Whether you have a set of shiny new wheels or a decaying rust bucket, cheap car insurance is a must for staying legal on the road. The good news? You have more control over factors that influence your auto insurance rates than those that affect other types of coverage, such as life insurance or home insurance.
The No. 1 key to finding affordable car insurance is to find and compare cheap car insurance quotes in your area, which you can do by entering your ZIP code below:
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If you’re looking for a deeper dive into cheap car insurance, this guide covers four of the best cheap car insurance companies. I’ll also cover lesser-known discounts, discuss what kinds of auto insurance you really need, and outline several strategies that will help you save on car insurance in 2015, no matter what insurer you choose.
Best Cheap Car Insurance Companies
The four auto insurance companies below have quality coverage and are traditionally some of the most affordable options around. But remember — due to a number of personal factors, your mileage may vary when shopping for cheap car insurance. Instead of blindly picking from this list, make sure you shop around before buying a new policy.
- Nationwide
- State Farm
- Travelers
- Progressive
How I Chose the Best
To pick the best cheap car insurance companies, I narrowed the field to auto insurers with a nationwide reach so you can benefit from the most inexpensive coverage no matter where you live. From there, I obtained a quote for “Marie,” a married 40-year-old woman from Columbus, Ohio, who drives a 2006 Honda Odyssey. I focused on three no-frills, inexpensive coverage options:
- State minimum liability coverage: In Ohio, that’s $25,000 in bodily injury liability per person, $50,000 in bodily injury liability per accident, and $25,000 in property damage liability.
- State minimum liability plus $25,000 per person and $50,000 per accident in uninsured and underinsured bodily liability.
- All of the above, plus comprehensive and collision coverage with $1,000 deductibles.
I also considered how easy the quote process was, including how long it took to get a quote for each company and how much personal information Marie had to give up, as well as available car insurance discounts. Though “cheap” is king in this study, I also looked at the company’s financial strength rating as measured by A.M. Best. Finally, I examined the company’s rankings in the latest J.D. Power customer service satisfaction survey as a tiebreaker in cases where results were close.
Nationwide
Nationwide delivered some of the lowest quotes for my driver, Marie, especially for the most basic coverage. Marie would pay just shy of $28 a month for state-minimum coverage, and only a couple dollars more than that to add uninsured and underinsured motorist liability. Her total topped out at just under $51 a month with $1,000 deductibles for comprehensive and collision insurance. Nationwide also offers at least 15 discounts for drivers to keep quotes as low as possible.
The company also had a straightforward quote process that took only four minutes from beginning to end. To get a quote, Marie didn’t have to fork over her Social Security number, but she did need to input her phone number. Nationwide suggested three straightforward coverage options (minimum, standard, and premium) that were easily customizable.
True to its name, Nationwide auto insurance has a national reach, and A.M. Best gives it a superior A+ rating for financial strength. However, with the exception of the north-central U.S., the company is rated at the middle or bottom of the pack for customer satisfaction in J.D. Power’s annual survey.
State Farm
State Farm’s quotes were low, but not the lowest Marie received. She would pay just shy of $33 for state-minimum coverage, $35 to add uninsured and underinsured motorist liability, and $63 with $1,000 deductibles for comprehensive and collision insurance. The company offers at least a dozen known discounts.
State Farm’s quote process was a bit more detailed than most, taking about five minutes from start to finish. Marie had to input either her Social Security or driver’s license number to complete the process. Like Nationwide, she was given three tiers of coverage (basic, premium, and a level similar to her current coverage) that were easy to tweak.
State Farm is the nation’s largest auto insurer, with 18,000 agents spread across every state. It ranks consistently well for customer satisfaction, rating above average in most of the regions of the J.D. Power survey. It also gets A.M. Best’s top marks, A++, for financial strength.
Travelers
Travelers offered very low rates for Marie: just $31 for state-minimum coverage, $34 to add uninsured and underinsured motorist liability, and only $47 to include $1,000 deductibles for comprehensive and collision insurance. The company offers roughly a dozen known discounts, including for defensive driving and low mileage.
