8 Ways to Get the Cheapest Car Insurance Rates Possible

Shop around for the best rate, and don't overlook the smaller insurers you might not have heard as much about.
Jan 8, 2020
8 Ways to Get the Cheapest Car Insurance Rates Possible

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None of us wants to spend more than we need to for car insurance, but it isn’t always obvious how to get lower rates.

Dozens of insurance companies, large and small, are vying for your business. Many have an eye-glazing assortment of policy options, making it hard to compare policies and figure out who’s offering lower car insurance rates.

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Here are eight things you can do to ensure you get good coverage at the cheapest possible rate.

1. Don’t assume any one company is the cheapest

Some companies spend a lot of money on commercials to convince you they offer the lowest car insurance rates. But no single insurer is the low-price leader for everyone. The car insurance company that’s cheapest for one person in one place might be the most expensive option for a driver in a different state.

The only way to ensure you’re getting the lowest rate possible is to compare car insurance rates.

A NerdWallet analysis of rates shows why shopping around is so important. Here are some of the rates we found for a 40-year-old driver buying a full coverage policy on a 2018 Toyota Camry LE. Our hypothetical driver has good credit and a clean driving record, earning a "good driving" discount from most car insurance companies.

  • In Florida, State Farm would charge $1,766 a year, on average — the cheapest rate in the state for a driver without a military connection. Geico’s average rate is $239 higher.

  • In California, it’s the opposite: Geico is cheapest, with an average rate of $1,458, and State Farm’s average is $423 higher.

  • Progressive is the cheapest option for New York drivers at $1,298 a year on average, but in Florida, it's the most expensive at $3,015.

2. Don’t ignore local and regional insurers

Just four companies — Allstate, Geico, Progressive and State Farm — control more than half of the nation’s auto insurance business. But smaller, regional insurers such as Auto-Owners Insurance and Erie Insurance often have higher customer satisfaction than the big names — and they may have lower car insurance rates, too.

3. Ask about discounts

Insurers typically provide car insurance discounts. While they will vary by insurance company and which state you live in, you can usually get a discount if you:

  • Bundle car insurance with other policies, such as homeowners insurance.

  • Insure multiple cars with one policy.

  • Have a clean driving record.

  • Pay your entire annual or six-month premium at once.

  • Agree to receive documents online.

  • Own a car with certain anti-theft or safety features.

  • Are a member of particular professional organizations or affiliate groups.

Don’t be swayed, however, by a long list of possible discounts. Compare rates from multiple insurers.

4. Work on your credit

Your insurance credit score is a significant factor in the car insurance quotes you receive except for a few states. California, Hawaii, Massachusetts and Michigan don’t allow insurers to use credit when determining car insurance rates. Insurance companies say customers’ credit has been shown to correlate with their chances of filing claims.

A NerdWallet analysis found that having poor credit can increase people’s car insurance rates by hundreds of dollars a year compared with having good credit. (In most situations, a FICO score of 579 or lower is considered “poor” credit, but insurers have their own credit models that may have a different cutoff.)

Build your credit history — and get lower insurance rates — by paying your credit card bills and loan payments on time and reducing your debt. Track your progress by checking your credit score regularly.

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5. Skip comprehensive and collision coverage for an older car

Collision coverage pays to repair the damage to your vehicle from another car or an object such as a fence. Comprehensive coverage pays to repair vehicle damage from weather, animal crashes, floods, fire and vandalism. It also covers car theft. But the maximum payout under either policy is limited by the value of the car if it’s totaled or stolen. If your car is older and has a low market value, it may not make sense to shell out for these types of coverage.

6. Raise your deductible

If you buy comprehensive and collision coverage, you can save money by opting for higher deductibles. (There is no deductible on liability insurance, which pays for the damage you cause others in an accident.) But this should only be an option if you know you can afford the higher amount if you ever need to file a claim.

🤓Nerdy Tip

Compare auto insurance quotes with different comprehensive and collision deductible amounts to see how much you might save if you were to choose a higher deductible.

7. Consider usage-based or pay-per-mile insurance

If you’re a safe driver who doesn’t log many miles, consider a usage-based insurance program such as Allstate’s Drivewise, Progressive’s Snapshot or State Farm’s Drive Safe & Save. You might qualify for a discount based on driving habits like how much you drive, what time of day you drive and how well you drive.

If you truly don't drive much at all, you could save money by switching to a pay-per-mile insurance program such as Metromile, Allstate’s Milewise or Nationwide’s SmartMiles.

Be aware that opting into a usage-based or pay-per-mile insurance program means you're allowing your insurance company to track your driving behavior. This is typically done through either a device that plugs into your car's diagnostic port or an app you download onto your smartphone.

8. Check insurance costs when buying a car

You probably already pay attention to factors such as fuel efficiency and repair costs when picking a car to buy, but you should also consider insurance premiums. A NerdWallet analysis of the cheapest cars to insure among top-selling vehicles found the lowest insurance rates are for the Subaru Outback, the Jeep Wrangler and the Honda CR-V.

Methodology

NerdWallet averaged rates based on public filings obtained by pricing analytics company Quadrant Information Services. We examined rates for 40-year-old men and women for all ZIP codes in any of the 50 states and Washington, D.C. Although it’s one of the largest insurers in the country, Liberty Mutual is not included in our rates analysis due to a lack of publicly available information.

In our analysis, “good drivers” had no moving violations on record; a “good driving” discount was included for this profile. Our “good” and “poor” credit rates are based on credit score approximations and do not account for proprietary scoring criteria used by insurance providers. These are average rates, and your rate will vary based on your personal details, state and insurance provider.

Sample drivers had the following coverage limits:

  • $100,000 bodily injury liability coverage per person.

  • $300,000 bodily injury liability coverage per crash.

  • $50,000 property damage liability coverage per crash.

  • $100,000 uninsured motorist bodily injury coverage per person.

  • $300,000 uninsured motorist bodily injury coverage per crash.

  • Collision coverage with $1,000 deductible.

  • Comprehensive coverage with $1,000 deductible.

In states where required, minimum additional coverages were added. We used the same assumptions for all other driver profiles, with the following exceptions:

  • For drivers with minimum coverage, we adjusted the numbers above to reflect only the minimum coverage required by law in the state.

  • We changed the credit tier from “good” to “poor” as reported to the insurer to see rates for drivers with poor credit. In states where credit isn’t taken into account, we only used rates for “good” credit.

  • For drivers with one at-fault crash, we added a single at-fault crash costing $10,000 in property damage.

  • For drivers with a DUI, we added a single drunken driving violation.

We used a 2018 Toyota Camry LE in all cases and assumed 12,000 annual miles driven.

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