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UPDATED: Mar 13, 2020
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Car insurance is one of the first bills many people seek to trim when lowering their monthly expenses. Whereas other expenses can be cut completely, car insurance is a necessary part of car ownership. This makes searching for discounts and comparison shopping for good rates a crucial part of many people’s insurance choices.
If you’re looking for car insurance, you may be disappointed to learn that there is no single “cheapest” or “best” auto insurance company. Different insurers will charge different rates to different people, and discounts are available to some insureds that are not available to others. This makes it necessary to get individual quotes and comparison shop among a variety of companies to get the best possible rates.
How Much Does Car Insurance Cost?
Although specific rates can vary, insurance premiums are regulated by state laws. This means that all insurance companies must report their rates publicly, and all insurers must keep their rates within a certain range. Generally, an insurance company will offer a specific base rate and then offer discounts that will reduce that cost. Therefore, the question isn’t necessarily who has the cheapest insurance, but what company has the best insurance discounts.
Aside from discounts, many things affect rates. Drivers who are considered “high risk” will pay more for insurance than those who are not as likely to be involved in collisions. Rates are also dependent on the state the policy is issued in, with costs ranging substantially from one state to the next. A specific policy’s premiums may also be higher or lower than the average due to the coverages it contains and other factors.
All of this means that searching for a cheapest car insurance company based on national averages may not be very meaningful. Your insurance policy will not cost the same as your neighbor’s or your friend’s, and it will be much more accurate to obtain a quote from multiple different insurers to compare rates.
Nevertheless, when shopping for car insurance you can generally expect to pay between $900 and $2,000 per year. If you’re particularly high risk, you might pay as much as $4,000 in some states. When determining whether insurance is a good deal, keep these figures in mind; they will help give a ballpark estimate of whether the quote you’ve received is high or low. The best gauge, however, is to compare your own quotes to each other to find the best deal.
What Company Has the Cheapest Coverage?
Traditionally, Geico and Progressive are both well-known for their low cost auto insurance. They can afford to offer substantial discounts due to their direct sales model and the size of their respective companies. Geico also offers very attractive discounts to government employees and military personnel, which can tip the scales in that company’s favor for those customers.
Geico and Progressive are not always the cheapest insurance companies, though, and they can actually be quite pricey for some people. For example, Geico tends to charge higher rates to people with poor credit than its competitors do. You may also sacrifice coverage to get the lowest rates as the advertised rates might not reflect the most complete full-coverage policy.
Another company that routinely offers low rates is State Farm. Because it is a mutual company, State Farm can afford to offer better discounts than other insurers. Of course, these discounts don’t apply to everyone, and you may not get the best possible rates with this company.
Other small insurers, like The General and Titan, specialize in affordable insurance to people with high risk. Others, like The Hartford, cater to specific age groups or social demographics. Some companies may not offer the most affordable base rate, but they may have attractive discounts that make them very competitive. For example, the 30% discount offered by Allstate for enrollment in the pay-as-you-go “Drivewise” program makes those policies extremely attractive to consumers.
Of course, cost is only one factor that should be considered when purchasing auto insurance. You should also consider the quality of customer service, the financial health of the company, what coverages you’re buying and any other factors that may be important to you. If you purchase insurance from an agency, you’ll want to be sure you’ll get along with your agent. If you buy over the phone, you’ll want to feel comfortable sharing your information. All of these are decisions that you can only make by dealing directly with the insurance company.
Although most drivers are familiar with a few top names in insurance, there are dozens of companies operating at a state and national level. By getting insurance quotes from as many providers as possible, you can save money on insurance and get the coverage that you need from a company you’ll enjoy working with.