You want to protect yourself and your car on the highway but not by spending a fortune on car insurance. So how can you lower your auto insurance rates without putting yourself in a dangerous situation?
Every state has different minimum requirements for drivers. In most states, your minimum requirement provides the bare essentials for your auto insurance policy.
You could save on premiums by meeting the state’s guidelines and going no further, but would this level of coverage help after a wreck?
Not always — or it least your bare-bones policy may not help enough. When your auto policy can’t cover your accident, you’ll be personally responsible to pay damages. Buying only the minimum might cost you more in the long run.
We’ve researched auto coverage amounts and insurance companies to help you find the cheapest car insurance that does not compromise your protection.
7 Best Cheap Car Insurance Companies
Here are the best providers of cheap car insurance in 2020:
- Progressive: Best for Families
- State Farm: Best for Rental Car Options After Accidents
- Liberty Mutual: Best Discount Variety
- Root: Best for Safe Drivers
- Travelers: Best for Hybrid-Electric Vehicles
- Geico: Best Annual Rates
- Quote Wizard: Best Marketplace
Six Elements of a Car Insurance Policy
To understand how to save on car insurance, you’ll need to know a little about how coverage works. A car insurance policy includes six basic types of coverage:
- Liability Coverage: If you cause a wreck, this part of your auto policy pays to repair the damage you caused — both property damage and bodily injury to someone else. Your state’s minimum may not be enough to protect you from losing assets if you get sued. So align your liability coverage with your assets.
- Comprehensive Coverage: This protects your auto investment from theft or damage from hail, animals, or vandalism.
- Collision Coverage: This coverage kicks in to protect your own car in an accident you caused. If someone else caused the accident that motorist’s coverage should pay, assuming you live in a state that assigns responsibility for car wrecks, as most states do.
- Uninsured Motorist/Underinsured Motorist Coverage: If the driver who causes a wreck has no liability coverage or does not have enough liability, this part of your policy could help cover your losses.
- Personal Injury Protection (PIP): This element of your coverage could pay medical expenses for you and your passengers regardless of who was at fault. This type of insurance also covers loss of wages due to an accident. PIP is required by law in some states, so check to see if yours is one of them. Some policies also have a separate coverage specifically for medical expenses.
Of these six coverages, the most important are liability, comprehensive, and collision. These cover most of the situations you could get in as a motorist and auto owner.
You could also make a case for personal injury protection since medical care is so expensive.
How to Find Cheap Auto Insurance
You could save money by eliminating comprehensive coverage, but your own investment would be less protected. If you still owe money on your car loan, your lienholder may require you to keep comprehensive coverage.
You could save by limiting your liability insurance to your state’s minimum requirement. But you’d be more exposed to financial losses after a wreck.
So how do you find cheaper car insurance?
You can save the most by keeping a good driving record. It’s true — the best car insurance rates go to people who pose lower risk of an accident. Accidents cost insurance companies money. So someone with a clean driving record who is statistically less likely to have a wreck can pay lower premiums.
Yes, your coverage options will make a difference. Getting discounts helps, too. Bundling policies with the same insurance provider can save you money. If you already have a renters policy, for example, you could save by adding auto insurance with the same company.
But safe driving is still the best way to save consistently. If you’ve had some moving violations or at-fault wrecks in the past couple of years you’ll pay higher premiums. There’s nothing you can do to get these problems off your driving record except wait.
In most states, after three to four years, the effects of the negative marks on your driving record will go away.
In the meantime, you can do other things to save on car insurance premiums whether or not you have a pristine record at the DMV.
How To Find The Cheapest Car Insurance
Yes, driving history matters a lot, but you can still find other ways to save. You can’t control every aspect of your insurability, but by controlling the factors you can control, you should be able to lower your insurance premiums.
Along with your driving record, these factors affect the cost of your coverage:
- Credit Score: Insurance costs do depend on your credit score but not because of your bill-paying history. Insurers have found a connection between lower credit scores and higher instances of claims. Not all states allow this underwriting consideration, but most do.
- Age: The youngest and the oldest drivers cost more to insure because statistics show they have more wrecks.
- Gender: Males have more wrecks and, as a result, tend to pay higher insurance costs.