Another strong point: The quote process with Travelers was very easy, taking only about three minutes from start to finish. Much of the information was pre-filled with the most likely answers, and no Social Security number was required. A nice “People Like You” feature also gave Marie an idea of whether she was choosing coverage that others in similar situations would pick.
Travelers auto insurance is available across the U.S., and the company has 12,000 agents. It gets A.M. Best’s top marks, A++, for financial strength. Unfortunately, it earns uneven rankings in the J.D. Power survey. While New Yorkers are particularly satisfied with Travelers, the company earns mediocre or poor marks for customer satisfaction in the rest of the regions where it’s ranked.
Progressive
With Progressive, Marie would pay a reasonable $37 a month for state-minimum coverage, $40 to add uninsured and underinsured motorist liability, and just $48 to tack on comprehensive and collision insurance with $1,000 deductibles. The company has at least a dozen known discounts, including breaks for insuring multiple vehicles, good students, and military personnel.
Like Travelers, Progressive’s quote process was quick and painless, clocking in at just three minutes. The company is fairly aggressive in marketing its insurance bundles, so you’ll have plenty of opportunities to add other coverage types if you need them (or click “no thanks” if not).
You can choose to see quotes by basic tiered levels, or you can opt to see coverage similar to what you already have. If budget is king, you can also name your price and see what it will get you. A coverage checker warns you when you’re probably buying too little insurance — or too much.
Progressive has a national reach and more than 30,000 agents. It’s all over the map in the J.D. Power customer satisfaction survey, but is in the middle of the pack in most regions. A.M. Best gives it a superior A+ rating for financial strength.
Where to Find Car Insurance Discounts
Once you’ve seen some rates, you need to dig in on exploiting discounts — the key to cheap car insurance rates. Many car insurance companies have discounts that go beyond bundling or insuring multiple vehicles, and some of them are less obvious than you may think.
Driving schools
Driving education is an often overlooked discount opportunity. Teen drivers are very expensive to insure, but one great way to lower that burden is through defensive driving training.
Drivers who have passed an accredited driver’s ed class or defensive driving training are eligible for up to a 10% discount, according to DriversEd.com. Plus, if you’ve recently received a ticket, enrolling in a defensive driving course can prevent the premium hike on your insurance (though most companies only let you do this once every 12 months).
Defensive driving courses cover topics such as traffic laws, drug- and alcohol-impaired driving, and inclement-weather driving and are often available online or at commercial driving schools. Courses for defensive driving can be found through your DMV or through local community centers.
In fact, defensive driving education is required in at least 15 states including Texas, Nevada, New Jersey, Virginia, Oklahoma, Oregon, New York, Iowa, Kansas, Nebraska, New Mexico, Louisiana, North Carolina, Illinois and Mississippi.
After completing a defensive driving course, participants will receive a completion certificate that can be presented to insurance companies in order to qualify for a discount. Depending on the insurance company, drivers may also have to retake the course and be current on their certification in order to continue receiving the discount. Classes are flexible and offered on a consistent basis, however, and learning defensive driving skills is an easy way to save money and become a more comfortable driver.
If you aren’t the only person covered on your auto policy, consider getting all the drivers on your policy to take a defensive driving and you can be eligible for additional discounts.
Good student discounts
These discounts are typically given to drivers under the age of 25 who are enrolled full time at a high school or college/university and are maintaining at least a 3.0 grade point average or are on the honor roll or dean’s list.
In order to prove satisfactory academic achievement and receive the discount, students need a current transcript or a letter signed by a school administrator. Students who are home-schooled can present standardized test results, such as SAT or ACT scores, that are within a desired percentile range depending on the insurance provider in order to qualify.
Good grades can continue helping students save money even after school is out because some insurance companies extend this discount to post-grads for a limited time.
- Related: Student Guide to Car Insurance
Safe-driver discounts
Drivers with a clean driving record, a standard that is determined by each individual insurance provider, are eligible for hefty discounts.
Although there is no universal definition of safe driving, insurance companies generally mean avoiding collisions and accidents for which you can be found at fault and avoiding moving violations such as speeding, driving under the influence, or reckless driving.
Having a clean record can not only give you a discount on your insurance, it can save you a lot more money in the short term.
