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: Jul 19, 2021

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Insurance Q&A: “What is the cheapest car insurance?”

Having no insurance is the cheapest insurance. Thanks for visiting our site!

Wouldn’t it be great if insurance wasn’t mandatory in every state?

On a more serious note, car insurance premiums are a bear for everyone…especially in a faltering economy.

And insurance costs are a hot topic as we all try to tighten our financial belts.

But before revealing the secret to the “cheapest car insurance,” we at TTAI would like to point out that the last target in your personal budget should be insurance costs.

Sure, it’s a pain when you don’t need it. But cause an accident when you are less than adequately covered and you may find yourself in the proverbial poorhouse due to the outcome of a nasty court case.

Not you? That’s what we all think until it happens to us.

The Short Answer

Simply put, an individual with a perfect driving history for three to five years and an 800+ insurance score who opts for liability-only car insurance will likely get the cheapest car insurance available.

But not everyone fits the mold.

In fact, many of us have a checkered driving history and credit scores below average. And not everyone wants liability-only coverage.

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Know the Basics

Read about how car insurance rates are determined for a more in-depth explanation of the overall process if you want to understand the “why” of what we’re going to discuss here.

Here is the condensed version of what matters when it comes to how much you’re charged for car insurance.

Driving History – You can expect to pay more than the average Joe for your policy if you have negative activity on your record.

Specifically, any moving violations on your motor vehicle record (MVR) or any insurance claims history on detailed on a C.L.U.E report.

Credit History – Most insurance companies are peeking at a snapshot of your payment history to determine how much to charge you for insurance.

Similar to banks and other lenders, having less-than-perfect credit will increase the cost of your premium.

However, there are several insurers that don’t review credit history for rate calculation, typically non-standard auto carriers.

[Types of auto insurance companies.]

Coverage – This is a big one. You will be required to carry full coverage auto insurance (in addition to the mandatory minimum car insurance) on your policy if you borrowed money to purchase your car or are currently leasing.

Additionally, even if your car is paid off (congratulations), you may still opt to purchase physical damage coverage, including collision coverage and comprehensive coverage if it’s worth something to you, or your only mode of transportation.

[What is the difference between comprehensive and collision coverage?]

If you don’t owe any money on your ride and it’s not worth too much, you can certainly consider dropping physical damage coverage. This is a great way to save on car insurance.

Many people make the mistake of continuing to pay for physical damage coverage when they may not receive much of a benefit from it in the event their car is damaged or worse yet, totaled.

Shop Your Premium

If you want the cheapest car insurance, be prepared to put in a little time and effort.

Shop around by obtaining insurance quotes online and considering calling/visiting an independent insurance agent, one who can shop your rate with a handful of insurance companies all at once.

Captive insurance agents can only provide you with one quote!  Also look into all available auto insurance discounts!

Doing so will ensure you obtain the cheapest car insurance out there!

Read more: Full coverage vs. liability-only car insurance.