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To find the cheapest car insurance available where you live, you’ll need to do a bit of research. To aid in your search, MoneyGeek analyzed dozens of insurance companies across hundreds of cities to determine which companies offer the lowest premiums. In addition, we examined data by driver type to help determine which company may be the best fit for your needs. For our study, the companies represented here are available in at least 29 states. While they may not offer the cheapest car insurance rates for everyone, they will offer the best deal for many drivers.

In researching affordable car insurance, it’s essential to get a personalized car insurance quote for the most accurate rates. That’s because car insurance quotes are based on factors such as location, age, driving record and type of vehicle. We recommend getting at least three quotes for a fair comparison of rates.

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Ensure you are getting the best rate for your car insurance. Compare quotes from the top insurance companies.

The Cheapest Car Insurance Quotes for Most Drivers

During our research, MoneyGeek found that the average driver — defined as a 40-year-old male with no driving violations and 100/300/100 comprehensive/collision coverage with a $1,000 deductible — can save up to 26.5% on car insurance when comparing car insurance quotes.

MoneyGeek’s study found that USAA* was the cheapest car insurance company for average drivers; however, USAA is available only to military families. For non-military drivers, the cheapest car insurance company is Geico. The annual Geico premium for the average driver is $1,047, which is more than $300 less than the national average of $1,379.

GEICO

Offering a full range of car insurance coverage plus a variety of discounts to keep rates low, GEICO is 37.9% less than MetLife, which as the most expensive car insurance company, has an average annual premium of $1,686. GEICO customers can enjoy the convenience of obtaining and maintaining their car insurance policy online or in the GEICO mobile app.

Company
Amountper year
1. GEICO
In 2020, GEICO ranked #1 in US for the cheapest car insurance for the average driver.
$1,047
2. State Farm
In 2020, State Farm ranked #2 in US for the cheapest car insurance for the average driver.
$1,235
3. Nationwide
In 2020, Nationwide ranked #3 in US for the cheapest car insurance for the average driver.
$1,341
4. Allstate
In 2020, Allstate ranked #4 in US for the cheapest car insurance for the average driver.
$1,351
5. Progressive
In 2020, Progressive ranked #5 in US for the cheapest car insurance for the average driver.
$1,381
6. Travelers
In 2020, Travelers ranked #6 in US for the cheapest car insurance for the average driver.
$1,525
7. Farmers
In 2020, Farmers ranked #7 in US for the cheapest car insurance for the average driver.
$1,578
8. MetLife
In 2020, MetLife ranked #8 in US for the cheapest car insurance for the average driver.
$1,686

*Although USAA provided the cheapest rates in MoneyGeek's study, the provider is only available to military members, veterans and their families, so GEICO was ranked as the most affordable for most drivers.

All quotes were determined by selecting an average driver profile for insurance companies throughout the country in hundreds of cities and every state. All companies listed here are available in a minimum of 29 states.

Cheapest Car Insurance for Drivers With Tickets or Accidents

Drivers with moving violations or accidents on their driving record may discover they have higher car insurance rates than drivers with clean driving records. Car insurance companies see these drivers as a higher risk to insure, and your rates will reflect that risk. One way to keep rates low in the event of an accident is by purchasing accident forgiveness coverage with your car insurance. This option can help you avoid a rate increase in the event of an accident when you are at fault. Companies such as Allstate, Nationwide and Geico offer this option.

Cheapest for Drivers With a Ticket

When comparing drivers with tickets or accidents to the average driver with a clean driving record, drivers with a ticket can expect to pay 22.4% more on average, while drivers with an accident could see increases of 36.3% on average.

GEICO

Car insurance typically costs more with a ticket or accident on your record. Drivers with GEICO can expect to pay an average of 34.4% more if they have a speeding ticket than drivers without a ticket. However, GEICO* has the best rates for most drivers with a ticket.

Company
Amountper year
1. GEICO
$1,407
2. State Farm
$1,503
3. Nationwide
$1,561
4. Allstate
$1,652
5. Progressive
$1,964
6. Farmers
$2,058
7. MetLife
$2,084
8. Travelers
$2,167

*In MoneyGeek's study, USAA provided the lowest rates with an average premium of $1,015 per year. However, USAA is available only to military families, veterans and their families, so GEICO is the most affordable option for most drivers.

Cheapest for Drivers With an Accident

Compared to the average driver, drivers with an accident on their record can expect to pay an average of $813 more than those without an accident on their record.

State Farm

State Farm* offers affordable car insurance policies. At $1,583, State Farm’s annual premium is 28.1% lower than the average cost to insure a driver with an accident on their record.

Company
Amountper year
1. State Farm
$1,583
2. GEICO
$1,660
3. Nationwide
$1,950
4. Allstate
$2,034
5. Farmers
$2,364
6. Travelers
$2,373
7. Progressive
$2,452
8. MetLife
$3,114

*In MoneyGeek's analysis, USAA offered the lowest rates for drivers with an accident on their record, with an average annual premium of $1,337. However, because USAA is only available to military members, veterans and their families, State Farm is the most affordable option for most drivers.

Cheapest Car Insurance by Coverage Type

Car insurance is available with a range of options, but most states require all drivers to have liability insurance. Liability insurance covers the injuries of others and their property when you are at fault in an accident. The maximum monetary amount of coverage is expressed in three numbers, such as 50/100/50. This equates to $50,000 for injuries to one individual, $100,000 for all injuries sustained in an accident and $50,000 for property damage.

Liability-Only Insurance

Because liability insurance covers the other vehicle if you are at fault in an accident, it is usually the most affordable option for coverage. Depending on your assets, income, and ability to cover vehicle damages or injury costs, you may wish to increase your insurance.

GEICO

For most drivers, GEICO* is the cheapest car insurance company for 50/100/50 liability coverage, with an average annual premium of $628. That’s almost half of the annual premium for MetLife, the most expensive company in this category. GEICO customers can use the mobile app to manage and update their car insurance coverage as needed.

Company
Amountper year
1. GEICO
$628
2. Nationwide
$798
3. State Farm
$800
4. Allstate
$868
5. Progressive
$888
6. Travelers
$960
7. Farmers
$995
8. MetLife
$1,143

*In MoneyGeek's study, USAA had the lowest annual rates for liability policies. However because USAA is available for military members, veterans and their families only, GEICO is the most affordable choice for most drivers.

Full Coverage Insurance

While not required by states, some lenders or lease companies may require you to have full coverage that includes liability, collision and comprehensive insurance. This is additional coverage that covers damage to your car, even if it is stolen or damaged due to weather. The average annual premium for the average driver for a 50/100/50 liability policy is $898, while the price for a 100/300/100 full coverage policy is $1,424.

GEICO

GEICO* is the cheapest car insurance option for 100/300/100 full coverage with comprehensive and collision. The average annual premium is $941, which is 28.3% less than the average premium cost for this category and 41.7% less than MetLife, the most expensive company.

Company
Amountper year
1. GEICO
In 2020, GEICO ranked #1 in US for the cheapest car insurance for the average driver.
$1,047
2. State Farm
In 2020, State Farm ranked #2 in US for the cheapest car insurance for the average driver.
$1,235
3. Nationwide
In 2020, Nationwide ranked #3 in US for the cheapest car insurance for the average driver.
$1,341
4. Allstate
In 2020, Allstate ranked #4 in US for the cheapest car insurance for the average driver.
$1,351
5. Progressive
In 2020, Progressive ranked #5 in US for the cheapest car insurance for the average driver.
$1,381
6. Travelers
In 2020, Travelers ranked #6 in US for the cheapest car insurance for the average driver.
$1,525
7. Farmers
In 2020, Farmers ranked #7 in US for the cheapest car insurance for the average driver.
$1,578
8. MetLife
In 2020, MetLife ranked #8 in US for the cheapest car insurance for the average driver.
$1,686

*According to MoneyGeek's study, USAA provides the lowest rates for full coverage car insurance, with an average annual premium of $883. However, because USAA is only available to military members, veterans and their families, GEICO is the typically the cheapest option for most drivers.

Cheapest Car Insurance for Drivers With Bad Credit

One of the personalized factors car insurance companies consider when determining your car insurance rates is your credit score. In general, those with higher credit scores file fewer claims than those with lower credit scores. According to the National Association of Insurance Commissioners (NAIC), car insurance companies may offer higher rates to drivers with lower credit scores to compensate for this elevated risk. However, California, Massachusetts and Hawaii prohibit car insurance companies from using credit scores to evaluate drivers. In MoneyGeek’s study, the average premium for drivers with poor credit is $2,670, while the average premium for average drivers with good credit is $1,424.

