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UPDATED: Mar 13, 2020
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If you are looking for the cheapest car insurance, then you will be most interested in carrying the minimum amount of coverage that is mandated by the state. Every state in the United States requires some amount of insurance coverage.
Usually it is bodily injury liability and property damage liability coverage only, which pays for injuries and losses to the other party if you are at fault in an accident. However, other forms of coverage are also mandated by some states.
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Choosing the cheapest car insurance that you can get away with is not always the wisest decision. Unfortunately, many of the mandated state minimum levels of coverage are insufficient for the costs involved for serious accidents.
This can leave you holding the bag financially, even with insurance from a well-respected company. For many people this can mean huge financial losses, even bankruptcy.
State Minimums Vary Widely for Car Insurance
The minimum amounts of car insurance required in order to legally operate a vehicle in a given state varies greatly.
Some states require surprisingly little coverage, such as Florida, which only mandates drivers to carry $10,000 bodily injury, $20,000 bodily in total per accident, $10,000 for property coverage, and Personal Injury Protection. Ohio only requires liability coverage in the amounts of $12,500/ $25,000/$7500 for those respective amounts.
Conversely, other states require much higher limits of coverage. Maine requires car owners to carry 50/100/25, and uninsured motorist and under insured motorist coverage. Arkansas also requires bodily injury and property damage limits of the same level, but not the other forms of coverage.
While most insurance professionals will argue that even those limits that are the highest ones mandated by law are still insufficient, most states fall below this mark by at least half. If you are wondering about the required coverage where you live, the Insurance Information Institute can provide you with that information.
Sometimes Minimal Coverage is Not an Option
There are certain cases, such as for cars that are leased or those that are financed, whereby you simply cannot carry the minimum amount of coverage required by law. In these cases, the lender or lessor requires you to carry full coverage in order to protect their interest in your vehicle. This means that in addition to mandatory coverage such as liability, you will also need personal property damage coverage, like collision and comprehensive.
If you must carry full coverage, you can still make some choices that will help you get the cheapest car insurance possible. These include choosing the highest deductibles on collision and comprehensive that you can possibly afford.
Make sure that you would be able to pay the deductible if your vehicle incurred loss in an at-fault accident. You can also opt to omit any additional types of coverage that are not required by the state or the other party to your vehicle.
Different Forms of Coverage Are Available
In addition to liability coverage, which protects you financially in case another party incurs a loss through your use of a vehicle, there are other types of car insurance coverage available. Comprehensive coverage and collision coverage are two of these, which when added to liability coverage make up full coverage car insurance.
Comprehensive provides property damage for your vehicle when it is damaged through non-moving perils, like vandalism, theft, and storm damage. Collision provides property damage when your vehicle is damaged in an at-fault moving accident.
Personal injury protection, another form of insurance coverage, gives you additional health coverage in case you are injured in a motor vehicle accident.
Uninsured motorist coverage protects you if you are involved in an accident with a driver who has no car insurance. Underinsured motorist coverage protects you if the person who is responsible for your car accident injuries carries insufficient coverage to pay for your medical expenses.
Other types of coverage included in many car insurance policies are very convenient to have, but may also be a good place to cut to keep the cost as low as possible. These include towing and labor, which are a blessing if your vehicle is not usable.
Also included is rental car coverage, which is very convenient when you already have other expenses like repairs and deductibles to take care of.
Discounts Can Help You Get the Cheapest Car Insurance
There are a variety of ways to save money on your car insurance from shopping around to limiting coverage and more. However, one of the simplest ones is often overlooked.
Simply ask the agent you are dealing with if you have all the discounts you possibly qualify for. Sometimes there are unusual discounts that traditional questions asked in the quote process fail to uncover.
Know how your choices impact your insurance costs. If you have a poor driving record, you will pay more than someone who does not. Using your vehicle for a limited number of miles each year will earn you a discount. Taking driver training courses and choosing to buy cars with good safety features will all earn you valuable discounts on coverage.
Choosing to put multiple lines of insurance, like homeowners and life insurance, with the same company will also usually get you a discount on your car insurance premium.
Avoiding insurance claims and maintaining a good credit rating will also help keep your costs down.
You Can Save on Car Insurance Policies In Many Ways
Forms of payment can also impact your final cost for car insurance. If you opt to pay in full for a car insurance policy, you may be able to save as much as $150 or even more per year over making monthly installments. While some companies offer the same rate for automatic monthly payments, most companies give you a break if you pay up front.
Even the choice of the car you drive can help you in obtaining the cheapest car insurance policy possible. The cost of insuring a domestic minivan is vastly different than the cost of insuring a foreign sports car. Check out the cost to insure a vehicle before you purchase it.
Shopping around and comparing the different options available to you is a way to save on car insurance policies that simply should not be overlooked. Getting as many quotes as possible is the best strategy for finding the cheapest car insurance because prices can vary greatly from one insurer to another.
Getting a Good Company That Offers Cheap Policies
Finding a cheap policy may not always be the hardest part of shopping around. In reality, finding a good, reliable company that offers cheap policies may be much harder.
As you are shopping around for price, remember that price is not the most important thing. If you get a cheap price from a company that goes out of business in no time or cannot pay claims, it is not a great deal at all.
Therefore, once you narrow down your choices for car insurance based on price, you will need to examine each insurer carefully. Luckily, this is a variety of resources that can help you make this process much easier. If you are looking for what customers are saying about a given insurance company, you can just do a quick online search for reviews on that company or contact an organization like the Better Business Bureau to find out about complaints and such about them.
The firm J.D. Power and Associates is another excellent place to check out a company to see how it fares with consumers. That organization does a yearly auto insurance study, which compares different insurers based on their policy offerings, claims, price, interaction, billing, and payment. Overall satisfaction is noted for each company and the top ones receive an award from the organization. Topping a J.D. Power and Associates study is very prestigious for any company.
The next important aspect to look at when it comes to car insurance is the company’s actual insurance rating. Independent insurance rating companies, like A.M. Best, Standard & Poor’s, Moody’s, and Weiss Ratings, rate insurers based on their financial stability and economic outlook for the future. Ideally, you should seek out insurance companies whose grade is an A or better, as the economic forecast of an insurer is very important.
Take the time to put knowledge on your side when you are in the market for the cheapest car insurance policy available. By doing so, you will know what to look for, how to get the best prices, how to choose the best possible company, and what truly matters when it comes to car insurance. This will save you from the difficulties many people face when they opt for too little insurance instead of enough to adequately protect them.
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