How to Find Cheap Car Insurance in the US

Did you know drivers who switch to Mercury save up to $3,882 a year in California? With tough economic times, finding cheap car insurance in the US is key.

In January 2025, NerdWallet found Geico’s minimum coverage to be the cheapest at $479 a year. Travelers, on the other hand, offers the most affordable auto insurance for full coverage at $1,722 annually. This study looked at 137 car insurance companies and over 1.5 billion rates from 700+ insurers in 29,000 U.S. cities.

Knowing what affects insurance costs is important. This includes your driving record, vehicle type, and coverage options. By comparing quotes and using discounts, you can find a policy that’s easy on your wallet.

Good drivers can save a lot with discounted auto coverage. Geico is great for those with poor credit but good driving records. This shows how important it is to drive safely to get discounts.

The goal is to get budget car insurance that covers you well without breaking the bank. Keep reading to learn how to find the best insurance deals and save money over time.

Key Takeaways

• Geico offers the cheapest minimum coverage at an average rate of $479 per year.
• Travelers provides the most affordable full coverage, averaging $1,722 annually.
• Mercury offers significant savings, with drivers in California saving up to $3,882 annually.
• Analyzing and comparing insurance rates from multiple providers can help find budget-friendly options.
• Maintaining a clean driving record and availing of discounts can lower car insurance premiums.

Understanding Car Insurance Basics

Car insurance is key for car owners, giving financial safety against unexpected events. Almost every state in the US requires some auto liability coverage. This shows how vital it is to know auto insurance basics.

What is Car Insurance?

Car insurance is a deal between a driver and an insurance company. It offers financial safety in accidents, theft, or damage. It covers many situations, like liability, collision, and more. For more details, check out this guide on car insurance.

Types of Car Insurance Coverage

Knowing the different car insurance types helps pick the right plan for you:

• Liability Insurance: Covers injury and property damage if you’re at fault in an accident.
• Collision Insurance: Pays for damage to your car from accidents or hitting objects.
• Comprehensive Insurance: Protects against theft, fire, and vandalism.
• Medical Payments (MedPay): Covers medical costs, no matter who’s at fault.
• Personal Injury Protection (PIP): Like MedPay, but also covers lost wages and other costs.
• Uninsured/Underinsured Motorist Coverage: Helps when the other driver doesn’t have enough insurance.
• Gap Insurance: Covers the difference between your car’s value and what you owe on it.
• Glass Coverage: May cover windshield and other window damage.

How Premiums are Calculated

Many wonder how car insurance premiums are figured out. Your premiums depend on several things:

Understanding car insurance and how premiums are set helps you make smart choices. This way, you can find the right coverage for your needs and budget.

Factors That Affect Car Insurance Rates

Knowing what affects car insurance rates is key for car owners. We’ll look at the main things that insurers check when setting your premium.

Driving Record and History

Your driving record is a big factor in your car insurance rates. A clean record means lower premiums. Insurers see safe drivers as less risky, so they charge them less.

On the other hand, tickets, accidents, and DUIs raise your costs. Keeping your record clean is a smart way to save on insurance.

Vehicle Type and Age

The type and age of your car also matter. Cars like the Audi Q5 and Tesla Model 3 cost more to insure. This is because they’re pricey and often get into more accidents.

Cars like the Subaru Outback, with their safety features and lower repair costs, are cheaper to insure. Newer cars might have safety features that lower rates. But, the impact depends on the car’s safety rating and repair costs.

Location and Mileage

Where you live and how much you drive also affect rates. Cities with lots of traffic and crime have higher premiums. States like Michigan, Louisiana, and Florida have some of the highest rates.

Driving a lot increases your risk, which can raise your premiums. Insurers look at your daily drive and yearly miles. To save, consider usage-based insurance, which bases rates on your driving habits.

For more info on how these factors impact your rates, check out this comprehensive guide.

