Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Sep 22, 2021

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Insurance Q&A: “How to get cheap car insurance?”

The cheapest car insurance isn’t always the best choice, as options and auto coverage can vary greatly among different companies. Some providers even have coverage limits depending on what sort of driver profile you have. A driver needs to be responsible and not only protect their vehicle, but themselves as well in the financial sense. A little shopping around can help you save some serious cash on your car insurance premium.

And because car insurance companies change their rates at least once per year, it’s best to shop around with an independent agent annually to ensure you continue to receive the lowest rate. If you’re a new customer shopping around, talk with as many companies as you can. If you already have a provider, it never hurts to re-evaluate your financial relationship.

How do you know you’re getting the best deal?

Simple. Get multiple insurance quotes online or shop with an independent insurance agent. The more quotes you get, the better your chances of finding affordable auto insurance rates. There are agents out there who can comparison shop your car insurance rate against over 100 other companies in just minutes.

If you go with one of the well-known national insurance companies or a captive agent, you will only get one quote (captive agent vs independent agent).

Sure, they might compare your car insurance rate to other rates, but it doesn’t mean a whole lot if compared to the more expensive ones.

And don’t be fooled by a highly paid actor on TV or a big advertising budget. Even if an auto insurance company touts a big personality, that doesn’t mean they offer quality services or affordable rates.

The only way State Farm and the other ‘big guys’ can adjust your car insurance rate is by adjusting or reducing your coverage – that’s not good.

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Is raising your deductible a good idea? 

Insurers offer deductibles ranging from $0 to $1,000 per physical damage claim. An auto insurance deductible is a form of self-insurance, meaning you insure your own risk, up to the deductible amount. The more you insure yourself, the less the insurance company will charge you.

But be certain to carefully examine your personal finances before making this decision. Raising your deductible to $1,000 and not having enough money on hand to pay for repairs can be a bad idea. And please don’t consider paying your deductible with a credit card. If you’re unable to pay, that can cause some major damage to your credit history.

[What happens to an insurance premium when a deductible is lowered?]

Can you get package deals for your insurance? 

You absolutely can, and it could end up saving you a lot of money; many providers offer a multi-policy discount. Purchase your homeowner’s insurance and car insurance policy from the same company. Many insurers offer steep discounts for packaging your policy.

But be certain to carefully examine your personal finances before making this decision. Raising your deductible to $1,000 and not having enough money on hand to pay for repairs can be a bad idea. And please don’t consider paying your deductible with a credit card. If you’re unable to pay, that can cause some major damage to your credit history.

Can you get package deals for your insurance? 

You absolutely can, and it could end up saving you a lot of money; many providers offer a multi-policy discount. Purchase your homeowner’s insurance and car insurance policy from the same company. Many insurers offer steep insurance discounts for packaging your policy.

There may be additional discounts if you add an umbrella insurance policy to your package. This is an easy way for insurers to increase their policy count without spending more advertising dollars per household, and we reap the benefits.

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Should you keep an eye on your credit score? 

Keep an eye on your credit score. It is not uncommon, in states where it’s legal, for insurers to consider your insurance score (similar to a credit score) in determining your rates.

The better your score, the less likely you are to file an insurance claim; those are their words, not ours. However, many studies have been completed by the University of Texas, Austin, that claim to prove a correlation between the two. You’ll want to pay your bills on time and avoid anything else that might put your credit report at risk.

Should you avoid flashy cars?

If you’re not rich, don’t buy a flashy, expensive, or overly sporty vehicle. The more expensive your car is to repair, the more you will have to pay in insurance. And the faster your car, the more you will have to pay for your insurance.

No one is picking on you here, even if you’re a lead foot. It just so happens that insurance companies pay number crunchers millions of dollars per year to determine the expected amount of claims using every unique identifier out there (excluding factors that can be considered unfairly discriminatory) to determine your car insurance rates.

What about discounts?

There are many types of discounts floating around out there. Nowadays, almost every insurance company uses online software to complete quotes. This software basically asks questions as the agent fills out your quote. These questions always include available discounts such as the good student discount and the good driver discount.

Not every company offers the same discounts, but the more companies you quote with, the higher your odds of getting the cheapest car insurance rate. Be sure to inquire about every possible discount! Not only are there discounts for safe drivers who have excellent driving habits, but there are also discounts available if you take defensive driving courses.

So many additional factors go into deciding what a company will offer in terms of discounts, that it never hurts to ask. You may even find that your current provider offers a long-time customer discount, and that you qualify!

Just note that while they may have “up to 40% in available discounts,” they’re meaningless if they start with a much higher rate than other companies!

Lastly, think twice about removing collision and comprehensive coverage from your car insurance policy. Such measures are typically only recommended if you are in a dire financial situation and cannot afford it. Though it could also make sense on an old car with little value.

But you shouldn’t be quick to remove possibly helpful coverage in order to get a cheaper car insurance rate; there are so many other possible ways to save money.

In conclusion, use the internet to your advantage. Gather quotes online so you have a good estimate of what you should expect to pay. There’s an affordable auto insurance rate out there for you!

Read more: How can I lower my car insurance rate?