You probably know that every state in the US requires drivers to carry vehicle insurance. Whether your ride is a car, truck, or motorcycle, you need to insure it before you drive it on the road.

Car insurance can cost a lot though. Even the cheapest car insurance policies can cost about $1,000 annually.

Finding the Cheapest Car Insurance

You might think that the easiest way to find the cheapest car insurance is to use a quotes finder. That probably will not provide the results you need though.

The quotes generators only consider insurance companies that have partnered with them. That means they may not include the lowest-priced companies.

Sometimes, it all depends on the inputs used. That means your situation. It means which policy types you choose. It means from which companies you get quotes.

So, which one of the many insurance companies gives you the cheapest car insurance?

It depends.

USAA

If you belong to the military or have been discharged from the military, you can avail yourself of USAA. That firm consistently offers the lowest rate for car insurance. If you do not belong to the military, the four companies that generally offer the lowest rates are Allstate, Progressive, Travelers, and State Farm.

Each company offers some of the best rates to specific categories of drivers. New drivers typically obtain the best rates from Allstate while Progressive offers the cheapest car insurance to high-risk drivers. If you drive for Lyft or Uber, you will probably get the best rate from State Farm. Of all the insurance companies, Travelers offers the best selection of discounts.

Travelers

So, what makes Travelers so cheap?

You do not have to pick a discount. If you qualify for five or six discounts, you get to apply them all. Tack together a few discounts of three to five percent each and you end up with 15 to 25 percent off. That equals the difference between paying $1,000 per year or $750 per year.

Its common discounts include a multi-policy option and a multi-car option or usage-based insurance. You might also qualify for discounts from accident forgiveness. It saves money by offering not so great customer service.

Progressive

Progressive also offers a lot of discounts. Even drivers under 18 get a discount from Progressive. It also offers a choice between using your personal information and accident history as the basis for your rate or using the telematic Snapshot device to collect data and base your rate on your actual driving habits. It also saves money by offering less than great customer service.

Allstate

Allstate offers a similar discount for student drivers which it refers to as the good student discount. These high-risk drivers do not usually come by any price breaks, so it means more. The company does usually pay its claims, but they have beastly customer service that its customers rated below average in a J.D. Power survey.

State Farm

State Farm offers rideshare coverage for Uber and Lyft drivers. You will find fewer discounts but the highest rating among the four companies for customer service. In the same J.D. Power survey, it scored 878 out of 1,000. That puts it ten points above average for the car insurance industry.

Type of Car Insurance Policy

Every state creates its own set of minimum auto insurance requirements. You will need to check the requirements for your state. That stipulates what you must carry, but you could also add insurance to the minimums. The kind of policy affects the cost. A few different car insurance policy types exist, such as:

Personal Injury Protection (PIP)

Rental insurance
Roadside assistance
Custom equipment
OEM endorsement

Bodily injury liability
Property damage liability
Collision
Comprehensive
Gap insurance

Bodily injury liability pays for injuries to parties hurt in an accident you cause whether they are pedestrians or traveling in another vehicle. Your policy typically covers a maximum payout to an individual and for a total accident expressed as a ratio, such as 20/40. The 20 in that refers to $20,000 which is the policy’s maximum payout for medical expenses plus pain and suffering per person. The second number, 40, refers to $40,000 which is the policy’s maximum payout for medical expenses plus pain and suffering per accident.

Property damage liability pays for damage you cause to another person's property. This includes a vehicle with which you collide or damage to a guardrail, fence, etc. The policy limit on this also varies.

Collision pays for damages to your vehicle when it collides with any objects from a mailbox to another automobile. This type of policy carries a deductible. That is the out-of-pocket payment you must make before insurance kicks in to pay the rest. This type of insurance costs more with low deductibles and costs less as you pay a higher deductible.

Comprehensive coverage pays for damage to your vehicle from anything except a collision, such as fire, tree limbs falling on it, hitting a deer, lightning strikes, etc. Like insurance, it requires you to pay a deductible before it pays for damages.

What Influences Car Insurance Cost?

If you need budget friendly insurance, you have some research to do. You also need to prepare yourself for the reality that the cheapest companies still raise the price if you have had at fault accidents in the past or you have a bad credit score.

Just so you know. If either of those things are true for you, you will find it tough to find cheap car insurance. You can still find car insurance, but it will cost a lot more.

Many factors influence the cost of car insurance. Since a policy covers damage to your vehicle, other’s vehicles and/or medical harm to others and/or yourself, the insurance company assumes the risk to insure you. That means they really care if you slide on your bills or have a history of reckless driving.

Here is a completest list of the factors that influence insurance cost:

The car you drive
The type of policy
Policy features
Your credit score
Your accident history
The size of the deductible

Policy Features

Insurance companies charge more for extra services. You will pay more for a policy that includes a no claim bonus, car hire information or after accident care or other special services. After-accident care includes items like towing service, roadside repairs such as a tire change or patch, taxi service to your destination and/or emergency accommodations.

Customer Service

You typically pay more for great customer service. How do you know it’s great? Customer satisfaction ratings. These tell you how simple it is to actually file a claim and if the company allows things such as filing online or via email. The response speed also matters. Faster response means a larger CSR staff typically which costs the company more money. If you learn that the company stays in touch with the customer during the claims process, this indicates a high-quality company, but you will probably find that company costs more.

The Other Stuff

The other coverage types you buy less commonly. Your bank might require you to carry gap insurance while you pay off the loan for your car. If something happens to your vehicle that totals it, for example, before you pay it off, gap insurance pays the remainder of the loan.

PIP covers your medical payments regardless of who was at fault. If you get injured when a deer kisses your car’s grill, PIP pays for your injuries since the deer population is really terrible about purchasing insurance.