GEICO

For most drivers, GEICO* is the cheapest car insurance company if you have bad credit. The average annual premium of $1,681 is nearly $1,000 less than the average annual premium for the category.

Company
Amountper year
1. GEICO
In 2020, GEICO ranked #1 in US for the cheapest car insurance for the average driver.
$1,681
2. Nationwide
In 2020, Nationwide ranked #2 in US for the cheapest car insurance for the average driver.
$1,781
3. Allstate
In 2020, Allstate ranked #3 in US for the cheapest car insurance for the average driver.
$2,254
4. Travelers
In 2020, Travelers ranked #4 in US for the cheapest car insurance for the average driver.
$2,490
5. State Farm
In 2020, State Farm ranked #5 in US for the cheapest car insurance for the average driver.
$2,527
6. Progressive
In 2020, Progressive ranked #6 in US for the cheapest car insurance for the average driver.
$2,475
7. Farmers
In 2020, Farmers ranked #7 in US for the cheapest car insurance for the average driver.
$3,281
8. MetLife
In 2020, MetLife ranked #8 in US for the cheapest car insurance for the average driver.
$4,248

*Although USAA provided the lowest average rate of $1,460 for drivers with poor credit in MoneyGeek's study, this provider is only available to military members, veterans and their families. Therefore, GEICO is the most affordable option for most drivers.

Cheapest Car Insurance for Students

Because they are new to driving, students often are seen as high-risk drivers, which is reflected in higher car insurance rates for teen drivers. To keep these rates low, students should be added to an existing family policy rather than having a separate policy of their own. In fact, you should shop around to find the best rates for a family policy with a student as rates vary from car insurance company to company. The average annual premium for policies with students added is $3,332 compared to $1,424 for the average driver.

Allstate

Allstate is the cheapest car insurance for students with an average annual premium of $2,980 when added to a family policy, which is almost $650 less than Nationwide, the most expensive option for students on average. Allstate offers its policyholders teenSMART, a training program providing on driving skills to help reduce collision risk. The company’s Drivewise program also monitors drivers’ driving habits that can result in extra savings.

Company
Amountper year
1. Allstate
In 2020, Allstate ranked #1 in US for the cheapest car insurance for the average driver.
$2,980
2. State Farm
In 2020, State Farm ranked #2 in US for the cheapest car insurance for the average driver.
$3,083
3. GEICO
In 2020, GEICO ranked #3 in US for the cheapest car insurance for the average driver.
$3,164
4. Progressive
In 2020, Progressive ranked #4 in US for the cheapest car insurance for the average driver.
$3,171
5. Nationwide
In 2020, Nationwide ranked #5 in US for the cheapest car insurance for the average driver.
$3,629

Cheapest Car Insurance for Military Members

USAA

Many car insurance companies offer special rates to current and retired military members, so it’s essential to shop for policies explicitly geared to military members. USAA is geared toward military families and generally has the cheapest car insurance rates for active military members and veterans. However, GEICO often has good rates as well, thanks to its 15% military discount. To make sure you get the best rates, get personalized quotes from at least three car insurance companies.

Cheapest Car Insurance Companies by State

Where you live is another personalized factor that car insurance companies consider when evaluating your risk as a driver. Companies look at a location for the number of speeding tickets issued and how many car accidents occur to determine how risky it is for drivers. In addition, some states require more insurance coverage, while others require less. Every state except Florida and New Hampshire requires a minimum amount of liability insurance for bodily injury and personal property. Alaska and Maine have the highest minimum coverage requirement amounts (50/100/25), while California, New Jersey and Pennsylvania have the lowest required coverage amounts (15/30/5).

Some states, such as Delaware and Montana, require additional special coverage, including underinsured motorist and personal injury protection. Underinsured motorist coverage provides coverage when the at-fault driver’s insurance is inadequate to cover all costs and damages. Personal injury protection provides coverage for medical payments.

The two most expensive states where USAA car insurance is available are New York and Louisiana. When USAA, which is available only to military families and veterans, is removed from the evaluation, the two most expensive states are Michigan and New York. The two least expensive states for car insurance with USAA rates factored into the analysis are Idaho and Maine. Without USAA insurance, the two least expensive states are Maine and Iowa.

Find Cheap Car Insurance by State

AlabamaGEICO is the cheapest in ALBirmingham

AlaskaGEICO is the cheapest in AKAnchorage

ArizonaGEICO is the cheapest in AZPhoenix, Tucson, Mesa, Chandler, Scottsdale, Glendale, Gilbert

ArkansasSouthern Farm Bureau is the cheapest in ARLittle Rock

ColoradoGEICO is the cheapest in CODenver, Colorado Springs, Aurora

ConnecticutGEICO is the cheapest in CTBridgeport

DelawareState Farm is the cheapest in DEWilmington

District Of ColumbiaGEICO is the cheapest in DC

GeorgiaNationwide is the cheapest in GAAtlanta

HawaiiGEICO is the cheapest in HIHonolulu

IdahoState Farm is the cheapest in IDBoise

IllinoisGEICO is the cheapest in ILChicago

IndianaErie is the cheapest in INIndianapolis, Fort Wayne

IowaGEICO is the cheapest in IADes Moines

KansasAmerican Family is the cheapest in KSWichita
KentuckyState Farm is the cheapest in KYLouisville, Lexington

LouisianaSouthern Farm Bureau is the cheapest in LANew Orleans, Baton Rouge

MaineGEICO is the cheapest in MEPortland

MarylandErie is the cheapest in MDBaltimore

MassachusettsSafety Group is the cheapest in MABoston

MichiganGEICO is the cheapest in MIDetroit

MinnesotaFarmers is the cheapest in MNMinneapolis, St. Paul

MississippiTravelers is the cheapest in MSJackson

MissouriAllstate is the cheapest in MOKansas City, St. Louis

MontanaState Farm is the cheapest in MTBillings

NebraskaGEICO is the cheapest in NEOmaha, Lincoln

NevadaGEICO is the cheapest in NVLas Vegas, Henderson, Reno, North Las Vegas

New HampshireProgressive is the cheapest in NHManchester

New JerseyGEICO is the cheapest in NJNewark, Jersey City

New MexicoMetLife is the cheapest in NMAlbuquerque

New YorkGEICO is the cheapest in NYBuffalo, New York

North DakotaNodak Mutual is the cheapest in NDFargo
OhioGEICO is the cheapest in OHColumbus, Cleveland, Cincinnati, Toledo

OklahomaGEICO is the cheapest in OKOklahoma City, Tulsa

OregonGEICO is the cheapest in ORPortland

PennsylvaniaErie is the cheapest in PAPhiladelphia, Pittsburgh

Rhode IslandState Farm is the cheapest in RIProvidence

South CarolinaGEICO is the cheapest in SCCharleston

South DakotaState Farm is the cheapest in SDSioux Falls

TennesseeGEICO is the cheapest in TNNashville, Memphis

UtahGEICO is the cheapest in UTSalt Lake City

VermontVermont Mutual is the cheapest in VTBurlington

VirginiaProgressive is the cheapest in VAVirginia Beach, Norfolk, Chesapeake, Richmond

WashingtonPEMCO is the cheapest in WASeattle, Spokane, Tacoma

West VirginiaErie is the cheapest in WVCharleston

WisconsinGEICO is the cheapest in WIMilwaukee, Madison

WyomingState Farm is the cheapest in WYCheyenne
AlabamaGEICO is the cheapest in ALBirmingham

AlaskaGEICO is the cheapest in AKAnchorage

ArizonaGEICO is the cheapest in AZPhoenix, Tucson, Mesa, Chandler, Scottsdale, Glendale, Gilbert

ArkansasSouthern Farm Bureau is the cheapest in ARLittle Rock

ColoradoGEICO is the cheapest in CODenver, Colorado Springs, Aurora

ConnecticutGEICO is the cheapest in CTBridgeport

DelawareState Farm is the cheapest in DEWilmington

District Of ColumbiaGEICO is the cheapest in DC

GeorgiaNationwide is the cheapest in GAAtlanta

HawaiiGEICO is the cheapest in HIHonolulu

IdahoState Farm is the cheapest in IDBoise

IllinoisGEICO is the cheapest in ILChicago

IndianaErie is the cheapest in INIndianapolis, Fort Wayne

IowaGEICO is the cheapest in IADes Moines

KansasAmerican Family is the cheapest in KSWichita

KentuckyState Farm is the cheapest in KYLouisville, Lexington

LouisianaSouthern Farm Bureau is the cheapest in LANew Orleans, Baton Rouge

MaineGEICO is the cheapest in MEPortland

MarylandErie is the cheapest in MDBaltimore

MassachusettsSafety Group is the cheapest in MABoston

MichiganGEICO is the cheapest in MIDetroit

MinnesotaFarmers is the cheapest in MNMinneapolis, St. Paul

MississippiTravelers is the cheapest in MSJackson

MissouriAllstate is the cheapest in MOKansas City, St. Louis
MontanaState Farm is the cheapest in MTBillings

