Getting cheap car insurance is tougher than ever as rates continue to soar. Auto insurance prices were up 11.8% year over year in January and 55% higher than just three years ago, according to Bureau of Labor Statistics data.
But cheap car insurance is out there, and there are ways to lower your car insurance costs, like shopping around to compare rates, bundling coverage, improving your credit (in some states), and maximizing discounts.
Follow these steps to find the best deal on the cheapest car insurance.
Learn more: Car insurance rates are climbing. Here are 4 reasons why and 11 ways to save.
Car insurance includes a menu of different types of coverage. Buying less coverage can lower your car insurance bill. But don’t play cheap with yourself; too little insurance can leave you exposed in the event of an accident. Find a middle ground where you’re reasonably protected but not wasting money on needless insurance.
Before shopping, understand how each coverage type works, and decide which ones and how much are right for your situation.
Learn more: Most common types of car insurance explained
For example, most states require a minimum amount of liability insurance, which covers property damage and injuries you cause others in an accident, but you may need coverage above those minimums. Aim for enough liability insurance to protect your assets.
Learn more: What is liability car insurance, and how much do you need?
You won’t get coverage for your own car by buying only the state-required minimum. Make sure to include collision and comprehensive coverage. Collision insurance pays for repairs or replacement after an accident, and comprehensive insurance pays if your car is stolen or damaged by something other than a collision, such as a storm or vandalism. A lender or lessor will require both if you’re financing or leasing a car.
Read more: How much car insurance do I need?
Your car insurance deductible is the amount you pay out of pocket to repair or replace your car before the collision or comprehensive insurance kicks in. The higher your deductible is, the lower your car insurance premium will be.
Learn more: What you need to know about car insurance deductibles
Choose the highest deductible you can afford, and then stash money equal to that amount in an emergency savings account. You’ll save money on your car insurance and then have cash available to pay the deductible after an accident.
Learn more: How much money should I have in an emergency savings account?
A variety of factors besides the coverage amount affect car insurance rates, including your driving record, age, marital status, and, in some states, credit history and gender. For example, teen drivers are expensive to insure, married people tend to pay less than singles, and people with a clean driving history pay less than those with speeding tickets.
Read more: Finding affordable car insurance for teens
But each insurer has its own methodology for setting premiums, so it pays to shop around. Quotes for comparable policies can be hundreds of dollars apart.
Online comparison tools can make the shopping process easier by eliminating the need to input your personal details over and over again. These tools show quotes from different insurers and let you compare prices for similar policies.
Learn more: How to switch car insurance companies
Understand that no comparison tool includes quotes from every insurer. Extend your search by getting online quotes from individual insurance companies. Some company websites will also provide quotes from competitors alongside their own rates so you can see how the premiums measure up.
Learn more: How to shop for car insurance
With “direct insurers,” you typically buy your insurance straight from the company’s website or app. There’s no intermediary between you and the insurance provider (and no separate agent to offer you personalized advice or answers either). Examples of direct insurers include Geico, Esurance, and Progressive.
Other insurance companies sell policies through agents. You’ll usually be referred to local agents when you get quotes on their sites.
A good agent helps their clients understand and weigh the options to get the right amount of coverage and navigate the claims process. There are two types of agents: captive and independent. Both can offer valuable service, but know which type you’re dealing with.
Captive insurance agents only sell the products their company offers. Examples include Farm Bureau, Farmers, Nationwide, and State Farm.
Independent insurance agents sell products from multiple insurance companies and help clients shop for the cheapest rates and hidden discounts.
Yet it’s still important to check rates on your own because independent agents don’t represent every insurer. You can’t buy a State Farm policy from an independent agent, for instance.
Companies offer a variety of car insurance discounts and incentives. Ask what discounts they offer, and take advantage of any that apply. Here are some common ways to save:
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Bundle your insurance. You can often save overall by buying multiple policies, such as car and home or renters insurance, from one company. Drive less. Many companies offer discounts for low mileage. If you put relatively few miles on your car, explore pay-per-mile car insurance.
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Take a defensive driving course. Young drivers and seniors may get lower rates by taking an approved safe driving course. Check with the insurance company about eligibility.
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Drive safely. You’ll get lower rates across the board with a clean driving history.
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Earn good grades. Many insurers offer good student discounts for high school and college students with a high GPA.
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Get credit for serving your country. A variety of insurers offer special discounts for serving in the military.
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Stick with the same insurer. Some insurers offer loyalty discounts for staying with them for a certain number of years. That could be worthwhile if you can’t save money by switching, but compare quotes to make sure.
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Autopay your premiums. You may get a discount by setting up your account to automatically pay premiums with a credit card or through your bank.
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Use an anti-theft device. A variety of companies offer a security discount for having an anti-theft device to protect your car. Some cars come equipped with anti-theft technology. You can also buy anti-theft tools and have them installed.
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Pay your premium in full. Save money by paying for six months or a year of coverage at once instead of monthly.
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Go paperless. Ditch the paper statements and get a discount for receiving information from the company electronically.
Learn more: How to get all the best car insurance discounts
Don’t go by price alone when making a final decision to buy a car insurance policy. The cheapest car insurance may save money upfront but could cost more down the road.
For example, some cheap insurance policies may not cover permissive drivers (someone you give permission to use your vehicle), or they might provide only reduced coverage.
With other policies, your coverage level might drop when you drive outside of your state.
Learn more: What is a named insured driver?
Read the policy’s fine print to understand any coverage restrictions. You can also check out the online reviews and complaints for different insurers you’re considering. Choose a company with a good customer service track record.
Your situation and needs change, so it’s important to do a car insurance checkup once a year to ensure you’re getting the cheapest and best car insurance coverage for your needs. Follow these steps:
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Check your coverage and adjust it if necessary. Are you paying for any extras you don’t need? Can you afford a higher deductible?
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Compare car insurance quotes. Get quotes to compare prices.
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Ask for discounts. Make sure you get all the discounts you qualify for.
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Decide whether to switch companies. But first make sure to account for the loss of any discounts with your current insurer before switching. For example, you might find cheaper car insurance elsewhere but pay more overall if the switch means losing a discount for buying home or renters and auto insurance from the same company.
This article was edited by Tim Manni.
Barbara Marquand contributed to this article.