The Importance of Shopping Around

Shopping around for car insurance is key. It helps you find big savings and coverage that fits your needs. People who compare quotes save about $398 a year, showing how it can cut costs.

Comparing Quotes from Multiple Insurers

Getting quotes from several insurers is a must. Companies like State Farm and Geico offer many options and discounts. This competition helps you get the best deals.

• The average cost of car insurance per year in the U.S. is slightly over $2,000 according to Bankrate.
• Average car insurance costs increased by 22.6% from April 2023 to April 2024, making it even more important to find better prices.
• Shopping around can save Americans over $1,300 annually on average.

Utilizing Online Comparison Tools

Online tools have changed how we compare car insurance. They let you quickly see rates from different companies based on your driving and vehicle. You can save up to 77.7% by shopping around, with an average of 56.3%.

In Michigan, drivers can save $2,599 to $2,812 for different cars. In Hawaii, savings are smaller but can be $582 to $688 a year. These tools help you find the best rates, whether you’re driving a new car or adding a driver.

With insurance costs going up, using online tools and comparing quotes is powerful. It lets you make smart choices and save money that can really add up each year.

Discounts to Help Lower Premiums

Lowering your car insurance premiums is easier with the right discounts. It’s key to know which discounts you can get and how to qualify. This way, you can cut down on your car insurance costs.

Safe Driver Discounts

Insurance companies give discounts to safe drivers. They value those who drive carefully. By avoiding accidents and keeping a clean driving record, you can save 10% to 20%.

Defensive driving lessons can also help you get these discounts. They can lower your costs for liability, collision, and personal injury coverage by 10% to 15%.

Multi-Policy Discounts

Getting multiple insurance policies from the same company can save you a lot. For example, combining auto and homeowners insurance can save you 18% on average. These discounts can go up to 25%, helping you save more while keeping your assets safe.

Insuring more than one car under one policy also offers savings. You can save between 10% and 25% this way.

Good Student Discounts

Good grades can lead to savings on car insurance. Insurance companies give discounts to students with a B average or higher. These discounts can save you 5% to 25%.

This discount rewards responsible and diligent students. It helps make car insurance more affordable for young drivers.

There are also smaller discounts for quoting online, choosing paperless billing, signing up online, and setting up autopay. These can all help lower your insurance premiums. Understanding and using these discounts can greatly reduce your policy costs.

Evaluating Insurance Providers

When looking at insurance providers, it’s key to think about a few things. You should look at the company’s reputation, what customers say, and if they’re financially stable. How reliable and helpful an insurer is can really affect your experience.

Reputation and Customer Reviews

The reputation of an insurance company matters a lot. Companies like Geico and USAA are often praised in industry reports. For example, Geico wrote $39.8 billion in direct premiums in 2023.

Looking at customer reviews on sites like Trustpilot or Yelp can give you a good idea. It shows how well an insurer handles claims and customer service. This helps you understand what to expect from them.

Financial Stability and Ratings

It’s also important to check if an insurer is financially stable. Agencies like A.M. Best give ratings based on this. For example, Auto-Owners is known for being affordable and reliable, with an average rate of $1,775 a year for full coverage.

Bankrate’s analysis also points out companies like USAA and Geico for their good rates and solid finances. This means you get a balance of cost and reliability from them.

Here’s a table showing how top insurance providers stack up in terms of financial stability and ratings:

Considering a company’s reputation, customer reviews, and ratings can help you choose wisely. This way, you get value, reliability, and peace of mind.

The Role of Credit Scores in Setting Premiums

Knowing how credit scores affect car insurance rates is key for drivers wanting better rates. Insurers use credit history to judge policyholders’ financial responsibility. This leads to big differences in what you pay.

How Credit Impact Insurance Rates

More than 92% of insurers use credit to set auto insurance rates. This shows the impact of credit on insurance rates. Your payment history, credit length, and credit types matter a lot. But, things like sex, marital status, and income don’t count.

About half of Nationwide’s existing customers pay a lower premium based on their credit score, reinforcing the importance of managing credit effectively to reduce costs.