NebraskaGEICO is the cheapest in NEOmaha, Lincoln

NevadaGEICO is the cheapest in NVLas Vegas, Henderson, Reno, North Las Vegas

New HampshireProgressive is the cheapest in NHManchester

New JerseyGEICO is the cheapest in NJNewark, Jersey City

New MexicoMetLife is the cheapest in NMAlbuquerque

New YorkGEICO is the cheapest in NYBuffalo, New York

North DakotaNodak Mutual is the cheapest in NDFargo

OhioGEICO is the cheapest in OHColumbus, Cleveland, Cincinnati, Toledo

OklahomaGEICO is the cheapest in OKOklahoma City, Tulsa

OregonGEICO is the cheapest in ORPortland

PennsylvaniaErie is the cheapest in PAPhiladelphia, Pittsburgh

Rhode IslandState Farm is the cheapest in RIProvidence

South CarolinaGEICO is the cheapest in SCCharleston

South DakotaState Farm is the cheapest in SDSioux Falls

TennesseeGEICO is the cheapest in TNNashville, Memphis

UtahGEICO is the cheapest in UTSalt Lake City

VermontVermont Mutual is the cheapest in VTBurlington

VirginiaProgressive is the cheapest in VAVirginia Beach, Norfolk, Chesapeake, Richmond

WashingtonPEMCO is the cheapest in WASeattle, Spokane, Tacoma

West VirginiaErie is the cheapest in WVCharleston

WisconsinGEICO is the cheapest in WIMilwaukee, Madison

WyomingState Farm is the cheapest in WYCheyenne
AlabamaGEICO is the cheapest in ALBirmingham

AlaskaGEICO is the cheapest in AKAnchorage

ArizonaGEICO is the cheapest in AZPhoenix, Tucson, Mesa, Chandler, Scottsdale, Glendale, Gilbert

ArkansasSouthern Farm Bureau is the cheapest in ARLittle Rock

ColoradoGEICO is the cheapest in CODenver, Colorado Springs, Aurora

ConnecticutGEICO is the cheapest in CTBridgeport

DelawareState Farm is the cheapest in DEWilmington

District Of ColumbiaGEICO is the cheapest in DC

How to Get the Cheapest Car Insurance Quotes for You

Finding the cheapest car insurance can be simple when you compare the best car insurance companies and request personal quotes for your needs. Every car insurance company looks at several personalized factors for each driver. Furthermore, they evaluate these factors differently from company to company, which means rates will vary from company to company as well. Car insurance companies also offer a variety of discounts — some the same, some not — that will further affect rates.

Auto Insurance Rates

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Ensure you are getting the best rate for your car insurance. Compare quotes from the top insurance companies.

Shop Around to Get Multiple Quotes

Before purchasing any car insurance policy, you should get personalized quotes from at least three car insurance companies. Make sure you provide the same information to each company and ask for the quotes on the same day to ensure a fair comparison. Car insurance rates frequently fluctuate, so requesting quotes on the same day with the same information gives you the best picture of what’s available to you as the cheapest car insurance quotes.

Improve Your Driving Record

Drivers with speeding tickets or car accidents on their driving record are seen as a higher risk to car insurance companies, resulting in higher rates. Therefore, maintain good driving habits to keep your driving record clean. To help you with this, many car insurance companies now offer monitoring programs to track and provide feedback on your driving habits. As your driving habits improve, you could see additional savings on your car insurance rates.

Improve Your Credit

Although your credit score may not reflect your driving skills, car insurance companies still use credit scores to evaluate risk when compiling car insurance quotes. Therefore, by maintaining good credit and a high credit score, you can help keep your car insurance rates down. Review your credit report regularly to ensure it is accurate and doesn’t contain incorrect or false information that could bring your credit score down.

Drive a Less Expensive Vehicle

Another factor car insurance companies consider when deciding rates is the type of vehicle you drive. This includes a review of the vehicle’s safety record, how much it would cost to repair and its reputation for theft. For instance, driving a vehicle with a high safety rating that is not routinely stolen will equate to lower car insurance rates, while a sports car that is highly desired by thieves will result in higher car insurance quotes.

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Teens are typically more expensive to insure than adult drivers, but adding your teen to a family policy could mean big savings. Teen who are added to a family policy could save more than $1,800 on average per year compared to teens with their own policy.

Find Savings for Younger Drivers

As new drivers on the road, teen drivers inherently come with a higher risk than more experienced drivers. That higher risk is reflected in more expensive car insurance rates. To keep rates down, parents should add teen drivers to their existing family policy. In addition, shop around for good student discounts for teens with specific grade-point averages as well as college student discounts attending school a minimum distance away from home.

Raise Your Deductible

As a general practice throughout the insurance industry, it’s common for those paying a higher deductible to receive a lower premium. However, this is only a good move if you have the funds to pay a higher deductible should you have to file a claim. Otherwise, you may find yourself in a tough spot following an accident. If you choose to go with the lower premium and higher deductible, consider putting some savings in a specific account to draw upon if you have to file a claim.

Combine Home and Auto Policies

One of the most common discounts offered by car insurance companies is bundled coverage combining insurance on two or more items together under one policy. Often, this means bundling homeowners insurance with car insurance. Some companies also offer multi-policy discounts if you insure two or more vehicles—motorcycle, RV, boat, etc.—on the same policy. Shop around to find the best rates and discounts to ensure you get the cheapest car insurance.

Choose Lower Coverage Levels or Liability Only

In some instances, lowering your car insurance coverage or choosing only liability coverage can result in more affordable car insurance. For example, if you have an older car with a depreciated value, carrying full coverage may not provide much benefit. If your car’s value is less than 10 times your annual premium for collision and comprehensive coverage, liability only is the better choice. However, keep in mind that if your car is leased or financed, the lender likely requires full coverage.

Expert Advice on Finding Cheap Car Insurance

  1. Can low-cost car insurance mean drivers are sacrificing quality?

    The best answer to this question is that it depends. There are lower cost, highly rated companies. Many times these companies are not well known names to consumers, mostly because these companies do not market to the mainstream population. These lesser known companies can offer excellent customer service and rapid payment of claims. Often an independent insurance agent (one who offers the products of many companies) deals with many of these lesser known companies. There are also low cost companies that advertise heavily in local markets. If a premium seems exceptionally low, that very well might be a red flag. When it comes to insurance the lower cost should not be the only consideration. Do your homework and research the company.

    Low-cost car insurances usually come with limited coverages as well as high deductibles. Drivers are not “sacrificing” quality if they are aware of the drawbacks and have a fair expectation. If drivers are blindsided by the inaccurate information or deliberately blurred language in the advertisement, however, opting in low-cost auto insurance may bite them in the back later.

    The chief factors that drive rates are unrelated to the quality of coverage. These include the insured’s driving record, age, geographic location, type of car, length of commute, as well as the amount of coverage, the amount of deductible, and whether collision is excluded.

    It is conceivable that there are firms that reduce rates by cutting corners and claim disputes often occur. A company could reduce its rates by incentivizing claims adjustors to exclude legitimate accidents. Such shenanigans will encourage litigation, which might raise the company’s costs.

    In the long run, the biggest and best insurance companies are also the cheapest. This is consistent with the concept of total quality management: Firms that operate efficiently and produce the best products also have the lowest costs. Consumer Reports ranks insurance companies along the dimensions of premiums, claims, service, and policy review. The firms with the best ratings for premiums are also rated well in other respects.

    Before buying insurance, consumers should verify that insurance companies are legitimate by checking licensing information with the state insurance department.

    Shopping for car insurance is one of life’s great challenges. It’s tempting to think of car insurance as similar to buying the car itself: the lower the price, the more likely you’ll be hitchhiking by the time you hit the next intersection. However, this isn’t necessarily the case.

    During the last several decades, we’ve seen an expansion in industry competition and the services they provide for consumers. Different car insurance providers have different actuarial formulas for determining premiums; some might put a premium on geographic locations, others for factors like driving history, credit score, or data on crime or litigation costs. These factors are responsible for some of the differences you get when shopping around for car insurance.

    Competition in the industry has also fostered other factors to help consumers rate quality: customer service, particularly when filing a claim, has become incredibly important. High volumes and a diverse base of customers has helped many market leaders provide customizable policies, high customer service, and low prices. At the same time, car insurance premiums have risen about 6% annually since 2011, as greater incurred losses by insurers are passed on to policyholders.

