The Definitive Guide to Finding the Best Cheap Car Insurance

Collect information, document the scene, file a report, file a claim. No one likes to think about getting into an accident, but it does happen. Being prepared for the possibility of an accident will help you to get through the process with as little stress as possible. But if you are involved in a hit and run, you may not know exactly what your next steps should be. And trying to deal with insurance on top of your anger and injuries can quickly increase your frustration. How will you get damages and compensation for your injuries?

Hide the phone! 73 percent of teens admit to having their phones nearby while driving alone. All drivers should keep their phones out of reach and on silent so they’re less tempted to check incoming app notifications and more likely to keep their eyes on the road.

Map it out: 42 percent of teens say they text while driving to get directions or find out how to get somewhere. Teens should program their navigation apps before getting behind the wheel or pull over to double check directions.

The next time you get your car insurance card in the mail, stop whatever you are doing and immediately go put it in your glove box; it's the best safeguard to ensure it's always in your vehicle. A 'No Proof of Insurance' ticket is a hefty fine these days.

Deductibles can be tricky. You want to select a deductible that is low enough to be affordable at the time of a claim but high enough to reduce the overall cost of insurance. Keep your emergency fund in mind when selecting your deductible. It can be very frustrating to sustain damage to your vehicle and not be able to get it repaired because you cannot afford your deductible. Deductibles are on the rise for many drivers to make car insurance a little more affordable.

[...] Some of the most innocent statements can and will be misconstrued or skewed by insurance claims adjusters. For example, you could be describing the weather at the time of your accident as "bright" or "sunny," but the insurance company uses your statement(s) to deny coverage claiming you caused the accident while you were blinded by the sun.

Teen drivers: All teenagers want to gain their independence, but having their car titled to one of their parents and being a listed driver on their parents' policy will be much less expensive than the teen driver having his/her own policy. This is, of course, if the parents are willing to do so (and most are). Keeping up grades is another significant discount teens can qualify for if they maintain a 3.0 or better.

All drivers: Of course, keeping a clean driving record is important to keep rates low, so is keeping a tidy credit profile! Almost all insurance companies use an insurance credit scoring system when determining rates. This is not the same type of credit scoring that is used when you are applying for a loan or credit card. It is done internally within the insurance company, and each company has their own scoring system. But the bottom line is that someone with better credit is going to get a better rate. People always ask, 'What does my credit have to do with my car insurance?' Simply put, statistics show that generally people with lower credit scores turn in more claims and often don’t pay on time (costing the company more money in billing notices and collections). Of course, there are always exceptions; not every person with a low credit score falls under this generalization. However, the statistics are strong enough that the majority of insurance companies have adopted credit scoring into their rates.

1. Be sure to check with an independent insurance agent – these agents have access to multiple companies. Having this access opens up the opportunity to choose better coverage and not always having to pay more for it. 2. Keep your driving record clean. If you do get a moving violation ticket, try this order to get the ticket removed so it won't affect your insurance rates: 1. Ask the judge for deferred adjudication. 2. Ask to take defensive driving. 3. Ask for community service. 4. No more windshield or minor claims. Having multiple claims (even three $50 claims) can disqualify you from getting insurance from certain companies that offer competitive rates. Use your insurance for catastrophic situations, not maintenance-type claims.

The biggest factor to your car insurance rate is your driving history. Tickets and accidents can make it difficult to find affordable car insurance. The type of vehicle you own can also drive up the cost of your insurance; larger vehicles or cars that are built for speed can have a significant impact on how much you end up paying for car insurance.

Your driving record and car are the same no matter where you live. But change your ZIP code just a couple of towns the wrong way and your rates can double.

1. Insure Multiple Cars or Drivers

If you obtain a quote from an auto insurance company to insure a single vehicle, you might end up obtaining a higher quote (per vehicle) than if you inquired about insuring several drivers and/or vehicles with that company. This is because insurance companies will offer what amounts to a bulk rate because they want your business, and under some circumstances, they are willing to give you a deal if it means you'll bring in more of it.

To obtain a discount, ask your agent/insurance company to see if you qualify and get a quote. Generally speaking, multiple drivers must live at the same residence and be related by blood or marriage. Two non-related people may also be able to obtain a discount; however, they usually must jointly own the vehicle.

Incidentally, some companies may also provide an auto insurance discount if you maintain other policies with the firm (e.g., homeowners insurance). Check with your agent/insurance company to see if such discounts are available and applicable.

