Getting cheap car insurance looks different for every driver because it depends on what you’re looking for. Do you want your state’s minimum coverage, which is the bare minimum required for you to legally drive? Or are you balancing price with coverage and service?
State minimum is the cheapest of the cheap but could cost you big bucks after an accident. Full-coverage costs more than state minimum car insurance, but you can shop around for the cheapest full-coverage policy and find other ways to cut down costs.
State minimum is the cheapest car insurance
State minimum coverage, meaning the legally required amount of liability car insurance your state requires in order to drive, is the cheapest car insurance coverage available.
We pulled state minimum coverage for a man living in California to give you an idea of how the monthly rates for state minimum coverage vary between six major companies.
Buying state minimum coverage costs less upfront than adding options like collision or comprehensive coverage. But minimum coverage could cost you more out of pocket in the long run if you don’t have enough insurance to pay for car damage or injuries.
When you’re buying liability coverage, you choose the maximum dollar amount that your insurance pays if you cause damage or injuries to someone else. This maximum is called your coverage limit. After your insurer pays the coverage limit towards damages, you’re required to pay the rest. This means you could end up paying more out of pocket after an accident than what you save by opting for state minimum coverage.
Costs of a large accident with minimum liability only
Jordan Peagler from MKP Law Group talked with Finder about the pitfalls of buying your state’s minimum liability limits.
In LA there are many people who are driving cars that are easily over $100K. If you get the minimum insurance limit in LA for $5,000 in property damages, you could be left footing the remaining $95K+ for a wrecked car, and that’s assuming no associated injuries.”
Rather than opting for the lowest liability limits allowed, Eagler suggests, “Don’t get the state minimum liability coverages — choose liability limits of at least 100/300/100.”
Costs of a small accident with minimum liability only
It’s not just large accidents that can cost you. Let’s say you go with Geico’s minimum coverage instead of full coverage. You’re saving around $82 bucks a month or $979 a year. You get in a fender bender, and the other driver’s car has multiple scratches that require cosmetic repairs totaling $7,500. According to Consumer Reports, each scratch repair costs anywhere from $150 to $2,500.
You file a claim, and your insurer pays up to your state minimum coverage limit towards damages, $5,000. Now, you’re left on the hook for $2,500 in repairs. You have to weigh whether your savings with state minimum are worth the risks of what you may have to pay out of pocket after an accident.
Cheapest full coverage car insurance companies
We pulled full coverage car insurance rates for a man living in California to give you an idea of how the monthly rates vary between six major companies. Geico is the cheapest with rates starting around $121 monthly.
We recommend buying full coverage, which is a policy with at least liability, comprehensive and collision coverage. Meaning, you’ll have higher coverage to protect you from paying out of pocket for the other driver’s injuries or property damage. Plus, coverage for your own car’s repairs and any damages caused by a storm, theft or incidents that don’t include hitting another car.
Full coverage costs as much as three times the price of state minimum coverage, based on our analysis of car insurance rates from six major companies. But for that price, you’re raising your liability limits by more than double the state’s minimums, while adding collision and comprehensive coverage.
This way, if you’re in an accident, big or small, there is less of a chance you’ll have to cough up cash out of pocket. Your insurance does what it’s supposed to do, foot the bill after an accident.
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Cheap car insurance looks different for every driver
Buying car insurance isn’t as cut-and-dry as people like to think — what works for you may not work for another driver. Look at how the best coverage, perks and type of policy can change based on different drivers’ lifestyles.
Experienced drivers offset the new driver’s risk for accidents. Insurers may assume that the new driver isn’t the only one getting behind the wheel and that experienced drivers are acting as teachers.
You can look for teen driving programs. Some companies like Allstate offer driving courses or programs that reward teens who drive safely.
Students — Opt for a pay-as-you-go or family policy
Students or parents can choose a few options to lower car insurance premiums, based on the student’s age, level of education and where they go to school.
Stay on your family’s policy until you’re 25. If you’re a high school or undergrad college student, most insurers let you ride your family’s policy until age 25, if you live in the same house fulltime or during school breaks.
Try pay-as-you-go car insurance. Most pay-as-you-go policies give steep discounts for low mileage, and some let you pay by the mile. This option works best if you need to buy your own policy or don’t drive much.
Focus on your grades. Most companies offer a discount if you keep at least a B average in school.
Military members — Look for highly rated service and storage insurance
As a military member, you want a car insurance company that will work with your lifestyle — whether you’re stationed in the US fulltime or deployed overseas.
Customer service is a top priority. When you don’t know the assignments that may come your way, you want customer reps that can stay flexible with your needs.
Storage insurance saves money if you’redeployed. Storage insurance is a car insurance policy with only comprehensive coverage. It protects your car from storm damage, theft, animals chewing through wiring and most other noncollision damage.
