asking for discounts when shopping for car insurance is always worthwhile.

Raise the Deductible

One way to immediately reduce your car insurance costs is by raising your deductible. The deductible is the out-of-pocket amount you spend before the insurance company kicks in to pay the claim.

Suppose your policy has a $250 deductible. You will pay for the first $250 of the repair costs if you make a claim, and the insurance company will cover the rest of the expense, up to your limit.

Raising your deductible to $500 or $1,000 can significantly reduce the cost of your car insurance. However, you would then have to cover the first $500 or $1,000 of a claim. Make sure to have emergency savings set aside to cover a higher deductible.

Reduce Coverage

Lowering your coverage is another way to significantly reduce how much you pay for car insurance. Start by reviewing your policy to check your liability limits. Depending on your state laws and risk tolerance, you may be able to lower them. Ask your insurance agent if you’re unsure about your state’s minimum coverage requirements.

Also, consider whether you still need full coverage. For example, if you drive a paid-off older car, it might be worth it to drop collision coverage and comprehensive coverage. Finally, drop add-ons that you don’t need anymore, such as gap insurance, roadside assistance, and rental car reimbursement. Dropping these extras can add up to big savings year over year.

Improve Your Credit

Since car insurance providers consider your credit history, raising your credit score can pay off in the long term. The best ways to improve credit are to pay down outstanding debts and to pay all your bills on time.

Drive Safely

It’s no secret that safe drivers tend to pay less for auto insurance. Therefore, another important way to get low car insurance rates is by having a safe driving record.

Your claims history also plays a role in determining your premiums. The more car insurance claims you make, the more your insurance will cost. Claims could trigger rate increases even if they’re not your doing, like a rock cracking your windshield or a tree falling on your car during a storm.

You might also receive a car insurance discount if you take a driving course. Defensive driving courses only take a couple of hours and typically cost less than $100.

Shop Around for Auto Insurance

Shopping around to compare rates is the most effective way to pay less for car insurance. Requesting quotes from multiple car insurance companies can take hours. But there’s an easier way — use an online insurance comparison tool.

You’ll typically enter information about your location, driving history, and car details. Then, you’ll see quotes from top companies like State Farm, GEICO, Nationwide, and Allstate. With so many options, you’re sure to find the lowest price available.

See More: Best and Worst Sites to Compare Car Insurance

Don’t Pay Too Much for Car Insurance

Car insurance is an essential thing to have if you own a car. It protects the vehicle in the event of an accident and is a legal requirement in most places. But you shouldn’t be paying too much for car insurance.

With so many options to lower your auto insurance premiums, it’s easy to find an affordable policy that will work for you and your family. Look for personalized rates based on your vehicle, location, and driver profile. Drivers across the country use online car insurance comparison tools to get the right prices for them.

Frequently Asked Questions