2. Keep a Clean Record

It should go without saying that the more accidents or moving violations an individual has, the more he or she will tend to pay in terms of annual premiums. For those unaware, points are typically assessed to a driver for moving violations. Generally speaking, more points can lead to higher insurance premiums (all else being equal).

3. Take a Defensive Driving Course

Sometimes insurance companies will provide a discount for those that complete an approved defensive driving course. Also, sometimes a driver can reduce the number of points he or she has on his or her license by taking a defensive driving, accident prevention, or other course.

Make sure to directly ask your agent/insurance company about this discount before signing up for a class. After all, it's important that the effort being expended and the cost of the course will translate into a big enough insurance savings. It's also important that the driver sign up for an accredited course.

Shop ahead. Before you buy your next car, check on insurance. Many people assume that SUVs are expensive and Neons are cheap. This is not necessarily true. Some companies will increase your liability based on the cost of damages your type of vehicle may inflict – big trucks cause big damage. However, they also rate the autos based on how likely they are to be damaged in an accident, how often they are stolen, and how badly drivers/passengers are injured. That Neon (or Jetta or Honda) is going to be a lot more expensive than you think. Many companies will have websites that will give you lists of safe and lower priced cars. (Saturn is a low insurance car because it has dent-resistant doors.)

Think twice about after-market gizmos. If your vehicle is totaled or stolen, the insurance company will determine a fair market or actual cash value. They will look at your vehicle as a “whole package.” Even if you paid for $3,000 in after-market items (wheels, spoilers, stereos, exhaust, etc.), they may only add $1,000 in value to your vehicle. It’s not dollar for dollar.

Have all of your insurance in one place. Often, the more types of policies you have, the more you save in discounts.

Drivers can lower their monthly auto insurance premiums by choosing a high-deductible plan – but it means taking on more financial risk if something goes wrong. According to Worters, people can save 15 to 30 percent on collision and comprehensive coverage by increasing their deductible to $500 from $200. A $1,000 deductible can save you 40 percent or more, she says.

While choosing a high-deductible plan can reduce your expenses, Bill Wilson, vice president of education and research at Independent Insurance Agents & Brokers of America, says you have to time it right so you don’t end up with a big out-of-pocket cost if you get into an accident.

First, check to see if you have the right amount of coverage. Nobody teaches us about this stuff, so when you bought car insurance, you may not have known which coverage options to choose.

Second, figure out what kind of coverage you currently have and how much you’re paying. Don’t be lazy – do this. If you don’t have your current info in front of you, how can you hope to save? Either call your car insurance company or use their website.

Third, it’s time to start shopping around. I prefer the phone because I can usually sweet-talk the rep into telling me about other deals that the websites don’t offer. Computers, however, seem to be immune to my charm.

10. Cut coverage on older vehicles. Once your car is 10 years old or worth less than 10 times the premium, the cost of repairing it could be more than the car is worth, says Reed. Ditching collision coverage could save you up to 40 percent. Savings: As much as $440 a year by scaling down to just injury and property damage coverage.

11. Bundle insurance policies. Insuring your home and auto with a single company could bring your rates down by about 10 percent a year, says Alec Gutierrez, senior market analyst of automotive insights for Kelley Blue Book. Savings: A study of 2 billion price quotes from more than 700 companies nationwide by Consumer Reports found that bundling home and car insurance would save the average customer $97 a year. But you may get an even bigger payoff depending on your location. Michigan residents, for instance, would save $240 by uniting the two.

12. Take your insurer for a spin. Many insurance companies now offer drivers a discount if you install a device that lets them monitor your driving habits. Progressive, for example, gives discounts of up to 30 percent for drivers who do not display any alarming tendencies. (Those with poor habits are not penalized. Yet.) Savings: Up to $330 if you're well-behaved.

Get quotes from several insurance companies. Personal finance commentator Jane Bryant Quinn points out that the best way to save money on auto insurance is to compare rates. Since auto insurers don’t advertise prices, you need to search out those that offer coverage at lower cost. To find the best rates, look for similar insurance options offered by different insurers. Use online quote websites if you are searching for a fast way to compare multiple quotes.

Contact insurance companies directly rather than going through an independent agent. You will save money by cutting out the middleman. Start by calling insurance companies in your area. You can also request quotes on the websites of nationally known insurance companies. Many online comparison sites make it possible for you to receive insurance quotes free of charge.