Drivers with poor credit pay 113% more for full coverage than those with excellent credit. Some states like California and Michigan limit how much credit affects insurance rates.

Improving Your Credit for Better Rates

Working to improve your credit can lead to better insurance rates. It’s important to check your credit reports, pay on time, and lower your debts. Nationwide uses a credit score to predict insurance losses and adjust rates.

With this knowledge, drivers can improve their credit. This way, they can get the best credit score car insurance rates.

State Regulations and Their Impact

In the United States, car insurance rules vary by state. Each state has its own set of rules and minimum coverage needs. Knowing these rules helps make sure your insurance meets local laws and offers enough protection. These regulations affect your coverage and how much you pay for insurance.

Understanding Minimum Coverage Requirements

Every state has its own minimum insurance needs. These usually include:

• Liability coverage for bodily injury and property damage
• Personal Injury Protection (PIP) in no-fault states
• Uninsured/Underinsured motorist coverage in some states

For example, California requires a minimum of 15/30/5 liability coverage. This means $15,000 for injury/death of one person, $30,000 for more than one person, and $5,000 for property damage. Texas has a higher requirement of 30/60/25 coverage. Florida, being a no-fault state, requires PIP as part of its minimum coverage. It’s important to know these minimums to follow state insurance laws.

How Different States Regulate Insurance

States have different ways of enforcing insurance rules and offer various discounts. New York, for example, includes personal injury protection in its no-fault system. Texas, on the other hand, has strict penalties for driving without the minimum coverage. Here’s a comparison of some state regulations and discounts:

It’s vital to understand state insurance rules to avoid fines and ensure you’re well-protected. Many discounts are available, like for vehicles with anti-lock brakes, good student drivers, and senior citizens.

The Benefits of Bundling Insurance Policies

Bundling insurance, like auto and home, is smart. It saves money and makes things easier. You get lower prices for each policy. This makes managing your insurance simpler, with one bill and clear coverage.

Combining Auto and Home Insurance

Combining auto and home insurance is very beneficial. It can lead to discounts of 10% to 25%. Even as prices for individual policies go up, bundling keeps rates down.

People who bundle are seen as less risky. This means they get better rates and terms.

Potential Cost Savings

Bundling can save a lot of money. Savings of 10% or more are common. For example, Allstate offers up to 25% off when you bundle.

It’s also wise to compare quotes. This helps find the best savings through bundling.

It’s smart to review your insurance every year. This ensures you have the right coverage and rates. By shopping around and bundling, you can save a lot. This makes managing your insurance easier and cheaper.

Strategies for Reducing Car Insurance Costs

Car insurance doesn’t have to be expensive. By using smart strategies, you can save a lot. Let’s look at some ways to cut down on costs.

Increasing Deductibles

One way to reduce car insurance costs is to choose a high deductible. You can save 15% to 30% by raising your deductible from $200 to $500. Going for a $1,000 deductible can save you 40% or more.

Remember, a higher deductible means you’ll pay more out of pocket if you need to file a claim. But, it can lead to big savings on your premiums.

Taking Advantage of Usage-Based Insurance

Another smart move is to sign up for usage-based car insurance. Companies like Nationwide’s SmartMiles offer pay-per-mile insurance. This can save drivers over 40% compared to regular policies.

These programs use telematics to track your driving. They reward safe and low-mileage driving with discounts of up to 30%. For example, Liberty Mutual gives big discounts for safe driving and installing safety features in your car.

Here’s a look at how much you can save by increasing deductibles and using usage-based car insurance:

Understanding Additional Coverage Options

When looking at extra car insurance, it’s key to check out gap insurance and roadside assistance. These options can greatly improve your policy. They also give you more peace of mind.

Gap Insurance

Gap insurance is a must for those with new cars and loans. If your car is stolen or badly damaged, gap insurance pays the difference. This way, you won’t have to pay off a loan for a car that’s gone.

