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What is the cheapest auto insurance?

The cheapest auto insurance you can buy will depend on a couple factors pertaining to where you live and how your vehicle is financed. Car loan companies actually have different requirements depending on if you lease or purchase the vehicle and every state has different minimum car insurance requirements so the answer to what is the cheapest car insurance is… well, not so easy to answer.

State Minimum Car Insurance Requirements

If you own your vehicle outright then you have no obligation to a car loan or leasing company so you can simply purchase the minimum auto insurance required by State law. The problem with this is most states have car insurance requirements far lower than you really need to prevent any kind of personal liability in the event of a car accident.

Is $20,000 liability enough if you hit a Mercedes, BMW or top of the line Toyota? How about medical expenses?

Passengers suffering such injuries as a broken arm or leg can easily surpass $20,000 in medical bills and you still have to pay for damages to the car. While its perfectly natural to want the cheapest car insurance try to find a balance between sufficient coverage and affordable premiums rather than just going after the cheapest car insurance rates.

Financing a Car

How much car insurance you need will be determined by the terms of your auto loan however since the title of the car is in your name and all liability ultimately rests with you as the vehicle owner most car loan companies let you get away with purchasing only the minimum amount required by law.

One of the most important types of car insurance coverage to have when financing a new car however is GAP insurance and this coverage is NEVER required by law. How GAP insurance works is if you get in a total loss car accident and your car insurance policy only covers up the book value of the car then odds you are will be upside down on your car loan in the first couple years. This means the amount of money a car insurance company will pay is short of what you owe the car loan company and you’re on the hook for the rest. If you have GAP insurance this will kick in and cover the difference. Without GAP insurance you have debt to the car loan company and no car.

Leasing a Car

This is where we have a problem with car insurance laws and another example of how big business is smarter than consumers. When you lease a car most auto leasing companies will require at least 100/300/100 coverage which means over $100,000 in liability for each of the main liability types of coverage. The reason is the title is not in your name and although leasing documents are crafted clever enough to remove the car company from liability there are ways to break that shield and sue the owner of the vehicle. Car leasing companies also realize the cost of medical expenses and repair cost of accidents and simply require you to get sufficient coverage. Why States do not require such sufficient levels of coverage is beyond us as increasing policy limits well over $100,000 is usually no more than a nominal fee.

Who is the Cheapest Car Insurance Company?

Cheap is not a great word to use so try to focus on the word affordable. There is no best, cheap or cheapest car insurance for every driver. What you need to do is compare car insurance companies and find the best coverage from a reliable provider at the most affordable prices. Focus on the details not the price!

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