What is the cheapest car insurance?

The cheapest car insurance you can buy will depend on your driving record, the kind of car you drive, and where you live. Car insurance rates can vary widely from driver to driver, so it’s important to comparison shop online to find the cheapest auto insurance rates. Enter your ZIP code below to get started now with free insurance quotes from local companies.

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Tonya Sisler has a Bachelor’s Degree from the University of South Carolina in Journalism and has worked for 15+ years in management. She has also completed a proofreading certification and is currently a professional writer.

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Brad Larson has been in the insurance industry for more than a dozen years. He started out as a claims adjuster for a national carrier. He has since switched to the agency side of the business. Brad is licensed in all P&C lines.

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Reviewed by Brad Larsen
Licensed Auto Insurance Agent

UPDATED: Oct 24, 2020

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In a nutshell...

  • When you lease a car, most auto leasing companies will require at least 100/300/100 coverage
  • If you own your vehicle outright, then you have no obligation to a car loan
  • GAP insurance is completely optional

The cheapest auto insurance you can buy will depend on a couple of factors about where you live and how your vehicle is financed.

Car loan companies have different requirements depending on if you lease or purchase the vehicle and every state has different minimum car insurance requirements.

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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 purchase the minimum auto insurance required by state law.

The problem with this is most states have car insurance requirements far lower than you need to prevent any personal liability in the event of a car accident.

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 it’s perfectly natural to want the cheapest car insurance to try to find a balance between sufficient coverage and affordable premiums rather than just going after the cheapest car insurance rates.

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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, most car loan companies let you get away with purchasing only the minimum amount required by law.

One of the most critical types of car insurance coverage to have when financing a new car is GAP insurance and this coverage is never required by law.

How GAP insurance works are if you get in a total loss car accident and your car insurance policy only covers up the book value of the car, the odds you are will be upside down on your car loan in the first couple years.

If you have GAP insurance, this will kick in and cover the difference. Without GAP insurance you have a 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.

The reason is the title not in your name, and although leasing documents are crafted smart 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 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 are usually no more than a nominal fee.

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  1. https://www.thebalance.com/filing-auto-insurance-claim-2645925
  2. https://www.allstate.com/tools-and-resources/car-insurance/how-to-compare-car-insurance-rates.aspx
  3. https://www.allstate.com/tools-and-resources/car-insurance/tips-for-car-insurance-discounts.aspx
  4. https://www.allstate.com/tools-and-resources/car-insurance/ask-agent-premium-deductible-limit.aspx

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