Resident student discounts
These discounts can be offered to students attending college more than 100 miles away from home. They are intended to be used exclusively by those students who are not planning to drive the insured vehicle while at school but may use it while they are home for vacations.
Other discounts
- Most insurance companies have active-duty military and veterans discounts.
- Discounts exist for car alarm systems or other safety equipment.
- Many insurers will even lower your rate if you pay your annual premium upfront or automate your payments.
Ask companies for a full list of discounts while you’re shopping, since they may not publicize all of them.
Major Car Insurance Types
Though companies offer several more nuanced options and add-ons, the three major types of auto insurance boil down to:
- Liability coverage
- Collision coverage
- Comprehensive coverage
Liability coverage
Liability coverage, required by law in most states, covers the other driver’s personal injury and property damage in a crash where you’re at fault. Importantly, it does not cover your own injuries or property damage. Buying only liability insurance is always going to be your cheapest option, though not necessarily the wisest. Sometimes it makes sense to carry only liability coverage, and sometimes it doesn’t. More on this in a minute.
You’ll probably see your liability coverage written like this on your quote or car insurance policy: $50,000/$100,000/$50,000 (or 50/100/50). That means you have $50,000 in bodily injury coverage for each person, $100,000 in bodily injury coverage total, and $50,000 in coverage for property damage. Each state requires its own minimum amount of liability insurance for you to stay legal.
Buying the bare minimum is tempting since it will keep your rates as low as possible. Unfortunately, that’s a bad idea — a bad crash can mean your costs will easily surpass low state minimums, and then you’ll have to pay up. If you don’t have the money, that will leave your other assets vulnerable.
Collision coverage
There is also collision coverage, which covers the damage to your car sustained in a crash. Most commonly, this covers crashes when you’re at fault, but it may also pay in certain circumstances when another driver is at fault, or in scenarios not covered under your other policies.
The cost of your collision coverage will largely depend on your car’s value, but you do control the deductible — the amount you pay out of pocket before your insurance company picks up the rest of the tab.
Comprehensive coverage
True to its name, comprehensive car insurance covers almost any car-related calamity you can think of minus damage resulting from a crash. Instead, comprehensive policies pay for things like auto theft, damage from severe weather, or needed repairs after a late-night rendezvous with a disoriented deer.
Comprehensive coverage is meant to complement collision coverage, not replace it. Like collision coverage, the cost will depend on your car, but you control your deductible.
What Types of Car Insurance Do I Really Need?
Comprehensive and collision coverage seem like a smart choice, but they come with a much heftier price tag than liability-only insurance. If you took out a loan to pay for your car, you probably don’t have a choice — your lender will require proof of comprehensive and collision coverage. And dropping comprehensive or collision coverage isn’t a good idea for anyone without the savings to pay for repairs out of pocket.
But there are situations when opting only for liability makes sense. For instance, if you drive an older, paid-off vehicle that you can easily fix or replace, keeping only liability coverage can mean significant savings. Comprehensive and collision coverage may also be overkill on any car you drive sparingly.
To see how much I would save on auto insurance by nixing all coverage but liability, I plugged my own stats into a quote generator. I’m a married female in my early 30s driving a paid-off 2011 Hyundai Sonata. I live in a small Southern city, have a clean driving record, and average 12,000 miles a year. A policy with 50/100/50 in liability, as well as comprehensive and collision policies with $250 deductibles, would set me back $45 a month. Dropping the comprehensive and collision policies would bring my bill down to just $24 a month.
Would I do it? No, since my car is still relatively new and would cost a significant sum to repair or replace. But let’s say I have a beat-up 2004 Nissan Altima with 150,000 miles on it. Replacing it would probably only cost about $2,000, a sum I could cover with my emergency fund if my car was totaled. Suddenly, cutting my car insurance bill nearly in half by dropping comprehensive and collision coverage makes a lot more sense.
Bottom line: Liability coverage is your cheapest option and will keep you legal on the road, but dropping collision and comprehensive coverage might be a risky move if it would be a major financial hardship to fix or replace your car after an accident.
Other types of coverage
There are a number of other coverage types and add-ons, some of which may be required in certain states. Of particular note is personal injury protection, which pays your medical expenses after a crash.
