None of us wants to spend more than we need to for car insurance, but it isn’t always obvious how to get lower rates.
Dozens of insurance companies, large and small, are vying for your business. Many have an eye-glazing assortment of policy options, making it hard to compare policies and figure out who’s offering lower car insurance rates.
See what you could save on car insurance
Easily compare personalized rates to see how much switching car insurance could save you.
» MORE: Compare car insurance rates
Here are eight things you can do to ensure you get good coverage at the cheapest possible rate.
- Don’t assume any one company is the cheapest
Some companies spend a lot of money on commercials to convince you they offer the lowest car insurance rates. But no single insurer is the low-price leader for everyone. The car insurance company that’s cheapest for one person in one place might be the most expensive option for a driver in a different state.
» MORE: The best cheap car insurance companies
The only way to ensure you’re getting the lowest rate possible is to compare car insurance rates.
A NerdWallet analysis of rates shows why shopping around is so important. Here are some of the rates we found for a 40-year-old driver buying a full coverage policy on a 2018 Toyota Camry LE. Our hypothetical driver has good credit and a clean driving record, earning a “good driving” discount from most car insurance companies.
In Florida, State Farm would charge $1,766 a year, on average — the cheapest rate in the state for a driver without a military connection. Geico’s average rate is $239 higher.
In California, it’s the opposite: Geico is cheapest, with an average rate of $1,458, and State Farm’s average is $423 higher.
Progressive is the cheapest option for New York drivers at $1,298 a year on average, but in Florida, it’s the most expensive at $3,015.
Video preview image
- Don’t ignore local and regional insurers
Just four companies — Allstate, Geico, Progressive and State Farm — control more than half of the nation’s auto insurance business. But smaller, regional insurers such as Auto-Owners Insurance and Erie Insurance often have higher customer satisfaction than the big names — and they may have lower car insurance rates, too.
- Ask about discounts
Insurers typically provide car insurance discounts. While they will vary by insurance company and which state you live in, you can usually get a discount if you:
Bundle car insurance with other policies, such as homeowners insurance.
Insure multiple cars with one policy.
Have a clean driving record.
Pay your entire annual or six-month premium at once.
Agree to receive documents online.
Own a car with certain anti-theft or safety features.
Are a member of particular professional organizations or affiliate groups.
Don’t be swayed, however, by a long list of possible discounts. Compare rates from multiple insurers.
» MORE: How to save by bundling home and auto insurance
- Work on your credit
Your insurance credit score is a significant factor in the car insurance quotes you receive except for a few states. California, Hawaii, Massachusetts and Michigan don’t allow insurers to use credit when determining car insurance rates. Insurance companies say customers’ credit has been shown to correlate with their chances of filing claims.
A NerdWallet analysis found that having poor credit can increase people’s car insurance rates by hundreds of dollars a year compared with having good credit. (In most situations, a FICO score of 579 or lower is considered “poor” credit, but insurers have their own credit models that may have a different cutoff.)
Build your credit history — and get lower insurance rates — by paying your credit card bills and loan payments on time and reducing your debt. Track your progress by checking your credit score regularly.
» MORE: What to know about a credit-based insurance score
See what you could save on car insurance
Easily compare personalized rates to see how much switching car insurance could save you.
- Skip comprehensive and collision coverage for an older car
Collision coverage pays to repair the damage to your vehicle from another car or an object such as a fence. Comprehensive coverage pays to repair vehicle damage from weather, animal crashes, floods, fire and vandalism. It also covers car theft. But the maximum payout under either policy is limited by the value of the car if it’s totaled or stolen. If your car is older and has a low market value, it may not make sense to shell out for these types of coverage.
» MORE: Understanding collision and comprehensive insurance
- Raise your deductible
If you buy comprehensive and collision coverage, you can save money by opting for higher deductibles. (There is no deductible on liability insurance, which pays for the damage you cause others in an accident.) But this should only be an option if you know you can afford the higher amount if you ever need to file a claim.
Compare auto insurance quotes with different comprehensive and collision deductible amounts to see how much you might save if you were to choose a higher deductible.