    Low-cost insurances are marketed which meets state minimum liability limits. Each driver must evaluate their own risk factors, economic conditions as well as driving needs before purchasing auto insurance. Product price is matched with the services provided by the insurance company. The quality will depend on what the driver is looking for.

    No, not necessarily. There are many variables that go into the pricing of car insurance. Given the right mix of variables, a driver may have low-cost insurance that provides the appropriate level of coverage that is wanted and needed. Some of the variables include a driver's age, gender, driving history to include accidents and traffic violations, the age and shape of the vehicle, the locations the vehicle travels to and where it is parked, annual mileage put on the vehicle, and driver credit score. The combination of outcomes for these variables will dictate the cost. Drivers who are classified as risky based upon the combination of outcomes will pay a higher premium than those who are deemed less risky.

    Absolutely. There is no shortage of cut-rate insurance carriers out there offering low premium rates for coverage that, while meeting the minimum requirements, can leave the insured wishing for more. Essentially, there are two major pitfalls where going with the cheapest insurance plan can backfire. The first is receiving inadequate coverage and ending up in an unfortunate situation where a particular incident is not covered, so the insurance plan does not issue a payout. The second is having an unpleasant experience filing a claim, interacting with the insurance carrier, receiving timely feedback, etc. The first issue often comes up because cut-rate insurance plans may not include uninsured and underinsured driver coverage or rental car coverage. If you are a victim of a hit-and-run incident or even if the other driver – who is at fault – doesn’t leave the scene of the accident, but doesn’t have insurance, you may be out of luck. Similarly, if your vehicle is damaged and needs repair, and your plan doesn’t include a rental car provision, you may be having to come up with other transportation solutions on your own. The second issue can arise when it’s time to contact your carrier to file a claim following an accident. One way that many basic carriers are able to offer lower rates is the savings they realize by not having a wide network of agents, staff to answer phones 24 hours a day, sophisticated websites and mobile apps that you can use to get in touch. What this means is that you may experience delays, have to spend more time on the phone, etc. – all of which can be very unpleasant if you have just had a car accident.

    Not true. It depends on how the cost savings come about. Higher deductibles and low operation cost by the insurer could help reduce the rate drastically. For those buying a new car and like the added services of “human” agents, they have to pay higher rates.

    Like with anything else, consumers usually get what they pay for. So, by buying low-cost car insurance drivers are possibly sacrificing quality in case they get in an accident. Substandard quality may manifest as unreasonably denying a claim, unfairly accepting to cover some items, or unjustly misclassifying the claim in order to lower the amount the insurance company will cover. The bottom line, drivers must do their due diligence and check both their insurance agency and the insurance companies that offer them quotes.

    In order to sell insurance, companies need to meet certain standards. Consumers can verify if an insurance company or agent is legitimate by checking with the National Association of Insurance Commissioners (NAIC) (https://content.naic.org/). Once you verify if a company is legitimate, you can then start comparing insurance companies. You can also check consumer satisfaction surveys related to auto insurance on the J.D. Power website (https://www.jdpower.com/awards).

    Because premium cost can vary widely between companies, a consumer needs to compare “apples” to “apples”. When comparing, make sure you are verifying that you are looking at policies that have the same deductible and coverage.

    The lowest-cost car insurance providers are not necessarily the lowest-quality insurers. However, one has to be aware that costs that are too low may mean fewer and slower services when claims are made. There could also be a greater potential inability to pay claims due to inadequate reserves associated with rates that may be too low. Firms periodically rank the best car insurance companies based on such factors as pricing and discounts, ease of filing a claim, website transparency, and complaint data.

    Most likely, yes. The economics of insurance explains this. When you buy insurance, you are buying a right to a payment if something happens. The expected cost of the payout influences the price of the policy. You can get the expected cost down by being a good risk: if you have a history of not getting an accident, then perhaps the probability of your getting into an accident will be low -- insurance companies like this type of person. Another way to reduce the expected cost to the insurance company is by driving an older car with a lower market value. Finally, you can buy insurance of "low quality" that doesn't provide you with a lot of coverage. If there isn't a lot of coverage, the expected cost of an accident will be lower than if you have more coverage. What would happen if "high quality" insurance had a low price? Everyone would want it and the actual costs due to insurance payouts would outstrip the premiums collected and the company that offered the policy would go bankrupt!

    Not necessarily! Even a quick Internet search for low-cost car insurance shows that many companies advertise for low cost auto insurance that still maintains quality. Of course, “quality” is a word that means different things to different people. The idea is to balance cost and quality. First, establish your parameters in terms of what you are willing to pay and also what you are willing to accept in terms of quality. That is, what do you need and want your insurance to do for you? The reality is that sometimes people do not know what they need (even if they think they do) or see some of the holes that might be they are and cause them potential problems in the future. A good and ethical insurance agent will be able to help with each person’s individual circumstances and needs. You can also ask opinions from others about their insurance coverage, which is a good way to get a consumer opinion, though their needs do not necessarily match your own.

    Also, another way to help ensure quality while keeping the cost low is to shop around. It is something that seems obvious but sometimes is difficult for whatever reason to put into practice. Another advantage of the Internet (and I certainly remember the world before the Internet was so ubiquitous!) is that you can do your homework ahead of time. It is often easy to get a general idea of what kind of coverage is available from different companies. Of course, an Internet estimate is not a quote, so be sure you know exactly what is being given – an estimate or a firm quote.

    Not necessarily. It depends on the coverage and the customer service provided by the insurance company. The auto-insurance market is very competitive and easy to shop around. Providing a bad experience would mean the customer hopping onto a different insurance company. Accordingly, most insurance firms provide good customer service.

    Not necessarily. While it is important for drivers to be aware of the exact terms of their policy, higher premiums do not automatically translate into better coverage. One of the most important determinants of the costs of car insurance is whether the insurance company views the policyholder as a safe driver.

    The answer to this depends on the definition of quality and how one arrives at a low cost. First and foremost, you should get what you pay for. If by low quality, one means that the company fails to honor its agreements, then no, low-cost car insurance should not mean drivers are sacrificing quality. If one’s auto insurance does fail to live up to its agreements then one should consider legal action. Someone may purchase “low-cost insurance” by sacrificing a great deal of coverage, e.g. a policy with high deductibles and low limits. While this may feel like low quality, it is exactly what one agreed to pay for. In that instance, such a policy may be insufficient, but still of high quality. If, however, one defines low quality as receiving fewer perks, perhaps a slightly longer delay in payment, restrictions on mechanic choice, less accommodating customer service, and generally lower coverage options, then that is possible. When comparing auto insurance amongst the largest providers (GEICO, Allstate, StateFarm, Progressive, etc.), potential customers should compare quotes across similar coverage levels and choose the cheapest option. Customers should feel generally comfortable that they are not sacrificing quality – competition amongst those companies is so fierce that quality is not likely to be sacrificed.

    The short answer is not necessarily. “Good” insurance doesn't necessarily mean expensive insurance. As with any insurance product, the size of the risk that the buyer is trying to transfer must first be determined. The younger driver with few assets to protect from a lawsuit may reasonably have lower liability limits and thus lower premiums while still having good, or at least adequate insurance.

    Not necessarily. Some drivers’ past and present behaviors contribute greatly to lower costs. However, one must know what you are paying for. The old economic principle of “You get what you pay for” is certainly true in this case. However, this does not mean you necessarily need all the bells and whistles.

    It depends on the coverage limits. If low cost means lower liability limits, then the lower costs are leading to a lower quality product. If an agent recommends lowering your liability coverage to reduce costs then find another agent. Drivers need adequate liability limits to protect their resources and also other people they may accidentally harm in an accident.

  2. What steps can drivers take to lower their car insurance costs?

    Shop for insurance companies that offer safe driver incentives or discounts, like diminishing deductibles. If you have teenage drivers, many companies offer a discount, if the teen completes an online “safe driver program”. Many companies offer discounts if you are willing to put a monitoring device in your car. If you can afford a higher out of pocket cost in the event of an accident, choosing a higher deductible can lower rates. Lastly, if your budget allows, pay your policy in full to avoid multiple payment service charges.

    Having a good driving record certainly helps because the insurance cost is tied with the expected indemnities paid to the drivers upon accidents. However, the costs of auto insurance may go beyond the fairly expected loss due to the adverse selection problem that arises from the asymmetric information between the insurance companies and the customers. Thus, it is important for drivers to disclose accurate information such as driving habit, uses of vehicle, etc. to insurance companies when purchasing a policy. Another way to mitigate the information asymmetry problem is to join the safe driving award programs provided by the insurance companies such as the Drivewise from Allstate and Snapshot from Progressive.