- Telematics: More and more insurers collect actual data about your driving habits and use them to measure your risk of having a wreck. Devices can be installed in your car to track your speed and braking habits. Other car insurance companies use apps on your phone to monitor you.
- Car Make & Model: Sports cars cost more to insure because they have more wrecks and cost more to replace. Larger vehicles cost more because they cause more damage in a wreck.
- Car Age: The age of your car factors into comprehensive and collision coverage. Since newer cars would cost more to replace, policies for newer cars tend to cost more.
- Car Safety Features: Antilock brakes, airbags, back-up cameras — anything that can prevent an accident could help lower your premiums and help you get more affordable coverage.
- Geography: Car insurance quotes differ from county to county and sometimes from neighborhood to neighborhood. Insurers factor in your risk theft, the number of cars on the highways near you, and even the weather patterns to assess the risk of paying a claim on your vehicle.
- Frequency of Driving: Driving more could increase your rates because you’re more likely to be involved in a wreck. That’s why insurers will ask how far you drive to work and how often you go on long road trips.
Controlling What You Can Control Saves Money on Car Insurance
As you can see, you cannot control every aspect of your premiums, so it’s important to control what you can if you want to find cheaper car insurance.
Can you improve your credit score? Probably so, if you’re patient and make a point of paying bills on time. Can you control your age? Of course not.
You also can’t easily control where you live or how often you need to drive. But you could control details about your car and, of course, your driving history going forward. But neither of these will provide instant savings unless you’re already in the market for a car anyway.
So most car owners can find the best results by researching two things:
- The number of discounts each company offers.
- Whether or not they have usage-based insurance options available.
We’ll get more into details in our company reviews, below. For now, let’s talk about use-based car insurance.
Use-Based Car Insurance Coverage
Use-based insurance either tracks how you drive, tracks mileage, or both. Either strategy could save you money.
Just by signing up for an as-you-drive, telematics-based program, you could automatically save 20 percent on your premiums. Insurance companies want this kind of information about your driving habits.
But you’re putting your privacy in the company’s hands since it gets to track your car’s whereabouts and/or your driving habits as long as you’re subscribed to this type of insurance.
How do companies gather this information? By using a telematics device — sometimes called a black box— that you plug into your car or through an app that you install on your phone.
Two Types of Usage-Based Insurance:
- Pay-How-You-Drive (PHYD) Insurance: This uses your driving habits and location to establish the amount of discounts you could get. Habits include vehicle speed, fuel levels, tire pressure, braking patterns, and trip distances, among others.
- Pay-As-You-Drive (PAYD) Insurance: This option considers only the miles you drive per day and charges part of your premium accordingly. The other part of your premium is not affected by your mileage. It’s based on the other underwriting factors we’ve already discussed.
Both of these strategies could backfire. If you drive more than 10,000 or 12,000 miles a year, for example, you could pay more with pay-as-you-drive insurance. Likewise, your app could decide that you’re a dangerous driver and charge higher premiums.
Unless you’re a safe and infrequent driver, use-based insurance may not be your fastest route to more affordable car insurance.
Cheap Car Insurance Company Reviews
So far we’ve talked about everything except insurance companies, but companies can have a big impact on your premiums, of course.
They offer different discounts and policy options, but these companies also can lower their prices, seemingly at random, to gain a larger market share in a state or ZIP code.
So shopping around creates an opportunity to find the most affordable auto insurance. We recommend getting at least three auto insurance quotes before deciding on coverage. The next free car insurance quote you get could change the game.
But once again, cheap car insurance quotes aren’t always the best quotes. Make sure you’re getting enough coverage to protect your property damage liability and your bodily injury liability.
As you compare companies, make sure you’re comparing the same amount of coverage. It won’t help to compare a full-coverage quote from one company with a minimum coverage quote from another company.
Now we will break down the options from six national brands and their cheap car insurance options.
Progressive: Best for Families
With a variety of discounts, bundle and save opportunities, and safe driving discounts, Progressive is a great option for families looking to save on auto insurance.
Right off the bat, you can get a nearly 10% discount on your auto insurance just by owning your home, even if your home insurance is with another company. If you do insure your home with Progressive, you can bundle your home and auto insurance for even greater savings. Don’t own your own home? No problem. You can bundle auto and renters insurance, or get a multi-policy discount by bundling more than two policies. Bundling options include boat, RV, motorcycle, pet, travel, health, life, and wedding/event insurance.
