How to get cheap car insurance

8 steps to affordable car insurance

While there's no single guaranteed way to lower your car insurance rates, following these steps could help.

1. Compare multiple car insurance quotes

You should always get a second opinion on your car insurance rate. It’s important to shop around and compare rates before signing up for a policy. The perceived risk you pose as a driver determines the cost of auto insurance, and each insurance company evaluates a person's risk differently. We recommend getting a minimum of three quotes before making a final decision.

2. Determine what auto insurance coverage you actually need

In most states, liability coverage is required for any car on the road, but that’s just the beginning of your coverage options. Among the most common car insurance coverages are liability, uninsured and underinsured motorist, collision, medical payment and comprehensive. Each comes with its own benefits and costs.

Get at least three car insurance quotes before signing for a policy, and make sure you’re comparing rates for the coverage you actually need.

Some states may require insurance beyond liability, like medical payment coverage or personal injury protection. For example, Michigan requires unlimited personal injury protection, which drives insurance costs up in the area.

If you live in a state that only requires liability insurance, you’ll need to decide what coverage is right for you. You may want collision coverage or uninsured motorist coverage to feel safer on the road.

If you drive an older car that’s seen better days, you may opt to go without comprehensive coverage. Comprehensive pays out the car’s total value for numerous types of claims (like damage from weather or vandalism), but if that value is low, the premium may not be worth it.

3. Check for discounts

You may also qualify for one or more discounts from your insurance company. One of the most common discounts is the safe driver discount, which rewards you for maintaining an accident- and ticket-free record.

These days, you can also get a discount for driving an environmentally friendly vehicle. John Ellmore, editor of the website Electric Car Guide, recommends that you ask your provider about any green vehicle discounts if you drive an electric or hybrid vehicle.

Talk to your agent to see which of the following discounts you qualify for and how adding up all your discounts will impact your premium:

• Safe driver discount
• Good student discount
• Defensive driver discount
• Full payment discount
• Affiliation discount
• Anti-theft discount
• Anti-lock brake discount
• Distant/resident student discount
• Early signing discount
• Green vehicle discount
• Low mileage discount
• Loyalty discount
• Military discount
• Multipolicy discount
• Multivehicle discount
• Autopay discount
• New vehicle discount

4. Improve driving habits

People with clean driving records can score a lower insurance premium than those with a record of accidents and speeding tickets. Safe driver discounts have been in place for a while, but some insurance companies can now monitor your driving. Typically, this involves installing a tracking device in your vehicle to keep a record of your driving habits (speed, braking distance and location).

5. Bundle insurance policies

Bundling is another way to save money on your insurance bill. Some providers offer auto insurance in addition to property or life insurance, so you may qualify for a discount if you purchase more than one policy from an insurance company.

So when you’re shopping around for auto insurance, make sure to ask how much it costs to add on your homeowners and life insurance policies, along with any other policies you have on boats, motorcycles or other vehicles.

Reviews on our site have even mentioned bundling their auto insurance with renters insurance, like one from Yasuko from Washington: “It gives me peace of mind knowing that I have this … because I bundled it with car insurance and I got a great rate. The paperwork was all online and it was easy to understand and read.”

» MORE: How to save money bundling home and auto insurance

6. Raise your deductible

Raising your deductible keeps your insurance premiums low without sacrificing coverage. Experts advise drivers to raise their deductible to $1,000 or more, provided they can absorb the cost of $1,000 in the event of an accident. This can be an especially good option for drivers with a short commute and people who don’t drive regularly since the chances of getting into a serious accident decrease the less you drive.

Raising your deductible is generally a better alternative to lowering your liability, which can save you money in the short term but could end up costing you more if you’re at fault in a serious accident.

7. Improve your credit score

Your credit score affects more than your monthly car payment; it also affects your insurance premiums. Insurance companies check your credit score to help determine risk. The higher your score, the lower your risk factor, which can drop your premium.

While it may seem unrelated, studies have shown a correlation between credit scores and safe driving. If your score is less than perfect, there are ways to fix it. If you’ve improved your score, be sure to shop around for more affordable car insurance rates — you’ve earned it.

» MORE: How to fix your credit

8. Understand how insurance is priced

Most auto insurance companies have a specific group they target, often reflected in their advertising, discounts and quotes. Some insurance companies cater to high-risk drivers, while others are more interested in selling to adults over 25 who own their own home.

While some companies do offer more affordable coverage than others, there are many factors that go into how much car insurance costs — the truth is, the cost of your car insurance depends in large part on your car and your particular situation.

Bottom line

It can be a challenge to find cheap but reliable auto insurance; the provider and plan with the cheapest upfront rate isn’t always the best long-term deal. You’ll shell out a lot more than your premium costs if you end up at fault in an accident without enough coverage, even if you follow your state's minimum insurance guidelines.

Make sure to get adequate coverage to keep you protected in the event of an accident, whether or not you’re at fault, and work with an auto insurance company that has the best discounts and bundles to both save you money and keep you safe.