Whe it comes to saving on auto insurance, most people have a simple mindset: I want the cheapest rates possible, even if that means I have bare-minimum coverage. This method can be logical in some cases, like if your car is a beater and you’re less attached to it than your favorite coffee mug. Perhaps you plan to buy a new car later this year, and aren’t too concerned if you total your ’94 Honda Accord with 228,000 miles on the odometer.
If you’re unlike most people, your car has some value. You cherish the convenience it provides in your life. Perhaps you rely on it to get back and forth to work and don’t have enough savings to replace it outright. Maybe you just don’t see the point in getting rid of your older, but perfectly functional, car. If this sounds like you, the cheap insurance mindset probably has a more practical definition. Something like: I want the cheapest insurance rates possible, with the proper amount of coverage for my vehicle.
In this guide, we’re going to outline for you just how to achieve that. Let’s take a look at some of the topics we’ll be covering:
- How is “Cheap Insurance” Defined?
- Discounts and What You Can Do to Lower Rates
- Where to Find Cheap Insurance
How is "Cheap Insurance" Defined?
We’ve already covered our personal definition of cheap insurance, but how does that translate into a more factually-based conversation with an agent? What do the insurance carriers define as cheap? Well, it’s a bit more nuanced than just asking for a price and moving on to the next carrier. You need to think about how much money you’ll be saving over time. This is achieved by having quality coverage for a reasonable cost – not with short-term savings and haphazard coverage. If you shortcut your coverage for savings in the interim, you’ll be hurting in the end.
Insurance Carrier Integrity Matters
First and foremost, you must consider the quality of a carrier’s customer service. Is it highly rated? Do customers report them to be of high integrity? Why does this matter?
Let’s say you were browsing insurance companies purely for the lowest price. You found “Unheard of Insurance Carrier” offering you the same coverage as other companies, but for about 35% cheaper. That seems like a great deal! But how did they possibly arrive at that price-point, when you were cited for two driving infractions last year?
Odds are, they are misrepresenting you. This means that the insurance agent has doctored your application to be more appealing to the insurance carrier, or they have disregarded your driving history altogether. It seems like a sham (and it is), but this happens all the time in the industry. Agents receive commission for every policy they sell, and the responsibility for misrepresentation falls upon the insured (you), and not the insurer (agent/carrier). There are a lot of untrustworthy people out there willing to take advantage of you.
So what happens when you sign up with “Unheard of Insurance Carrier” for that unbelievably cheap price, and now you have a claim to report? The carrier will notice the inconsistencies when reviewing your policy, and you won’t be covered for your claim. Plain and simple. Don’t cut corners when considering the integrity of your insurance provider, because you could wind up footing the entire bill for your vehicle repairs.
All Coverage Is Not Equal
Make sure your coverage limits are identical when speaking with agents from different carriers. If you don’t know what coverage limits you’re looking for, it’s common practice for an agent to give you a cheap quote based on their own presumptions of the coverage you need.
If you’re okay with recommendations from the agent, a lot of numbers will be thrown your way. You should write them down so you can compare the price to coverage ratio when speaking with an agent at the next company. If you’re comparing apples to oranges, your price comparisons won’t make any sense. When doing this on your own, it’s ideal to figure out what limits you’re looking for before you even pick up the phone.
Also keep in mind that coverage types vary between companies. Company A might cover your truck’s aftermarket exhaust (with an endorsement), as where Company B might not even offer that kind of coverage. If the agent at Company B forgets to mention this, you’ll probably receive a lower priced quote that doesn’t cover everything you need. Anything that isn’t covered means you’ll be paying full-price for costly repairs in the future, and the money you’ve been saving because of your cheap monthly premium is now a wash.
Discounts and What You Can Do to Lower Rates
Insurance carriers offer discounts of all different kinds, and they can differ wildly between companies. It’s a way for them to target a specific audience, like students. If you can prove that you’re currently enrolled in college and produce a decent GPA, most carriers will grant you a small discount on monthly premium. Being a good driver for a long period of time will net you a discount. The list goes on, but here are the most common ways to save:
- Good Driver Discount
- Good Student Discount
- Bundled Policies Discount
- Multi-vehicle Discount
- Electric Vehicle Discount
- Loyalty Discount
- Automatic Billing Discount
- Military Discount
Where to Find Cheap Insurance
There are two primary ways to hunt for cheap auto insurance:
- Do the research yourself
- Employ a brokerage to do the research
Doing the Research Yourself
Employing a Brokerage
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