- Consider usage-based or pay-per-mile insurance
If you’re a safe driver who doesn’t log many miles, consider a usage-based insurance program such as Allstate’s Drivewise, Progressive’s Snapshot or State Farm’s Drive Safe & Save. You might qualify for a discount based on driving habits like how much you drive, what time of day you drive and how well you drive.
» MORE: Comparing Drivewise by Allstate to Snapshot from Progressive
If you truly don’t drive much at all, you could save money by switching to a pay-per-mile insurance program such as Metromile, Allstate’s Milewise or Nationwide’s SmartMiles.
Be aware that opting into a usage-based or pay-per-mile insurance program means you’re allowing your insurance company to track your driving behavior. This is typically done through either a device that plugs into your car’s diagnostic port or an app you download onto your smartphone.
- Check insurance costs when buying a car
You probably already pay attention to factors such as fuel efficiency and repair costs when picking a car to buy, but you should also consider insurance premiums. A NerdWallet analysis of the cheapest cars to insure among top-selling vehicles found the lowest insurance rates are for the Subaru Outback, the Jeep Wrangler and the Honda CR-V.
About the author: Lacie Glover is an insurance editor and writer and a NerdWallet authority on insurance. Her work has been featured by USA Today, U.S. News and World Report and The Associated Press. Read more
NerdWallet averaged rates based on public filings obtained by pricing analytics company Quadrant Information Services. We examined rates for 40-year-old men and women for all ZIP codes in any of the 50 states and Washington, D.C. Although it’s one of the largest insurers in the country, Liberty Mutual is not included in our rates analysis due to a lack of publicly available information.
In our analysis, “good drivers” had no moving violations on record; a “good driving” discount was included for this profile. Our “good” and “poor” credit rates are based on credit score approximations and do not account for proprietary scoring criteria used by insurance providers. These are average rates, and your rate will vary based on your personal details, state and insurance provider.
Sample drivers had the following coverage limits:
$100,000 bodily injury liability coverage per person.
$300,000 bodily injury liability coverage per crash.
$50,000 property damage liability coverage per crash.
$100,000 uninsured motorist bodily injury coverage per person.
$300,000 uninsured motorist bodily injury coverage per crash.
Collision coverage with $1,000 deductible.
Comprehensive coverage with $1,000 deductible.
In states where required, minimum additional coverages were added. We used the same assumptions for all other driver profiles, with the following exceptions:
For drivers with minimum coverage, we adjusted the numbers above to reflect only the minimum coverage required by law in the state.
We changed the credit tier from “good” to “poor” as reported to the insurer to see rates for drivers with poor credit. In states where credit isn’t taken into account, we only used rates for “good” credit.
For drivers with one at-fault crash, we added a single at-fault crash costing $10,000 in property damage.
For drivers with a DUI, we added a single drunken driving violation.
We used a 2018 Toyota Camry LE in all cases and assumed 12,000 annual miles driven.
10 Tips to Help You Find the Best Life Insurance Plan for Yourself
Why do you need life insurance?
“In this world full of uncertainties, one needs to be certain about the protection of their loved ones. This can be done by securing oneself with, the armour of life insurance.”- An unknown author perfectly summarises the significance of life insurance in these few words.
A life insurance policy is a legal contract between you and a life insurance provider. In exchange for regular premiums paid by you, the insurer remits a sum of money to you after a definite period known as maturity or your loved ones in case of your demise.
However, apart from acting as a financial safety net for your loved ones in your absence, life insurance has some other benefits as well. It can act as a savings instrument, provide financial freedom to you in your old age, and helps in reducing your tax* liability. The reasons for investing in life insurance are plenty. However, purchasing one of the best plans for yourself can be a little tricky.
How can you choose the best life insurance plan?
Here is a guide to help you select the right policy that suits all your needs.
- Assess your life insurance goals
Goals may vary from person to person. You must plan for your life insurance goals with the help of a suitable life insurance policy. If safeguarding your family’s financial security is your primary goal, you can buy a term insurance plan that offers a high coverage at affordable rates.
