Background on Car Insurance Pricing

To understand how to get the lowest cost car insurance, it's helpful to understand how car insurance companies price the insurance. There are two large factors that determine your rates: the first factor is the amount and type of coverage; and the second factor is the probability or risk of an event happening that causes the insurance company to have to pay on a claim. Calculating the risk of an event is complicated and involves assessing numerous hard to quantify risks, including yourself as the owner and person in the most control to prevent a claim from happening. That said, location is likely a factor that the average person isn't going to change and can significantly change the price. Because of the difficulty assessing risk, the premium rates that you receive from a car insurance company as they each have their own ways of calculating all the various risks. Cheap car insurance can come from a variety of different companies. To understand how to get the lowest cost car insurance, it's helpful to understand how car insurance companies price the insurance. There are two large factors that determine your rates: the first factor is the amount and type of coverage; and the second factor is the probability or risk of an event happening that causes the insurance company to have to pay on a claim. Calculating the risk of an event is complicated and involves assessing numerous hard to quantify risks, including yourself as the owner and person in the most control to prevent a claim from happening. That said, location is likely a factor that the average person isn't going to change and can significantly change the price. Because of the difficulty assessing risk, the premium rates that you receive from a car insurance company as they each have their own ways of calculating all the various risks. Cheap car insurance can come from a variety of different companies.

How can I find the cheapest car insurance?

Because calculating risk is so difficult the carriers all take different approaches to the challenge. Which means that shopping around can save you a lot of money. In our research, the difference between carriers was as much 500%. That means that if you choose the wrong carrier you could pay 5 times more than necessary. Price may not be the only consideration, but that difference is too much not to shop. In The Car Insurance Guide's proprietary 2020 research we found rates for the same person in the same car varied on average 100-200% from one car insurance company to another. Over the course of a year, the choice of one insurance company over another could result in a thousand dollars of savings. This is after tax dollars!

Bundle your Home Insurance with your Car Insurance and Save More

Insurance companies that offer both home insurance and car insurance will reduce the overall cost when bundling both coverage’s together. It stands to reason. The company can get an additional sale with little additional sales & marketing costs. Also, the more relationships that a consumer has with a company, the more likely they are to maintain that relationship. From the consumer’s standpoint, it's typically easier to deal with one company as opposed to two companies. So as a general matter, combine your car insurance quote with homeowners insurance to see if you can save even more with a bundled quote.

How to save time when shopping around to get the best car insurance pricing?

Getting quotes from multiple car insurance companies can be a time-consuming process, but fortunately that's where The Car Insurance Guide is a very helpful resource. Our team of licensed insurance agent analysts have done a lot of the research for you. We've conducted extensive pricing research with different consumer profiles in different regions to see which car insurance companies provide the most affordable insurance premiums for a consumer like you. Some companies clearly provide better pricing and cheaper car insurance than others. That's a major factor in how we've developed the list of recommended car insurance companies that you see recommended on our site. To save time and get the highest chance of finding the cheapest insurance from a highly rated car insurance company, start getting quotes from best ranked companies on our list and compare the pricing you get.

In addition to shopping, what else can you do to reduce the monthly insurance premiums?

A great way to reduce the costs of insurance after shopping around is to reduce the risks that you have to cause claims. Preventative measures, like car alarms, and logic, are a great way to do this. Many companies offer discounts for people for a variety of reasons. Some examples are: good driving, alumni, grades, lower mileage, military, paying early, and driving training.

Another way to reduce cost, is to reduce the scope of coverage and or get lower coverage amounts. However, reducing you monthly premiums in this manner increases the risk to you because if something does happen you may have to cover some of the losses out of pocket. For this reason, we don't recommend taking on more risk to reduce your premiums.

Finally, increasing your deductible can reduce your monthly premium. A deductible is the amount that you pay on the damage, loss or liability before insurance kicks in and covers the rest (or up to the policy limit). For the insurance company, the lower the deductible the more the insurance has to pay when there is an incident. Not surprisingly, insurance companies will charge a higher premium for policies that have a low deductible. Therefore, the choice is based on whether you have a preference for a lower premium or for being less out of pocket if anything does happen. If you don't think you'll be able to pay the deductible if something does come up, chose a low deductible plan. If you want to bet that nothing will happen and you can afford to pay a high deductible if it does, then choose a low premium plan.