There’s also uninsured or underinsured motorist coverage, which means you won’t be left on the hook after a crash where the other driver is at fault but doesn’t carry enough (or any) insurance and can’t afford to pay. Other add-ons pay for rental cars while your car is being fixed and for roadside assistance.
If you’re trying to keep your bill low, personal injury coverage probably isn’t a smart buy as long as you have a good health insurance plan — there would be too much overlap between the two policies.
However, uninsured and underinsured motorist coverage is a decent bet, especially in areas with a high percentage of uninsured drivers. It’s also fairly inexpensive: Adding both options to my GEICO quote boosted my monthly bill by only a few dollars.
As for other little add-ons, consider skipping them. If you can cover the cost of a rental (or borrow a car from a friend while you’re in a jam), rental-car riders are unnecessary, and a AAA membership is often a better deal than roadside assistance coverage if you have an older vehicle.
What car insurance is required in my state?
Each state has different requirements when it comes to car insurance. Many simply require liability insurance (both bodily injury and property damage). Others go a step or two further, requiring add-ons such as personal injury protection and uninsured or underinsured motorist coverage.
According to the Insurance Information Institute, here are the kinds of insurance each state requires as of September 2015, as well as the minimum required amounts of liability insurance. The only state that does not require liability insurance is New Hampshire; however, that state still mandates that you show you have sufficient funds to meet state requirements if you’re at fault in a crash.
| Types of insurance required | Minimum required liability insurance (bodily injury per person/bodily injury per accident/property damage liability, in thousands) | |
| Alabama | Bodily injury liability, property damage liability | 25/50/25 |
| Alaska | Bodily injury liability, property damage liability | 50/100/25 |
| Arizona | Bodily injury liability, property damage liability | 15/30/10 |
| Arkansas | Bodily injury liability, property damage liability, personal injury protection | 25/50/25 |
| California | Bodily injury liability, property damage liability | 15/30/5 |
| Colorado | Bodily injury liability, property damage liability | 25/50/15 |
| Connecticut | Bodily injury liability, property damage liability, uninsured motorist, underinsured motorist | 20/40/10 |
| Delaware | Bodily injury liability, property damage liability, personal injury protection | 15/30/10 |
| District of Columbia | Bodily injury liability, property damage liability, personal injury protection, uninsured motorist | 25/50/10 |
| Florida | Property damage liability, personal injury protection | 10/20/10 |
| Georgia | Bodily injury liability, property damage liability | 25/50/25 |
| Hawaii | Bodily injury liability, property damage liability, personal injury protection | 20/40/10 |
| Idaho | Bodily injury liability, property damage liability | 25/50/15 |
| Illinois | Bodily injury liability, property damage liability, uninsured motorist, underinsured motorist | 25/50/20 |
| Indiana | Bodily injury liability, property damage liability | 25/50/10 |
| Iowa | Bodily injury liability, property damage liability | 20/40/15 |
| Kansas | Bodily injury liability, property damage liability, uninsured motorist, underinsured motorist | 25/50/10 |
| Kentucky | Bodily injury liability, property damage liability, personal injury protection | 25/50/10 |
| Louisiana | Bodily injury liability, property damage liability | 15/30/25 |
| Maine | Bodily injury liability, property damage liability, uninsured motorist, underinsured motorist, medical payments | 50/100/25 |
| Maryland | Bodily injury liability, property damage liability, personal injury protection, uninsured motorist, underinsured motorist | 30/60/15 |
| Massachusetts | Bodily injury liability, property damage liability, personal injury protection, uninsured motorist, underinsured motorist | 20/40/5 |
| Michigan | Bodily injury liability, property damage liability, personal injury protection | 20/40/10 |
| Minnesota | Bodily injury liability, property damage liability, personal injury protection, uninsured motorist, underinsured motorist | 30/60/10 |
| Mississippi | Bodily injury liability, property damage liability | 25/50/25 |
| Missouri | Bodily injury liability, property damage liability, uninsured motorist | 25/50/10 |
| Montana | Bodily injury liability, property damage liability | 25/50/10 |
| Nebraska | Bodily injury liability, property damage liability, uninsured motorist, underinsured motorist | 25/50/25 |