• 57% of Progressive customers choose more bodily injury coverage than what their state requires.
• The average monthly cost of comprehensive coverage at Progressive is $11 for a six-month policy.
• Collision coverage with Progressive costs around $32 per month on average for a six-month policy.

Roadside Assistance

Roadside assistance is another great option. It helps in emergencies like breakdowns, flat tires, or locked keys. This coverage means you’ll never be stuck, making your drives safer and more convenient.

• Emergency roadside assistance covers costs in case of roadside emergencies.
• Rental car coverage enhances car rental protection.
• Personal effects coverage helps secure belongings in case of theft.

When to Reevaluate Your Car Insurance Policy

It’s important to check your car insurance often. This ensures you get the best coverage at a good price. Updating your insurance can save you money and offer better protection. Here are times when you should review your insurance policy:

Major Life Changes

Big life events can change your car insurance needs. These include:

• Moving: Moving to a safer or less busy area can lower your premiums.
• Buying a New Car: A new car usually means higher insurance costs. But an older car might cost less.
• Adding a Driver: Adding a teen driver can increase rates. But adding an older driver with a clean record might lower them.
• Career Transition or Retirement: Changes in job can mean less driving. This might qualify you for lower mileage discounts.
• Improving Your Credit Score: A better credit score can lead to lower insurance rates. Review your policy after improving your finances.

Annual Policy Reviews

Do an insurance policy review every year. This helps you get the best rates and coverage. Here are important points to consider:

• Changes in Driving Patterns: Less driving can qualify you for usage-based insurance, which often costs less.
• Vehicle Depreciation: As your car gets older, repairs or replacement costs go down. This can lower your premium.
• Previous Claims: If you’ve had no accidents, you might get lower rates.
• Available Discounts: Look for new discounts like safe driver or multi-policy discounts.

Regularly reviewing your car insurance is key. Keeping your policy up to date ensures you’re covered and can save money.

The Impact of Claims on Insurance Premiums

Filing insurance claims can really change your future premiums. It’s important to know how claims affect your rates. Also, managing claims wisely can help keep your car insurance affordable.

How Claims Affect Future Rates

When you file a claim, it goes on your record. Insurers use this to decide your car insurance rates. They look at your driving history over several years.

Even small accidents or claims for theft or vandalism can raise your rates. Insurers see these claims as a sign of future risks. This means you’ll likely pay more for insurance.

Managing Claims to Minimize Rate Increases

Handling insurance claims well is key to avoiding big rate hikes. Think about the cost of repairs versus the future premium increase. If repairs are cheap, paying yourself can keep your rates down.

Some insurers, like Progressive, offer Accident Forgiveness. This can prevent rate hikes after an accident, depending on where you live and if you qualify.

The effect of insurance claims can last for years, often three to five. Records stay in databases like CLUE for up to seven years. Being smart about claims and using benefits like Accident Forgiveness can help keep your rates down.

Tips for Choosing the Right Insurance Agent

Choosing the right insurance agent is key to getting the best car insurance in the United States. It’s better to work with an independent agent than a captive one. Independent agents work with many companies, giving you more options than captive agents who only work with one.

What to Look for in an Insurance Agent

A good insurance agent knows a lot about insurance and is honest with you. Check if they are licensed and if there are any complaints against them. More experienced agents can find the best insurance for you.

Look for an agent who can give you quotes from different companies. This can help you save money and get better service. Independent agents don’t charge you extra because they get paid by the insurance companies. But, big companies like Allstate and State Farm might only be available through captive agents or directly from the company.

The Importance of Clear Communication

Good communication with your insurance agent is very important. A good agent will ask the right questions and suggest the right coverage for you. They should not push you too hard and be clear about any fees or commissions.

To find the best agent, trust your gut and build a good relationship with them. It’s also smart to compare quotes from different agents and companies. This way, you can make sure you’re getting the best deal.

For more tips on choosing the right insurance agent, check out this guide on selecting a good insurance agent.