Car insurance companies spend considerable time calculating policy premiums by assessing several areas of risk. Insurers analyze driving records and personal finances to determine where to set the monthly premium. Although car insurance companies have many questions to ask, one question remains the most frequently asked question by consumers.
What is the cheapest car insurance?
In 2020, USAA offers the cheapest auto insurance policy in the United States at only $474 for a six-month policy and $949 for a policy that lasts one year. Here’s how USAA stacks up against prominent auto insurance companies for a six-month policy:
- State Farm-$656
Let’s see how we can help you find the cheapest car insurance
Tips for Finding the Cheapest Car Insurance
The low rate offered by USAA does not mean the rate is set in concrete. You can do your part to find the cheapest car insurance policy by following a few time-tested tips. Just remember that the longer you had auto insurance and you kept in good standing with the insurance company or companies, the more likely you will enjoy a lower monthly premium from a new insurer.
Bump Up Your Credit Score
Car insurance companies analyze financial risk when it comes to setting premiums. The most influential source for analyzing an applicant’s financial risk is a credit score. Get a free credit report from Equifax, Experian, and/or TransUnion and start devising ways to increase your credit score. Paying your bills on time and lowering your credit utilization rate are two places to start. The credit utilization rate is the amount of outstanding credit as a percentage of the total amount of credit that is available.
How much you drive each year plays an important role in establishing monthly car insurance premiums. The more you drive, the more risk an insurance company assumes. For example, a California auto insurance policyholder who drives 15,000 miles per year can expect to pay 25 percent more for an auto insurance policy than a Californian who drives just 7,500 miles a year. Think about carpooling or taking public transportation for the commute to and from work.
Lower your miles, lower your monthly premium.
Increase the Deductible
You can lower your auto insurance premium by raising the annual deductible. You have to calculate how much money you can afford to pay out of pocket to fix your vehicle. If you can afford to pay a minimum of $1,000 out of pocket for an auto repair job, then you should consider increasing the annual deductible to save money on the monthly premium.
Auto Insurers Reward Safe Drivers
It is timeless advice that has been around as long as there have been cars and insurance companies.
Drive safe and reap the financial award from your auto insurance companies. The most impactful way to raise your car insurance premiums is by accumulating tickets and/or becoming involved in an accident or accidents. Companies like Nationwide reward policyholders that install a monitoring device in their vehicles. The device measures things like the number of hard stops and the number of risky maneuvers performed at night.
Ask yourself the question, “Do I really need all of this auto insurance coverage?” Why should you pay for collision coverage if you have never been in an accident? Yes, there is always the possibility of getting involved in a car accident. However, you want to ask the same question for insurance coverage that you asked for the annual deductible.
Can you afford to pay for collision costs out of pocket? If the answer is yes, drop collision coverage from your auto insurance policy.
Finally, shop for auto insurance as you shop for any product: comparison shop. The six-month rates for the six auto insurance companies listed above came from a website. You can find the cheapest car insurance by simply making a few clicks of a computer mouse.