    Insurance companies interpret statistical data differently, so it pays to shop for the best rate among reputable insurers. As with health insurance, personal habits and plan design affect costs. Having a good credit record, avoiding moving violations, and avoiding long commutes are ways to reduce auto insurance costs. Substituting mass transit for a long commute will help. Buying an expensive, difficult-to-repair sports car will raise your premium, while a 17-year-old Camry is cheaper to insure.

    Anti-lock brakes, airbags, daytime running lights, anti-theft devices, and electronic stability control can reduce costs. Geographic location affects rates. Rates are lower in some states than in others, and rates are lower in lower-density than in urban environments. As well, most insurers in most states offer a discount for a defensive driving course.

    Plan design will also affect costs. These include deductibles and limits. Dropping collision or comprehensive coverage on older cars will also reduce premiums. If your aim is to minimize costs, consider driving a used rather than a new car. In their classic book The Millionaire Next Door, Thomas Stanley and William Danko point out that self-made millionaires tend to drive big, used cars. This likely helps them keep their insurance rates low.

    If you pay your premium monthly, consider paying in a lump sum when the bill first arrives.

    Car insurance carriers use a lot of information to determine your premium, from factors within your control (such as driving history) to facts that are more difficult to change (like geographic location). When you’re looking to lower your car insurance costs, the most obvious goal is to keep your driving history under control. Do your best to avoid speeding tickets, moving violations, and accidents, which can increase your premium for years to come.

    Nathaniel Hawthorne wrote, “Time flies over us, but leaves its shadow behind.” With car insurance, you do carry your driving history with you (citations usually last for anywhere between three and seven years). However, time works to your advantage: higher incident rates among younger drivers mean their premiums are often far higher than older adults. Maintaining a good credit score will also help.

    As complex as actuarial formulas behind your car insurance premium might be, the underlying factors can be easily understood. Always ask yourself, “what can I do to reduce the risk to my vehicle?”. You’ll pay lower premiums for driving a less expensive, safer car; for parking your car in a garage rather than outside and driving fewer miles. Insurance firms often ‘package’ car insurance with other products (like home insurance) to provide discounts.

    Cost is one of the main considerations when drivers are evaluating their insurance needs. The following are some of the suggestions to lower car insurance costs:

    • Evaluate personal and/or family driving needs. Match the needs with the cost, risk factors, and safety steps one can take to make sure they are compliant with the state insurance requirements and quality of insurance they are looking for.
    • Periodically take driver safety classes by contacting local driving clubs, community colleges and their own auto insurance companies.
    • Eliminate or reduce all impediments while driving like cell phones, audio/video communications, drinking/eating, communications with the passengers and maintain your focus on driving.
    • If driving to a new destination, review the map, familiarize yourself with the directions as well as road conditions.
    • Always maintain a safe driving speed, follow road conditions, rules, regulations as well as pay attention to work area conditions.
    • When purchasing or driving a new vehicle, familiarize yourself before getting into the vehicle. If purchasing a vehicle, evaluate safety features and get as many as one can afford.
    • Shop around and compare what competing auto insurance companies are offering.
    • Bundling multiple insurance policies can save money. For example, if one can bundle a homeowner's insurance policy or renter's insurance policy with a personal umbrella policy and an auto insurance policy all with the same insurance provider, they may receive a discount.
    • Ask the insurance provider what discounts may be available, such as safe driver discounts, good student discounts, military discounts, and occupational discounts.
    • Having safety features on the vehicle, such as antilock brakes, airbags, daytime running lights, and sensors that alert when the vehicle veers out of lane or to signal a potential collision can provide for discounts.
    • If there are multiple drivers on one policy, removing the poor driver(s) from the policy can reduce rates.

    The best thing you can do is shop around for auto insurance at least once per year. It costs nothing to get quotes from multiple carriers – all it takes is a few minutes on the phone. Staying with the same insurance provider for many years can sometimes yield some modest benefits; for example, some firms provide a small “loyalty” discount for repeatedly renewing your plan with them. But they also have little to no incentive to pass on any new savings to you at renewal, and it may be the case that your circumstances have changed enough to warrant a new rate. For example, you may have reached an age where rates can be lower, your marital or family status may have changed, you may have relocated to a new zip code with fewer traffic incidents or bought a house with a garage, and so on. What shopping around does is force an insurance provider to actually “re-price” your coverage, taking into account your current characteristics and criteria. Additionally, there are some things you can do as a driver. First, it goes without saying that being a safe driver can help you save on insurance: that means keeping a clean driving record, avoiding at-fault accidents and traffic citations. Second, keep in mind that newer, exotic and more expensive cars are – surprise – more expensive to insure; conversely, insurance coverage on an older (but still safe) car is more affordable. Third, it never hurts to complete a defensive driving course every couple of years. If you have a moving violation that is eligible for it, taking a course can help you have the citation resolved without it affecting your driving record. But even if you don’t have a traffic ticket, submitting the completion certificate from a safe driving course to your insurance provider can get you a 5-10 percent discount, and it is usually good for two years. Lastly, most if not all insurance providers that sell other types of coverage – home, rental, etc. – will give discounts to have multiple policies with them, so make sure that whenever you switch carriers, to switch other policies over as well, or at the very least inquire about quoting those other plans and make the decision with this information in hand.

    Insurance companies charge a premium based on a set of criteria to determine the risk of losses. The age of the driver is about the only thing that cannot be changed. Practice driving safe, going to a safe-driving program, take a higher deductible, and don't buy vehicles that are high risk - all could reduce your insurance premium.

    Aside from the common sense measures (using mass transit, insurance shopping, increasing deductibles, installing an anti-theft device) other ways to lower car insurance premiums include bundling car and home insurance, getting a good student discount (whenever a child is in the policy), switching to a vehicle which, unlike sports cars or SUVs, are less expensive to insure. In addition, some employers have negotiated discounts with some insurers. Such an employee benefit could save money for some drivers without sacrificing quality.

    Many things are factored in when calculating the cost of car insurance premiums, which include driving history, age, gender, and credit history. Some of these items you don’t have any control over, like your age. However, avoiding accidents and keeping a good credit history can help save you money every month on your insurance costs. There are other ways like attending driving courses, or if you are a young driver, getting good grades. Some insurance companies will also provide discounts if you bundle multiple policies together. Finally, if you are willing to accept higher risk in the form of a higher deductible, you can decrease premium payments. But, you need to make sure you can afford to pay that higher deductible if something were to happen.

    One more strategy is that if your vehicle is paid off, you can change to liability coverage. It is important to note that if something happens to your vehicle, it will then not be covered under the insurance plan, so you must be willing to accept the risk.

    Drivers should always shop around and compare quotes to get the best rates for the car insurance sought. They should also check for multi-car discounts and savings when bundling car and home insurance. Today, drivers should make use of the free information that is available online about car insurance costs for various plans.

    If you're driving an older car, consider eliminating collision and comprehensive insurance coverage on the car once the premium exceeds 50% of the car's value. If you are a homeowner, consider not bundling your auto and home insurance together; bundling discourages shopping around for better deals and if you are complacent, insurance companies might incrementally raise your rates bit by bit over time hoping you won't leave them. You should drive safely to lower your riskiness to the insurance companies. Also, try not to get traffic tickets! If you are caught speeding, the insurance companies will infer that you are a bad risk and raise your rates.

    Insurance companies often offer ways to lower costs. One way is to have longevity with the company, and that also relates to another method, which is bundling. There is a certain company whose ads you have probably seen on television that seems to specialize in bundling, but you can get bundles from a variety of companies. In short, if you have multiple belongings insured with the same company, such as a renter’s or homeowner’s policy, multiple vehicles, etc., they can lower your premium.

    Another way to lower car insurance costs is not to get involved in too many auto accidents – especially if they are deemed to be your fault. Of course, that factor will vary based on whether you are in a so-called “no-fault” state in which responsibility is shared between each driver’s insurance company, regardless of fault in the accident.

    Along those same lines, there are often safe driving discounts. Some companies have tracking mechanisms, for example, that let the company track your driving, how much you drive, how fast you drive relative to the speed limit, etc. If they feel that you are a safe driver, it is not difficult to see why they are willing to give you a discount.

    All of the above are good ways to help get insurance at a lower cost and keep it down while simultaneously maintaining quality.

    There are several steps one could take to lower car insurance costs. It starts with the type of car. One could purchase smaller cars, as insurance on SUVs, larger trucks, and expensive cars cost more. One could also purchase cars that have safety features, as well as anti-theft devices. One should shop around for better premiums, bundle with home insurance, and if possible take advantage of multi-car discounts. Following traffic laws while driving will help, and some insurance companies may even provide a discount for taking a defensive driving course. One could also increase the deductible but should be careful about this issue. You don't want the deductible to be so high to render the insurance almost useless. Having a good credit score may also help in reducing car insurance costs.

