How to Select the Most Affordable Car Insurance Rates

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Car insurance rates can vary, but they're also largely dependent on your driving history and other factors. Ideally, when comparing different coverage and rates, you should consider your financial situation in relation to the required insurance. From there, you can then consider whether you need to increase your limits to protect your assets. 

However, finding the most cost-efficient insurance rates isn't always easy, especially if you are a first-time car owner. The good news? You have several options when it comes to getting the best car insurance rates.

Factors Affecting Car Insurance Rates

To learn ins and outs of car insurance, you need to first know how insurers set rates for customers. Typically, these are the main factors that can impact your car insurance costs:

  • Age, gender, and marital status
  • Credit score 
  • Location
  • Driving history and usage
  • Year, make, and model of the car

Here are a few things to consider when deciding on the right car insurance coverage:

Drop Collision and Comprehensive Insurance

While optional in all states, collision and comprehensive coverage are worthy investments for additional financial protection. But if you own an older vehicle with a lower resale value, these additional premiums may not be worthwhile. Here's a general rule of thumb: You can drop your comprehensive/collision coverage if your car is older than six years or has more than 100,000 miles. This rule is applicable to budget/lower-end models, not a premium Mercedes or Lexus.

Raise Your Deductibles

In the event of an accident or collision, the insurer will pay a percentage of the cost of repairs. Of course, you can set how much you'll wind up paying out of pocket when you initially buy insurance. This amount is called a deductible. If you set a low deductible, the insurer will raise the premium cost to cover the additional burden they have to bear. Likewise, if you're willing to raise your deductible, you can get lower insurance premiums.

Check Your Eligibility for Discounts

Insurers usually offer special discounts to a wide range of motorists, including the following:

  • Military personnel and veterans
  • Drivers with an accident-free record
  • Federal employees (both serving and retired)
  • Students with a good academic record

Additionally, you can also get discounts from some insurers if you've completed driving education or defensive driving classes. Vehicles with safety features like airbags, anti-lock brake systems, anti-theft systems, and daytime running lights could also be eligible for discounts.

Renew/Buy Car Insurance as an Existing Customer

If you let your existing coverage lapse before finding a new plan, you could end up paying a higher premium. However, you can typically get lower rates for an in-time renewal from your existing insurer. You can also select automatic payments to lower the cost of future renewals. Likewise, if you've bundled your home and car insurance from the same company, you may be eligible for some type of discount. Check with your insurance provider for more details.

Search Online for Car Insurance Cost Comparisons

GEICO, State Farm, and USAA are some of the big-name insurance providers in the U.S. However, there are dozens of other smaller companies with a more regional presence, like Erie Insurance or Travelers. You can easily find information on cheap car insurance rates online. If you currently or previously served in the military, USAA is usually the go-to option. GEICO, Erie Insurance, and State Farm are all good alternatives for civilians who don’t have a history of service in the armed forces.

Other Steps to Find Cheaper Auto Insurance Rates

California, Hawaii, Massachusetts, and Michigan are the only states where insurers don’t check your credit score before setting your rates. If you're not a resident of one of these states, you can reduce your insurance rates by improving your credit score. A FICO score above 600 is usually ideal. You may also want to check a car's perceived risk potential before buying. Sports cars, EVs, and luxury vehicles all have higher insurance rates because of higher repair costs and accident risk.

Obtaining Optimal Coverage at a Minimal Cost Isn't Difficult

As you can see, there are many ways in which you can reduce the hit to your wallet from auto insurance. Through a combination of sensible decisions (both on the road and in your finances), careful planning, and proper research, you can get the optimal coverage for your new car at a minimal cost.

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