Look over the discounts you are receiving from your current insurance company. Find out if other companies will offer you these same discounts. Ask if the company offers any discounts you might not know about. Most companies offer safe driver discounts and discounts for safety features on your car. Others offer additional discounts for a safe driving record, high credit score or low mileage.

Saving money on car insurance is never as easy as the commercials claim it is, and the savings are never as large as they promise, but that doesn't mean it's impossible to save anything. If you wait six months between farming quotes, insurance companies will consider you a "new" or "not returning" customer and offer you better promotional rates.

First, find out what coverage you need. Nearly every state requires you to carry insurance, but the coverage varies from state to state. Take a moment to find out what coverage is required where you live. Keep in mind that you’re on the hook when costs exceed your coverage limits, and that’s why people get policies that cover more than the required minimums. A good rule of thumb is to make sure you’re covered for an amount equal to the total value of your assets (like your house, car, savings, and investments). For example, if you have $50,000 of bodily injury liability coverage but have $100,000 in assets, attorneys could try to seize your assets if you’re at fault and the other party’s medical bills exceed $50,000.

Next, choose the highest deductible you can afford because it will significantly reduce your premium. It’s better to spend $500 on repairs when you need them rather than paying an extra $50 a month whether you need them or not. I only recommend this if you have an adequate emergency fund in place to cover the cost of the deductible. The last thing you want is to go into debt to cover repairs.

Lastly, always comparison shop. With the coverage you want in hand, start calling around to get quotes. Be sure to play one insurer off the other. For example, after you get your first quote from GEICO and are on the phone with Progressive, make sure you mention you are shopping around and give them the quote GEICO just gave you. Then, when you call Esurance, mention you are shopping around and give them the lower of the two quotes you’ve gotten between GEICO and Progressive, and so on.

Get More Coverage – Believe it or not, in some cases, you can get lower premiums by getting more insurance coverage. Sometimes, the minimum amount of coverage can cost more than additional coverage.

Shop Around – Never take the first quote you are given. You could be missing out on a much better deal from another insurance company. It is also a good idea to get quotes every few months even if you already have insurance. You never know, you could be paying more than you need to.

Don’t Let Your Coverage Lapse – If you let your coverage lapse, you will be charged a higher rate when you get a new policy.

Get a Safer Vehicle – The more safety features your vehicle has, the less your insurance is going to cost. Safe cars are easier to insure than high-performance vehicles. Take advantage of safety packages when you are buying a new vehicle.

Watch Your Credit Score – The better your credit score, the lower your insurance rates are going to be. This is because you won’t be considered a high risk.

Don't you hate paying for the same thing twice? If Personal Injury Protection, also known as PIP, is part of your auto insurance policy, you might be paying twice for the same coverage. PIP coverage pays medical expenses for the insured driver after an auto accident. Some states, mostly those with no-fault insurance, require drivers to purchase PIP as part of their coverage.

Some PIP plans not only cover your medical and hospital expenses, but they can also help you pay bills, such as child care expenses, while you're laid up. However, if you live in a state that does not require PIP insurance, and if you have good health, life, and disability insurance coverage, then you probably don't need supplemental PIP coverage with your auto policy.

If you want to save money on your car insurance, you've probably thought of things like cutting down on your annual mileage or paying more upfront.

That said, you could also knock off between 10 and 15 percent on your car insurance if you install a dash cam.

Dash cams are an amazing tool if you're ever involved in an accident, as they record the whole thing, meaning a contention between two drivers can be quickly resolved by viewing the footage.

In simpler terms, insurers can make sure they don't have to pay out if it's the fault of the other driver.

You May Not Need Collision Insurance

So, you purchased an older model car. It's only worth $2,500 and is seven or more years old. As your car depreciates, it gets closer and closer to your deductible. Remember that the insurance company won't pay you any more than the value of your car, so if the value is the same or less than your deductible, you won't get any money. If you're driving an older car, consider not getting collision insurance. The minimum policy required by law is enough in your case. Don't count on your insurance agent to tell you, though.

If You Have a Car Loan, You Need Gap Insurance

After you got rid of that older car, you purchased a shiny new car complete with that brand new car smell that everybody loves. You took out a loan for $25,000 and drove home. Two weeks later, your car was totaled and the insurance company offered to pay you $21,000 for the car. The bank is going to still want the $25,000 you owe, so you'll be on the hook for the other $4,000.