    While shopping around for competitive rates never hurts, the surest path towards permanently lowering your premium is through building a reputation of being a safe driver. This takes time, but it pays off in the long run. Nothing helps you lower your auto insurance costs more than years of a clean driving record.

    One can always sacrifice coverage for a lower cost: one could choose a liability-only policy, choose higher deductibles, skip roadside assistance coverage, lower their bodily injury/medical/property damage coverage, and forego comprehensive insurance. There is a gradient of reasonableness in these instances. Sacrificing almost all coverage to save on costs generates extreme levels of risk. To be clear, auto insurance should not be viewed as simply a box one must check to be allowed to legally drive. The purpose of auto insurance is to ensure that the necessary financial resources are in place to protect the driver, the driver’s passengers, and any third party who is negatively impacted by the accident. Failing to provide for these financial resources completely defeats the purpose of insurance. At the same time, overprotection is simply a wasted expense – one must choose the right balance. Auto insurance companies generally have a recommended level of coverage and drivers should seriously consider these levels. The most appropriate steps that all drivers should take to lower their auto insurance costs are to strive to be safe, low-risk, drivers who do not speed, stop at all stop signs, etc. Driving under the influence should never happen. Bundling is also a great way to save money. Inquire with each auto insurance provider to see which discounts may be available. Lastly, staying with a company for a longer amount of time may result in a discount, but at the same time such a discount may not be high enough to avoid switching – it is a situational basis.

    There are several factors that go into determining a premium on automobile insurance. Type of car, use of the car, the area where the car is garaged, how safe the driver of the car is, what size physical damage deductible is requested, the age and gender of the driver, and the liability limits chosen are some of the items that go into calculating a premium. For example, a late-model Lexus, personal use only, located in Crossville TN, the driver of the car having no speeding tickets, with $1,000 deductible comprehensive and collision coverage, the driver being Female age 25 with a single limit of liability of $500,000 can expect to have a lower premium than another Lexus owner, using it for business, in Nashville, TN, with one speeding ticket, with a $500 Comprehensive and Collision deductible, the driver being male 22 years old, with a single limit of liability of $1,000,000.

    Generally speaking, driving less means there is a smaller chance of getting into an accident. However, one may have to drive due to a longer commute to work, taking care of a family who is far away, etc. Thus, when one does drive, it is important to follow all laws carefully, including speed limits. One should attempt to drive no higher than the speed limit, especially due to inclement weather. Perhaps considering driving in the right lane more often and at a slower speed than the limit by five miles per hour. This not only reduces the chances of getting pulled over but is financially wise for the environment and the care of your vehicle. You may also want to consider usage-based insurance. If you are comfortable with the insurance company using your data, you can install an app or device in your car that tracks what you do and this can significantly lower your premiums and perhaps even give you cashback for safe driving. Last, using insurance companies for all of your vehicles and perhaps other needs can give you a multiple policy discount.

    First, lower your risk by driving responsibly and avoiding distractions. When you purchase a car, buy one that is rated highly by the Insurance Institute for Highway Safety. Safer vehicles save everyone money in the long run. If you have young drivers, consider buying an older, lower-valued vehicle and dropping Comprehensive and Collision coverage (but be sure it has a good safety rating). Lastly, improving your credit score can lower your premiums. It may seem strange, but most insurers will factor in your creditworthiness into their premium calculation.

  3. What is the best way for drivers to fit auto insurance expenses into their budget?

    It depends on a person’s financial situation. If a consumer can afford it, they should take advantage of a policy that offers a reduced rate if the premium is paid in full at the beginning of the policy period. After paying the premium for the first year, you can place 1/12 of your insurance premium in a savings account monthly, for an annual policy, to ensure you have the funds when the bill comes due. You could follow a similar process for policies that have a 6-month term.

    To avoid “surprises” from auto insurance renewal expenses, I would recommend drivers to choose the premium payment frequency that matches their paychecks. In cases where drivers are not given the options to pay at the desired frequency, they may utilize the installment payment services provided by credit card companies to smooth the cash flows over a longer period.

    Treat your car insurance just as a mortgage company forces you to treat homeowners’ insurance. Deposit one-twelfth of the premium in a short-term bond fund each month so that you have the total premium ready when the premium comes due.

    With premiums rising around 6% annually, insurance expenses are becoming a bigger part of the budget. That said, the best way for consumers to ensure they’re getting the best deal is to shop around – look at premiums across a number of different firms. Moving to cities or towns with lower auto theft and incident rates might be an option, but reducing the size of your car and improving your credit rating are under your control. Consider investing in a theft-prevention device, like a car alarm, which can lower your monthly premium.

    Coverage questions also become an issue: on one hand, it’s always ‘easiest’ to cut costs by reducing costs or increasing your deductible. We don’t know when our next accident will happen, so if you increase your deductible, be sure you have enough money in savings to cover losses during an accident. Also, be mindful of the minimum requirements for insurance set by your state, and reduce coverage only after you’ve explored other offers.

    One’s budget and economic conditions continually change. This makes it imperative that one evaluates their own driving needs, risk factors, and state requirements and match it with their budget. One should take advantage of the various discounts offered by insurance companies. Additionally, when purchasing an automobile make sure you know what safety features it has. Safety features provide an additional discount.

    Drivers should budget their insurance expenses along with their monthly car payment even if they pay auto insurance semiannually or annually. Setting aside a pro rata portion for insurance out of every paycheck will reinforce its importance. Driving is a privilege and it is illegal to drive without insurance in most states. Given the potential harm that can be sustained in an auto accident, regardless of fault, auto insurance should never be an afterthought. If an individual cannot afford auto insurance, then they should refrain from driving until they can and use an alternate mode of transportation in the meantime.

    Think of auto insurance premium as your cellphone bill or your internet bill – you have to have the service, so set up an auto-payment plan through your bank and forget about it. Unlike an internet plan or your phone bill, this is one payment you do not want to forget and miss or even be late on: lapses in auto coverage do translate into higher premiums later.

    Check the insurance premium before buying that 'dream’ car! Don’t let that dream car be your nightmare. A common mistake people make is they tend to be less careful if they know they have “good insurance”. Don’t submit claims just because you can. That always leads to a higher insurance premium in the future.

    If the company offers monthly or quarterly premiums, drivers could spread out the insurance cost throughout the year. However, drivers must be on the lookout for insurers who demand an excessive fee to allow for such a payment scheme.

    Paying a monthly premium instead of semi-annually may be the easiest way to make sure you have budgeted for your auto insurance expense. It is easier to fit fixed expenses into a budget than occasional expenses. Most insurance companies will charge a small fee if you choose to pay your premium monthly, but it is typically only a few dollars a month.

    Typically, the largest budget items are mortgage or rent and car loan or lease payments. One should consider the portion of income going to these two items, and realize that an auto insurance expense is going to be a percentage of the car price. This expense may range from 5 to 12 percent, depending on the extent of coverage, so drivers should take into account what percentage is affordable.

    Insurance payments are recurring payments -- just like your cell phone bill but paid more infrequently. If your budget is tight, it's best to simply put aside an amount each month to be able to cover the future insurance bill. In other words, consider your insurance premium as outside of your disposable income and then live your life!

    When I give budget advice in general, I usually recommend prioritizing. That means also balancing the long term with the short term. Food and shelter generally top the list as essential items in the budget for obvious reasons. Automobile related expenses are generally in the top category as well if it is necessary for getting to work since the car plays a vital role in earning income for the current and future periods. Letting auto insurance lapse can create a multi-period problem from which it can be difficult to recover. So, if we take food, shelter, and auto insurance as top-ranked items in the budget, my next advice usually is to try to find areas in which one can economize. Often there are areas in which alternatives can be found to reduce costs. It does not always have to be a case of giving up one thing to get something else. Sometimes tough choices have to be made. And sometimes something can be given up in one month in favor of auto insurance, but be added back in during future months. In any case, if income is more or less at a constant level, then the best way to help ensure that there is money for food, shelter, and auto insurance is to find clever ways to cut costs.

    Budgeting for auto insurance expenses is similar to budgeting any other expenses, but specifically budgeting just for auto insurance, it should start around the time the car is purchased. The insurance policy premium needs to be made each year the car is owned even if the auto was paid for outright. Part of the budgeting for auto also requires budgeting for registration fees and fuel costs. The overarching perspective budgeting here is that only a fraction, say around 20%, of the take-home pay should go towards the auto budget.