If you are looking to save for your child’s education or thinking of buying a dream house for yourself, you can consider investing in a unit-linked insurance plan. You can also buy a retirement plan which will ensure regular income for your everyday expenses post-retirement.
- Calculate the optimal insurance cover that you need
Many financial advisers suggest that your life insurance cover should be at least ten to fifteen times of your annual income. However, there are several elements that you should consider while estimating the ideal life insurance amount.If you have debts, then meeting the Equated Monthly Instalments (EMIs) might be challenging for your family in your absence. In addition to this, you need to arrange funds for your children’s higher education or marriage. As a result of inflation, your family might also face difficulties in maintaining their current lifestyle in the absence of the principal breadwinner. Thus, you need to find the total of the following:
Your family’s annual expenses multiplied by the number of years for which income replacement might be necessary
The total amount of your outstanding debts and the cost of repaying mortgages, if any
The amount you need to set aside for future expenses like your child’s education, wedding, etc
From the expenses mentioned above, you can deduct the sum of your liquid assets like cash in hand or bank and any other kind of investments to arrive at an adequate life insurance cover.
- Determine the amount you have to pay as the premium and find the policy offering the best deal
You can use online premium calculators to ascertain how much premium you have to pay for the required amount of life insurance. Compare different plans to find a policy that offers the highest coverage at rates that fit your budget. You should also assess your premium paying term based on your earnings for the upcoming years.
- Select the correct policy term
The term of the policy should ideally be the number of years your family will be financially dependent on you. The general thumb rule for deducing the ideal policy term is to subtract your current age from the age at which you expect your income to stop or wish to accomplish a particular life goal.
- Opt for a reputable life insurance provider
Life insurance companies with a Claim Settlement Ratio (CSR) of over 95% for consecutive years are generally considered reliable. The CSR is the percentage of claims that the company has settled in a financial year compared to the number of claims placed. You can visit the Insurance Regulatory and Development Authority (IRDAI) website to view the updated CSR of different insurance providers in India. It is also advisable to read customer reviews and understand whether your life insurer’s claim service is fast and hassle-free.
- Do not conceal facts from your life insurance provider
If you consume tobacco or alcohol, or work in a hazardous industry, inform your life insurer about these details. You must also declare any existing illnesses or family history of critical ailments. These factors influence your risk profile. Providing accurate information is vital to prevent claim rejection in the future.
- Read the final policy document carefully
Understand all the terms and conditions clearly, before you make the final commitment. Find out relevant details such as the lock-in period and the circumstances in which the claim will not be valid.
- Buy life insurance at an early age
Life insurance premiums are lower when you are younger. Thus, you can save on the cost of your premium if you buy your life insurance policy as soon as you start earning. You can begin with lower coverage and add more riders as your income increases.
- Choose a comprehensive plan
Medical contingencies might affect your income adversely. Hence, it’s necessary to choose a comprehensive plan, with appropriate riders for yourself:
Critical Illness rider provides full claim payout if you are diagnosed with any serious medical condition like kidney malfunction, cancer, or cardiac diseases. This amount can be useful in meeting treatment costs and protect you against the loss of income due to such illnesses
Accidental Death Benefit rider provides your loved ones an additional amount in case of your sudden demise due to an accident. This safeguards your family’s future from the threat of impairing the regular flow of income to maintain their current lifestyle
Permanent Disability rider functions as a waiver for all your future premiums if you are permanently disabled due to an accident. Your life cover~ continues throughout the remaining policy tenure
Terminal Illness rider gives you access to funds for dealing with terminal ailments like cancer by providing full payout before death
It would help if you always looked for an insurance provider that offers such benefits without charging you any hidden fees.
- Evaluate your life insurance needs regularly
It is essential to assess your life insurance needs from time to time as your financial goals might change with age and life events like marriage or childbirth. You can review your life insurance needs periodically and adjust your cover accordingly. This will also take care of inflation.
Life insurance is an essential financial tool. Keeping these tips in mind and a thorough research can help you make an informed decision to find the best life insurance policy with sufficient coverage.