| Nevada | Bodily injury liability, property damage liability | 15/30/10 |
| New Hampshire | Uninsured motorist, underinsured motorist, medical payments | 25/50/25 (minimum available in NH, but not required by state law if you show sufficient funds) |
| New Jersey | Bodily injury liability, property damage liability, personal injury protection, uninsured motorist, underinsured motorist | 15/30/5 |
| New Mexico | Bodily injury liability, property damage liability | 25/50/10 |
| New York | Bodily injury liability, property damage liability, personal injury protection, uninsured motorist,wrongful death | 25/50/10 |
| North Carolina | Bodily injury liability, property damage liability, uninsured motorist, underinsured motorist | 30/60/25 |
| North Dakota | Bodily injury liability, property damage liability, personal injury protection, uninsured motorist, underinsured motorist | 25/50/25 |
| Ohio | Bodily injury liability, property damage liability | 25/50/25 |
| Oklahoma | Bodily injury liability, property damage liability | 25/50/25 |
| Oregon | Bodily injury liability, property damage liability, personal injury protection, uninsured motorist, underinsured motorist | 25/50/25 |
| Pennsylvania | Bodily injury liability, property damage liability, personal injury protection | 15/30/5 |
| Rhode Island | Bodily injury liability, property damage liability | 25/50/25 |
| South Carolina | Bodily injury liability, property damage liability, uninsured motorist | 25/50/25 |
| South Dakota | Bodily injury liability, property damage liability, uninsured motorist, underinsured motorist | 25/50/25 |
| Tennessee | Bodily injury liability, property damage liability | 25/50/15 |
| Texas | Bodily injury liability, property damage liability | 30/60/25 |
| Utah | Bodily injury liability, property damage liability, personal injury protection | 25/65/15 |
| Vermont | Bodily injury liability, property damage liability, uninsured motorist, underinsured motorist | 25/50/10 |
| Virginia | Bodily injury liability, property damage liability, uninsured motorist, underinsured motorist | 25/50/20 |
| Washington | Bodily injury liability, property damage liability | 25/50/10 |
| West Virginia | Bodily injury liability, property damage liability, uninsured motorist | 25/40/10 |
| Wisconsin | Bodily injury liability, property damage liability, uninsured motorist | 25/50/10 |
| Wyoming | Bodily injury liability, property damage liability | 25/50/20 |
Six Tips to Find Cheap Auto Insurance
Now that you know what kind of car insurance you need, it’s time to do a little more legwork to get a good deal.
Certain factors that affect your car insurance rates are largely beyond your control. These include basic demographics such as your age, gender, marital status, location, and job.
But other factors, including what and how you drive, are easier to change. And everyone can comparison shop, exploit discounts, and consider bundling policies to find the cheapest car insurance companies, too.
Tip #1: Shop around
It’s a no-brainer, but it always pays to shop around for cheaper car insurance. Instead of wasting time making endless phone calls or filling out the same information on dozens of websites, save time by using an online quote tool. Online quote tools help you get a quick snapshot of potential rates from several auto-insurance companies at once.
The results of your search can surprise you. Don’t assume a certain provider will be the cheapest auto insurance company because it was the case for your family or friends. So many factors affect your rate that you’ll never know which company will come out on top until you compare apples to apples. Use the tool below to start your search. Not every company will appear using our quote tool. GEICO, in particular, only quotes prices via its own website.
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Tip #2: Bundle policies
Many car insurance companies will give you a discount if you have other policies with them. For instance, you may get a break on car insurance if you use the same provider for life, home, or renter’s policies. Bundled policies are convenient, too; you’ll be dealing with only one bill and one company.
A note of caution: Don’t automatically assume bundles will save you money. Companies that offer only auto insurance may offer compelling discounts to keep your business. Sometimes that means you get cheaper car insurance if you keep policies with separate insurers.
Tip #3: Boost your deductible
Your deductible is what you pay out of pocket before your insurance covers the rest of the cost to fix or replace your car. A plan with a $250 deductible will generally cost more than one with a $1,000 deductible.