Standard policies could work too. You might not need storage insurance if you’re stationed in the US or your family uses your car while you’re away.
Pay-as-you-go — The new way to lower car insurance costs
Pay-as-you-go car insurance is a policy that uses an app or device plugged into your car to track your driving. It uses the data to offer you a personalized car insurance rate, based on your actual driving and mileage.
Since the insurance company relies less on spreading risks across the insurer’s other customers, it may offer discount as high as 30% or 40% off of its standard rates. You usually save the most if you…
Keep low mileage
Accelerate and brake gently
Stay off your phone
Avoid driving at night
6 tips to get cheap car insurance with the value you need
You can get cheaper auto insurance rates and not completely sacrifice your coverage levels, no matter which type of policy or company you choose:
1. Drop collision if your car has a low value
If your car is worth close to what your annual premium for collision and collision deductible is combined, you can probably get rid of it. So if your car is worth $2,000, and you have a $1,000 collision deductible plus $400 in annual premiums for collision, you might not benefit enough from having collision to justify the cost.
2. Raise your deductible and pocket any savings
Dr. Jacquie Carroll, an Accredited Financial Counselor told Finder, “When you increase your deductible, your premiums (the amount you pay each month/quarter/year) will go down, meaning your monthly bills are lower.” This means you’ll have monthly savings from choosing a higher deductible compared to what you’ll pay monthly for a lower deductible.
Dr. Caroll suggests drivers, “pocket the savings each month and you will have enough in one year to cover the higher deductible. Anything after that, is pure savings!”
3. Run quotes for multiple levels of coverage
If you play with raising liability limits or adding coverage, you may be surprised how much extra coverage you can get for a little extra cost. Jordan Peagler from MKP Law Group suggests,
“Good car insurance coverage may amount to a difference of $10-15 more each month, but could hugely benefit you if you get into a serious or even minor accident. Always look at the big picture when considering how much you spend on your car insurance.”
4. Update your mileage, especially if it’s under 12,000 miles/year
Updating the mileage you drive each year is something you might not remember to update with your insurer or during the quote process, but making sure the amount of miles you drive each year is accurate assures you’re being charged accurately.
Most insurance companies give 10% to 20% discounts for low mileage, so regardless of what type of coverage you have — lower miles driven each year means lower rates.
5. Continue to check for discounts like homeowner or bundling
You may not have qualified for a homeowner discount or for bundling your car, home or other policies when you originally purchased your insurance. If you’ve recently gotten married or purchased a home, check to see if your current insurer can apply any new discounts or shop around for an insurer who will to see if you qualify for better rates.
6. Try telematics appslike Allstate Drivewise or Progressive Snapshot
These programs set your premiums based on how safely you drive, shaving up to 50% off your rates. But they work best if you’re a safe driver that’s okay with giving permission to track your trips and store your driving data.
Watch: 6 ways to score lower rates on car insurance
Bottom line
The cheapest car insurance is state minimum coverage, but that’s because you’re getting the bare minimum coverage available. It’s always best to balance cost with value, to make sure you’re not left with extensive out-of-pocket costs after an accident. The best way to get cheap car insurance, regardless of which type of policy you choose, is to compare your options from a variety of car insurers to find the right policy at the right price.
How we got our rates
Our minimum coverage rates are based on a single 30-year old driver with a clean driving history living in California. California is one of seven states that don’t use gender to determine car insurance costs. We chose full coverage car insurance with liability limits that exceed the California state minimum requirements, which include:
Bodily injury liability coverage per person: $15,000/$30,000 per accident minimum
Property damage liability: $5,000
Uninsured motorist bodily injury: $15,000 per person/$30,000 per accident minimum
Uninsured motorist property damage: $3,500
Comprehensive: $0
Collision: $0
Medical payments: $0
Our full-coverage rates are based on a single 30-year old driver with a clean driving history living in California. We chose full coverage car insurance with liability limits that exceed the California state minimum requirements, which include:
Bodily injury liability coverage per person: $50,000/$100,000 per accident minimum
Property damage liability: $50,000
Uninsured motorist bodily injury: $50,000 per person/$100,000 per accident minimum
Uninsured motorist property damage: $50,500
Comprehensive deductible: $500
Collision deductible: $500
Medical payments: $5,000
Your rates may be different based on details like your ZIP code, location, job and annual mileage.
Sarah George is Staff Writer for Small Business Loans at BankRate and formally a personal finance writer at Finder focusing on all things banking and insurance. Her know-how has been featured in such publications as CBS, CNET and Reviews.com, and she was a panelist in Finder’s 2020 money-saving webinar. Sarah earned an English education degree and is a Certified Educator in Personal Finance. See full bio
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Sarah has written 116 Finder guides across topics including:
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