The policies for rental insurance and roadside assistance typically get bundled together. The former provides for you to rent a vehicle when yours is disabled. The latter provides you with a tow truck or mechanic when you break down or have an accident.

Just like it sounds, custom equipment insurance provides coverage for any customizations you add to your vehicle or motorcycle. An OEM endorsement refers to a policy inclusion that stipulates your vehicle can only be repaired with original equipment manufacturer parts.

Some companies offer minor violation forgiveness and accident forgiveness while others do not. Those that do may charge for this extra.

But do I really need insurance?

YES! Okay? It is the law. If you get pulled over and caught without auto or motorcycle insurance, the ticket will be huge. I am talking massive here. You could pay the $75 to $100 per month for full-coverage car insurance or you could pay $300 to $500 for a ticket. You would also lose points off of your license. If caught twice, in most states, you would lose your driver’s license.

It just makes good sense to purchase insurance. That is all. In the worst-case scenario, you have an accident while uninsured. The police find you at fault for the accident. You have to pay for the repairs to your vehicle, the other involved vehicles and people’s medical bills. Whether it costs $500 or $500,000 to pay for it all, you must pay it and on your own if you do not carry insurance. The other people involved in the accident can sue you to force you to pay for their hospital bills and car repairs.

Reducing Costs: The Cheapest Car Insurance

Finding the cheapest car insurance takes a little effort. You start with companies known for offering low rates to gain the best chance. Maybe $1,000 per year still seems pretty steep to you. Perhaps you want to reduce the number further.

Apply for Discounts

If the insurance company allows it, you can apply the discounts for which you qualify to see how that helps. If you do not see any on the website for which you qualify, phone a local agent with that company. Provide them with the quote number that the website offers. Ask if they offer any local discounts the corporate website would not list.

Many times, the local agency can help you reduce the monthly or annual payment. They may suggest items that the website did not, including discounts or options just introduced and not yet integrated onto the website.

Choose Email Communication

You can often save money – at least a few percent off, by opting to receive all communications via email. The paperless discount, as most agencies call it, saves trees and postal costs for the firm. They pass this along to the consumer.

Create a Bare-Bones Policy

The last resort to try is creating a bare-bones policy. You might think you can get away with just a minimum coverage policy, but what happens when you get hit by an uninsured driver? Because not everybody does the right thing and purchases the needed insurance. You probably need to find a way to afford full coverage.

While you can typically get a discount by paying the entire policy premiums in a six-month or 12-month lump payment, that may call for more funds than you have available. Many companies offer that, but you can also pay month-to-month. Some companies now offer a pay-as-you-go option.

Try to keep the collision and comprehensive coverage in there. Consider raising the deductible to lower the premium. This helps you afford the full coverage while reducing the cost.

Now, you probably gasped. You cannot fathom having to pay the $1,000 deductible out-of-pocket. Here is the deal. That only happens if you have that particular kind of accident. So, unless a tree attacks your car or a deer runs directly into your path and kisses your grill, you will not have to pay a deductible. Do not drive into anybody’s mailbox or hit another car and you won’t need to use comprehensive or collision.

In the case that you do need to pay a deductible because deer really love your grill, you can always take out a small personal loan to cover the deductible. That will let you pay off your portion of the damages to your vehicle a tiny bit each month. The insurance company will pay the rest.

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Shopping Around for Great Insurance Rates

Let’s be honest, comparison shopping for car insurance is the only way to get the cheapest car insurance. Even if you already have insurance, you should shop around and compare rates at least every two years.

You might find a better rate, but you will also keep your current insurance company honest and your rate with it low. That’s because today’s insurers use data mining to determine what kind of person you are. Although it probably sounds creepy, it works to your advantage because you can control what they see.

Every couple of years, you should search for a new insurance company. Generate insurance quotes. Compare and contrast as if you really are thinking about changing companies.

Since they started using data mining to be nosy as heck and find out more about you, they analyze your web surfing habits. They see when you look for quotes and they worry. They tend to not raise the rates of people who do comparison shopping regularly, research has shown.

You will also benefit from living in a state with low rates. If you live in New York, you probably laughed when you saw the annual cost of about $1,000 because full coverage with the cheapest insurance company there would cost about $2,500. In Oklahoma, you would pay about $1,500 for the same coverage. It all depends on your state.

You probably do not plan to move across the state line just to drop your annual cost, but if you plan to move for work, consider the area surrounding your new job. If you have a choice of a few different states, choose the one with the cheapest car insurance and the lowest taxes. Many people who relocate to areas like New York City or Washington, D.C. have this opportunity.

Three factors contribute to a state’s typical insurance rates. These include:

cost of living
population density
minimum liability requirements

Less dense populations pay lower insurance rates. If you live in a city, there is a greater population density, thus a greater chance of accidents. You will probably find cheaper car insurance in Alaska than you ever would in the state of New York. Let’s say you move to NYC though. You could conceivably live in NY, New Jersey, or Connecticut and simply commute.

How much of a difference in cost is there you ask? In NY, full coverage costs about $2,500 per year, but in Connecticut, that drops a whopping $700 to an average of $1,800 for full coverage. Rents across the NY state line are also significantly lower and square footage of apartments larger, so consider the suburbs if you relocate to a large city.

You pay insurance based on the state in which you live, not the one in which you work, so many people working in major metros located near state borders can choose the state with the best financial incentives to settle down in, so they pay less to live well.

In Conclusion

You have to have car insurance and full coverage provides the best protection. You can find a low-cost way to pay for it though. You can find the cheapest car insurance out there and then whittle the price down even further by applying various discounts, agreeing to use mechanisms like Snapshot and, if you relocate, choosing the suburbs for your home.

What is the Cheapest Car Insurance Available?