    Insurance companies love safe drivers and they vie for their business. Avoid tickets, especially for more serious traffic offenses such as DUIs. Driving too fast might save you a few minutes at the time, but it exposes you to not only legal trouble but also higher insurance premiums for many years ahead. You can keep auto insurance affordable simply by driving responsibly.

    Firstly, drivers simply must budget for such expenses. Too many individuals fail to include insurance costs into their budget – so the best way for drivers to fit auto insurance expenses into their budgets is to fit auto insurance into their budgets. Specifically, there are two general ways to pay for auto insurance: periodically and lump-sum. I encourage lump-sum if possible because it typically does save on costs. However, it generally feels like a higher cost because it happens all at once. In a perfect world, drivers would contribute a monthly amount to a car insurance savings fund and then use that money every six months to pay for the insurance lump-sum. This saves on costs and also takes away a bit of payment hassle. Of course, this may not be possible for many drivers. In which case, auto insurance should be treated as if it is a required expense that takes high priority in one’s budget and funds should be immediately taken from each paycheck to either pay the insurance bill or be shifted into an untouchable savings fund specifically set up for pay such bills. Automation is a great way to accomplish this – have it automatically paid/deducted or automatically shifted to another account.

    Most insurance companies have a direct withdrawal from a checking account monthly payment plan with little or no interest being charged. If interest charges are applicable, they must be balanced against the convenience of having the premiums automatically taken out of the driver’s checking account.

    There are two basic principles here. Treat it as a fixed, necessary expense like your utilities, food, etc. This is because, in Washington State, liability insurance is required. Think critically about how much insurance you need. You can do this by answering the question of how much risk are you willing to bear. Individuals who are willing to accept paying a higher deductible before insurance claims kick in will pay a lower insurance premium. Not only will only large claims be filed (which insurance companies like), this demonstrates financial savvy on your part. Perhaps keep enough put away in a savings account that equals your maximum deductible to use for those emergencies only.

    Nearly every state requires drivers to purchase a minimum amount of liability insurance, so this is a necessary expense. If it can't be fit in the budget, then they will need to use public transportation or a ride-sharing service.