Without gap insurance, you have to pay it out of your pocket. If you have a loan for your car, you should also consider gap insurance.

1. Keep Up Your Credit Score

You may find it strange that paying your bills on time can lower your car insurance premium. However, it can be a big factor in your insurance rates. “Many insurers use credit-based insurance scores,” says Mike Barry, vice president for media relations of the Insurance Information Institute. “It’s a contentious issue in certain state houses … [but] insurers will say their studies show that if you’re responsible in your personal life, you're less likely to file claims.”

2. Check Rates Before You Buy a New Car

Many people don’t realize how much insurance rates can vary depending on the type of car they buy. Fancier, more expensive vehicles may not only be a lot pricier to buy, they also could cost you dearly in increased annual premiums. Insurance rates can vary by as much as $2,200 each year when you compare a basic car to a high-end cruiser. Over five years, that can add $11,000 to the cost of buying that expensive car. It’s wise to check the potential insurance rates with your agent before you decide on the brand and model you plan to buy.

3. And Add Safety Features to it

The primary reason people add safety features to a new car is to protect themselves and their family, but many of these features can also reduce the cost of your car insurance. Be sure to tell your agent about them when you get a quote. Examples of features that will get you a discount include anti-theft protection, air bags, motorized seat belts, and antilock brakes.

Drive a Lower-Profile Vehicle.

The belief that car color bumps up your premium is false. However, owning a car that is a target for theft, expensive to repair, or has a less-than-stellar safety record can easily boost your costs. Car insurers are more interested in the make and model, year, body style, engine size and, in some areas, location (street parking versus driveway/garage-kept vehicles, for instance).

If a car falls under the "sports car" category – two seats, a lot of horsepower, performance engine, high-end wheels, and racing tires – expect to pay more. Insurers see these vehicles as higher risk for accidents (drivers tend to use the speed potential, also increasing the potential for getting traffic fines), more damage (sports cars tend to be smaller than family sedans), and higher maintenance costs (sports cars usually are equipped with unique or high-tech parts, which make them costlier to replace).

Automobile Collision

Collision insurance is designed to cover the cost of repairs to your vehicle if you are involved in an accident. If you have a loan out on the car, the loan issuer is likely to require that you have collision insurance. If your car is paid off, collision is optional; therefore, if you have enough money in the bank to cover the cost of a new car, collision insurance may be unnecessary. This is particularly true if you are driving an older car, because cars depreciate so quickly that many vehicles are worth only a fraction of their purchase price by the time the loan is paid in full.

Consider looking at reports provided by independent market research organizations. JD Power has done extensive research and ranked different providers based on various qualitative factors. These reports are available on their website.

Consumers need to understand the terminology of car insurance to shop for and compare policies and coverage.

While it’s impossible for an insurance company to always have the lowest rate, there are different business models that allow them to have different base costs. The largest players generally have good rates, Geico and Progressive being among the most aggressive.

If you don’t drive often, there may be benefits to checking out a per-mile-driven insurance policy provider like Metromile. If you drive under 10,000 miles a year, they can generally have extremely good rates.

Some local insurance providers can have very good rates, but they will generally be very selective about who they insure to keep their risk profiles down (hence the low rates). If you have a sterling driving record, they may be worth checking out.

Comprehensive coverage will always be more expensive than liability-only coverage, but the amount the coverage changes will vary based on the value of the car and all of the other factors an insurance company uses for factoring their pricing.

All else being equal, someone residing in a crowded and crime-ridden urban area can expect to pay considerably more for coverage than a similar motorist with the same car in a quiet suburb of the same city.

Insurance companies consider many variables when setting premiums, including the type of car, age and driving record of the driver, and the risk of theft or property damage in a particular neighborhood, based on the company's past experience. That's why the potential savings can vary dramatically from one ZIP code to another.

While you're probably not going to move to a new state just because of car insurance costs, the most important thing to remember is that – regardless of where you live – you can get a better deal than the average Joe by shopping around.

Keep in mind that auto insurance companies can’t change premiums in the middle of your policy’s term for any reason. Rate increases can only occur during policy renewals. So, if your accident happened in January and your policy doesn’t renew until July, several months will pass before you receive any related rate increase.

This is important because it gives you time to get quotes from several auto insurance carriers. Of course, they’ll see your accident and rate you accordingly, however, the chances are good you’ll be able to find cheaper car insurance.