For a real-world example, I plugged my own stats into a quote generator from Progressive, changing only the deductible to see how it would affect my rate. As mentioned earlier, I’m a married female in my early 30s driving a 2011 Hyundai Sonata. I live in a small Southern city, have a clean driving record, and average 12,000 miles a year.
With a $100 deductible on comprehensive and collision coverage, I would pay roughly $120 a month. Raising that deductible to $250 brought my bill down to about $100 a month. A $500 deductible reduced my monthly bill to $90, and a $1,000 deductible pushed it down to $82. That means I get to hold onto $456 a year if I go with the $1,000 deductible instead of the $100 deductible — not a bad sum.
However, raising my deductible is a good move for me only because I have $1,000 set aside in an emergency fund to cover the higher deductible. If you don’t have cash stashed away to pay the higher deductible in case of a crash or other calamity, raising your deductible isn’t the wisest move. Also keep in mind that factors such as your age and driving record will affect how much raising your deductible will save you.
Tip #4: Drive a low-risk car
Powerful, sporty luxury cars are always the most expensive to insure. These cars have the power to go extremely fast, and insurance companies know their drivers are more likely to get into trouble. These cars also cost a lot more to fix and are attractive targets for thieves — all situations your insurance company wants to avoid.
The most expensive 2015 car to insure, the 600-horsepower Nissan GT-R Nismo, will set you back about $3,574 a year in car insurance, according to Insure.com. Right behind it are a slew of high-powered or luxury rides including the Mercedes-Benz SL65 AMG Convertible, Dodge SRT Viper, Porsche 911 Carrera S Cabriolet, and Audi R8 5.2 Spyder Quattro, all of which still top $3,000 a year.
If you don’t have six figures to drop on a car, here’s some good news: Family-friendly vehicles including minivans, sedans, and smaller SUVs cost the least to insure. Their drivers tend to be more careful, ultimately filing fewer claims. These vehicles are simpler to fix and they aren’t quite as tempting for thieves.
The cheapest car to insure, the Jeep Wrangler Sport, will set you back only about $1,134 a year in premiums. The Jeep Patriot Sport, Honda CR-V LX, Dodge Journey SXT, and Honda Odyssey EX-L are similarly easy on the wallet.
Ultimately, the choice is yours, but a less-glamorous ride can help you nab cheap auto insurance.
Tip #5: Change your driving habits
Insurance is all about risk. If you get a speeding ticket every month, your bill will skyrocket. If you’ve had a clean driving record for years, you will have cheaper car insurance. Unfortunately, cleaning up a spotty driving record can take time.
A quicker way to save that’s often overlooked? Simply drive less. Consider your options carefully: Can you carpool? Work from home? Use mass transit or even move closer to your job? All of these options can help you save since less time behind the wheel means less chance of a claim. Be sure to tell your insurer about your new habits, though.
Tip #6: Maintain good credit
It may seem unfair, but the vast majority of car insurance companies look at your credit score to help determine your rate. If you have good credit, your insurer assumes you’ll be more responsible behind the wheel. Bad credit means you’re statistically more likely to file a claim, insurers say.
According to consumer advocacy group United Policyholders, a rock-bottom credit score could mean you’ll pay double, triple, or even quadruple over someone with a perfect credit score.
This controversial practice is illegal in four states: California, Hawaii, Maryland, and Massachusetts. If you don’t live in those states, you’ll want to work on raising your credit score in your quest for cheap auto insurance.
It’s Time to Save on Car Insurance
Ready to get started? A little legwork now can save you big in the long run. And remember to re-evaluate your car insurance at least annually. Your own changing circumstances and old-fashioned competition always have the potential to hook you a cheap car insurance policy.
Now that you know what you need and how to save, compare rates from several car insurance companies to start your search. Our streamlined quote tool can help you get multiple cheap car insurance quotes quickly.
If you want to learn more about car insurance, check out some of The Simple Dollar’s past articles on the subject:
- How Much Does Car Insurance Cost?
- Best Car Insurance Companies of 2015
- Do You Need Rental Car Insurance?
- Steering Clear of Car Insurance Scams
The post Best Cheap Car Insurance Options appeared first on The Simple Dollar.
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