  • Jim Snooks
    Jim SnooksAssociate Professor of Business at Moraine Valley Community College
    Jie Ying
    Jie YingAssistant Professor of Finance at Southern Illinois University Edwardsville
    Mitchell Langbert
    Mitchell LangbertAssociate Professor of Business Management at Brooklyn College
    Reilly White
    Reilly WhiteAssociate Professor of Finance at the University of New Mexico
    Archish Maharaja
    Archish MaharajaProfessor of Business and Director of Graduate Programs at Point Park University
    Wendy Habegger
    Wendy HabeggerLecturer at James M. Hull College of Business at Augusta University
  • Dr. Mikhail Kouliavtsev
    Dr. Mikhail KouliavtsevDepartment Chair and Professor of Economics and Finance at Stephen F. Austin State University
    Dr. Leo Chan
    Dr. Leo ChanAssociate Professor of Finance Economics at Utah Valley University
    Eliezer Fich
    Eliezer FichProfessor of Finance at Drexel University’s LeBow College of Business
    Carrie L. Johnson
    Carrie L. JohnsonAssociate Professor and Extension Specialist at North Dakota State University
    Dr. James Barth
    Dr. James BarthLowder Eminent Scholar in Finance at Auburn University
    Malcolm Robinson
    Malcolm RobinsonProfessor of Economics at Thomas More University
  • Rutherford Johnson
    Rutherford JohnsonLecturer of Economics at the University of Minnesota Crookston & General Conference Chair of the West East Institute
    Amit Sinha
    Amit SinhaProfessor of Finance and Quantitative Methods at Bradley University
    Aron Tobias
    Aron TobiasAssistant Professor of Economics at Syracuse University
    Jonathan Handy
    Jonathan HandyAssistant Professor of Finance at Western Kentucky University
    Hank Bahr
    Hank BahrAdjunct Lecturer at Haslam College of Business at The University of Tennessee, Knoxville
    Randy Beavers
    Randy BeaversAssistant Professor of Finance at Seattle Pacific University
  • David Marlett
    David MarlettManaging Director of Brantley Risk and Insurance Center, IIANC Distinguished Professor of Insurance at Appalachian State University
  • Jim Snooks
    Jim SnooksAssociate Professor of Business at Moraine Valley Community College
    Jie Ying
    Jie YingAssistant Professor of Finance at Southern Illinois University Edwardsville
    Mitchell Langbert
    Mitchell LangbertAssociate Professor of Business Management at Brooklyn College
    Reilly White
    Reilly WhiteAssociate Professor of Finance at the University of New Mexico
    Archish Maharaja
    Archish MaharajaProfessor of Business and Director of Graduate Programs at Point Park University
    Wendy Habegger
    Wendy HabeggerLecturer at James M. Hull College of Business at Augusta University
  • Dr. Mikhail Kouliavtsev
    Dr. Mikhail KouliavtsevDepartment Chair and Professor of Economics and Finance at Stephen F. Austin State University
    Dr. Leo Chan
    Dr. Leo ChanAssociate Professor of Finance Economics at Utah Valley University
    Eliezer Fich
    Eliezer FichProfessor of Finance at Drexel University’s LeBow College of Business
    Carrie L. Johnson
    Carrie L. JohnsonAssociate Professor and Extension Specialist at North Dakota State University
    Dr. James Barth
    Dr. James BarthLowder Eminent Scholar in Finance at Auburn University
    Malcolm Robinson
    Malcolm RobinsonProfessor of Economics at Thomas More University
  • Rutherford Johnson
    Rutherford JohnsonLecturer of Economics at the University of Minnesota Crookston & General Conference Chair of the West East Institute
    Amit Sinha
    Amit SinhaProfessor of Finance and Quantitative Methods at Bradley University
    Aron Tobias
    Aron TobiasAssistant Professor of Economics at Syracuse University
    Jonathan Handy
    Jonathan HandyAssistant Professor of Finance at Western Kentucky University
    Hank Bahr
    Hank BahrAdjunct Lecturer at Haslam College of Business at The University of Tennessee, Knoxville
    Randy Beavers
    Randy BeaversAssistant Professor of Finance at Seattle Pacific University
  • David Marlett
    David MarlettManaging Director of Brantley Risk and Insurance Center, IIANC Distinguished Professor of Insurance at Appalachian State University
  • Jim Snooks
    Jim SnooksAssociate Professor of Business at Moraine Valley Community College
    Jie Ying
    Jie YingAssistant Professor of Finance at Southern Illinois University Edwardsville
    Mitchell Langbert
    Mitchell LangbertAssociate Professor of Business Management at Brooklyn College
    Reilly White
    Reilly WhiteAssociate Professor of Finance at the University of New Mexico
    Archish Maharaja
    Archish MaharajaProfessor of Business and Director of Graduate Programs at Point Park University
    Wendy Habegger
    Wendy HabeggerLecturer at James M. Hull College of Business at Augusta University
  • Dr. Mikhail Kouliavtsev
    Dr. Mikhail KouliavtsevDepartment Chair and Professor of Economics and Finance at Stephen F. Austin State University
    Dr. Leo Chan
    Dr. Leo ChanAssociate Professor of Finance Economics at Utah Valley University
    Eliezer Fich
    Eliezer FichProfessor of Finance at Drexel University’s LeBow College of Business
    Carrie L. Johnson
    Carrie L. JohnsonAssociate Professor and Extension Specialist at North Dakota State University
    Dr. James Barth
    Dr. James BarthLowder Eminent Scholar in Finance at Auburn University
    Malcolm Robinson
    Malcolm RobinsonProfessor of Economics at Thomas More University
  • Rutherford Johnson
    Rutherford JohnsonLecturer of Economics at the University of Minnesota Crookston & General Conference Chair of the West East Institute
    Amit Sinha
    Amit SinhaProfessor of Finance and Quantitative Methods at Bradley University
    Aron Tobias
    Aron TobiasAssistant Professor of Economics at Syracuse University
    Jonathan Handy
    Jonathan HandyAssistant Professor of Finance at Western Kentucky University
    Hank Bahr
    Hank BahrAdjunct Lecturer at Haslam College of Business at The University of Tennessee, Knoxville
    Randy Beavers
    Randy BeaversAssistant Professor of Finance at Seattle Pacific University
  • David Marlett
    David MarlettManaging Director of Brantley Risk and Insurance Center, IIANC Distinguished Professor of Insurance at Appalachian State University
  • Jim Snooks
    Jim SnooksAssociate Professor of Business at Moraine Valley Community College
    Jie Ying
    Jie YingAssistant Professor of Finance at Southern Illinois University Edwardsville
    Mitchell Langbert
    Mitchell LangbertAssociate Professor of Business Management at Brooklyn College
    Reilly White
    Reilly WhiteAssociate Professor of Finance at the University of New Mexico
    Archish Maharaja
    Archish MaharajaProfessor of Business and Director of Graduate Programs at Point Park University
    Wendy Habegger
    Wendy HabeggerLecturer at James M. Hull College of Business at Augusta University
  • Dr. Mikhail Kouliavtsev
    Dr. Mikhail KouliavtsevDepartment Chair and Professor of Economics and Finance at Stephen F. Austin State University
    Dr. Leo Chan
    Dr. Leo ChanAssociate Professor of Finance Economics at Utah Valley University
    Eliezer Fich
    Eliezer FichProfessor of Finance at Drexel University’s LeBow College of Business
    Carrie L. Johnson
    Carrie L. JohnsonAssociate Professor and Extension Specialist at North Dakota State University
    Dr. James Barth
    Dr. James BarthLowder Eminent Scholar in Finance at Auburn University
    Malcolm Robinson
    Malcolm RobinsonProfessor of Economics at Thomas More University
  • Rutherford Johnson
    Rutherford JohnsonLecturer of Economics at the University of Minnesota Crookston & General Conference Chair of the West East Institute
    Amit Sinha
    Amit SinhaProfessor of Finance and Quantitative Methods at Bradley University
    Aron Tobias
    Aron TobiasAssistant Professor of Economics at Syracuse University
    Jonathan Handy
    Jonathan HandyAssistant Professor of Finance at Western Kentucky University
    Hank Bahr
    Hank BahrAdjunct Lecturer at Haslam College of Business at The University of Tennessee, Knoxville
    Randy Beavers
    Randy BeaversAssistant Professor of Finance at Seattle Pacific University
  • David Marlett
    David MarlettManaging Director of Brantley Risk and Insurance Center, IIANC Distinguished Professor of Insurance at Appalachian State University
  • Jim Snooks
    Jim SnooksAssociate Professor of Business at Moraine Valley Community College
    Jie Ying
    Jie YingAssistant Professor of Finance at Southern Illinois University Edwardsville
    Mitchell Langbert
    Mitchell LangbertAssociate Professor of Business Management at Brooklyn College
    Reilly White
    Reilly WhiteAssociate Professor of Finance at the University of New Mexico
    Archish Maharaja
    Archish MaharajaProfessor of Business and Director of Graduate Programs at Point Park University
    Wendy Habegger
    Wendy HabeggerLecturer at James M. Hull College of Business at Augusta University
  • Dr. Mikhail Kouliavtsev
    Dr. Mikhail KouliavtsevDepartment Chair and Professor of Economics and Finance at Stephen F. Austin State University
    Dr. Leo Chan
    Dr. Leo ChanAssociate Professor of Finance Economics at Utah Valley University
    Eliezer Fich
    Eliezer FichProfessor of Finance at Drexel University’s LeBow College of Business
    Carrie L. Johnson
    Carrie L. JohnsonAssociate Professor and Extension Specialist at North Dakota State University
    Dr. James Barth
    Dr. James BarthLowder Eminent Scholar in Finance at Auburn University
    Malcolm Robinson
    Malcolm RobinsonProfessor of Economics at Thomas More University
  • Rutherford Johnson
    Rutherford JohnsonLecturer of Economics at the University of Minnesota Crookston & General Conference Chair of the West East Institute
    Amit Sinha
    Amit SinhaProfessor of Finance and Quantitative Methods at Bradley University
    Aron Tobias
    Aron TobiasAssistant Professor of Economics at Syracuse University
    Jonathan Handy
    Jonathan HandyAssistant Professor of Finance at Western Kentucky University
    Hank Bahr
    Hank BahrAdjunct Lecturer at Haslam College of Business at The University of Tennessee, Knoxville
    Randy Beavers
    Randy BeaversAssistant Professor of Finance at Seattle Pacific University
  • David Marlett
    David MarlettManaging Director of Brantley Risk and Insurance Center, IIANC Distinguished Professor of Insurance at Appalachian State University
  • Jim Snooks
    Jim SnooksAssociate Professor of Business at Moraine Valley Community College
    Jie Ying
    Jie YingAssistant Professor of Finance at Southern Illinois University Edwardsville
    Mitchell Langbert
    Mitchell LangbertAssociate Professor of Business Management at Brooklyn College
    Reilly White
    Reilly WhiteAssociate Professor of Finance at the University of New Mexico
    Archish Maharaja
    Archish MaharajaProfessor of Business and Director of Graduate Programs at Point Park University
    Wendy Habegger
    Wendy HabeggerLecturer at James M. Hull College of Business at Augusta University
  • Dr. Mikhail Kouliavtsev
    Dr. Mikhail KouliavtsevDepartment Chair and Professor of Economics and Finance at Stephen F. Austin State University
    Dr. Leo Chan
    Dr. Leo ChanAssociate Professor of Finance Economics at Utah Valley University
    Eliezer Fich
    Eliezer FichProfessor of Finance at Drexel University’s LeBow College of Business
    Carrie L. Johnson
    Carrie L. JohnsonAssociate Professor and Extension Specialist at North Dakota State University
    Dr. James Barth
    Dr. James BarthLowder Eminent Scholar in Finance at Auburn University
    Malcolm Robinson
    Malcolm RobinsonProfessor of Economics at Thomas More University
  • Rutherford Johnson
    Rutherford JohnsonLecturer of Economics at the University of Minnesota Crookston & General Conference Chair of the West East Institute
    Amit Sinha
    Amit SinhaProfessor of Finance and Quantitative Methods at Bradley University
    Aron Tobias
    Aron TobiasAssistant Professor of Economics at Syracuse University
    Jonathan Handy
    Jonathan HandyAssistant Professor of Finance at Western Kentucky University
    Hank Bahr
    Hank BahrAdjunct Lecturer at Haslam College of Business at The University of Tennessee, Knoxville
    Randy Beavers
    Randy BeaversAssistant Professor of Finance at Seattle Pacific University
  • David Marlett
    David MarlettManaging Director of Brantley Risk and Insurance Center, IIANC Distinguished Professor of Insurance at Appalachian State University
  • Jim Snooks
    Jim SnooksAssociate Professor of Business at Moraine Valley Community College
    Jie Ying
    Jie YingAssistant Professor of Finance at Southern Illinois University Edwardsville
    Mitchell Langbert
    Mitchell LangbertAssociate Professor of Business Management at Brooklyn College
    Reilly White
    Reilly WhiteAssociate Professor of Finance at the University of New Mexico
    Archish Maharaja
    Archish MaharajaProfessor of Business and Director of Graduate Programs at Point Park University
    Wendy Habegger
    Wendy HabeggerLecturer at James M. Hull College of Business at Augusta University
  • Dr. Mikhail Kouliavtsev
    Dr. Mikhail KouliavtsevDepartment Chair and Professor of Economics and Finance at Stephen F. Austin State University
    Dr. Leo Chan
    Dr. Leo ChanAssociate Professor of Finance Economics at Utah Valley University
    Eliezer Fich
    Eliezer FichProfessor of Finance at Drexel University’s LeBow College of Business
    Carrie L. Johnson
    Carrie L. JohnsonAssociate Professor and Extension Specialist at North Dakota State University
    Dr. James Barth
    Dr. James BarthLowder Eminent Scholar in Finance at Auburn University
    Malcolm Robinson
    Malcolm RobinsonProfessor of Economics at Thomas More University
  • Rutherford Johnson
    Rutherford JohnsonLecturer of Economics at the University of Minnesota Crookston & General Conference Chair of the West East Institute
    Amit Sinha
    Amit SinhaProfessor of Finance and Quantitative Methods at Bradley University
    Aron Tobias
    Aron TobiasAssistant Professor of Economics at Syracuse University
    Jonathan Handy
    Jonathan HandyAssistant Professor of Finance at Western Kentucky University
    Hank Bahr
    Hank BahrAdjunct Lecturer at Haslam College of Business at The University of Tennessee, Knoxville
    Randy Beavers
    Randy BeaversAssistant Professor of Finance at Seattle Pacific University
  • David Marlett
    David MarlettManaging Director of Brantley Risk and Insurance Center, IIANC Distinguished Professor of Insurance at Appalachian State University

Methodology

All quotes were determined by selecting an average driver profile for insurance companies throughout the country in hundreds of cities and every state. All companies listed here are available in a minimum of 29 states. Learn more about MoneyGeek's methodology.

About the Author

Karon Warren is a freelance writer who has written for Lending Tree, Student Loan Hero, Magnify Money, Sapling and others.

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Sources