Families with teenagers or young adults in the household can also enjoy discounts specifically geared towards young drivers. Progressive offers its Teen Driver discount for teens 18 and younger, and a Good Student Discount on your car insurance if your teen maintains a B average or better while in school. For those with college-age students (22 or younger) who are studying 100 miles or more from home, you get the Distant Student Discount.
With Snapshot, Progressive’s safe driving tool, your good driving habits can help you save on your auto insurance as well. You get a discount just for signing up for the program and, as long as you practice safe driving habits, you can get additional savings upon renewing your auto policy.
Perhaps Progressive’s most famous discount option is its Name Your Price tool. With this program, you input some basic information and how much you can afford to pay and Progressive will come up with different coverage options that fit within your budget.
Progressive offers a total of 13 discounts available for auto insurance. While not the largest amount of discount offered by insurers on our list, there are plenty of options available for anyone looking for lower rates.
State Farm: Best for Car Rental and Travel Expense Coverage
If you had an accident with your vehicle and it’s at the shop for repairs, or if the accident occurred more than 50 miles away from your home, then you’d be glad to choose State Farm as your car insurance company.
State Farm has the most comprehensive rental car and travel expense coverage on the market, for not only does the rental car coverage pay for your rental car while your vehicle is being fixed, but it also can repay up to $500 of the deductible if you suffer an accident while driving the rental.
And if you get in an accident while traveling, they cover transportation, meals and lodging for you and your family members for up to $500, while also covering trip expenses for when you pick up your car. However, for travel expense coverage to apply, the accident your car suffered must be covered by your comprehensive or collision insurance.
Though State Farm doesn’t have as many discounts as other companies on this list, with 11 to choose from, you still have a chance to substantially lower your premiums. The company also offers two telematics programs: the “Drive Safe & Save,” meant for customers 25 and up, and the “Steer Clear Driver” program, aimed at drivers below the age of 25. Both of these programs can provide up to 30 percent off the total costs of premiums.
Liberty Mutual: Best Discount Variety
Looking to qualify for as many discounts as possible? Then Liberty Mutual is the right insurance company for you. With 17 discounts to choose from, and with simple requisites (choosing to receive statements online is enough to grant you up to 3 percent off), you’ll qualify for several different options.
Liberty Mutual also offers more specific discounts than other insurers, including military and alternative-energy discounts for hybrid cars.
Liberty Mutual also offers usage-based insurance through their PAYD and PHYD insurance options, called the ByMile and RightTrack programs, respectively. The PAYD option is meant for drivers who rarely use their vehicle, as it charges a base-rate premium that’s modified by how many miles you drive — the less you use your car, the cheaper the overall auto insurance coverage costs will be.
RightTrack measures how well you drive, granting as much as 30 percent off premiums if you drive with care. Unfortunately, RightTrack is not available nationwide. Only 42 states have this option, so you must contact Liberty Mutual directly to check for availability.
Root: Best for Safe Drivers
Driving carefully pays with Root, as the telematics-oriented insurance company breaks all discount averages on the market. Typically, subscribing to a PAYD or a PHYD grants an average discount of 20 percent, but with Root, you can save up to 52 percent off your premiums.
Everything is done through Root’s app, which allows you to change your coverage levels at any time. Root also offers roadside assistance for free, which is a feature that insurance companies usually offer as an add-on.
Unfortunately, their roadside assistance only applies to three accidents for every six months. Root only services 37 states, leaving Florida, Kansas, Wyoming, Idaho, Minnesota, Wisconsin, Michigan, New York, Vermont, New Hampshire, Maine, South Dakota, and New Jersey on the sidelines.
Root’s strongest feature, which is also its biggest drawback, is that the company prides itself in only insuring good drivers. To see if you qualify for Root, you need to install its app on your phone and drive with it for three weeks. If you get a quote, you’re considered a good driver, but if you don’t, not only does Root consider you a bad driver, but it also doesn’t allow you to take the test ever again.
It’s understandable that a company wants to only insure the best drivers out there, but it’s disappointing to know that the best telematic options on this list can be so limiting to potential customers.
Finally, Root doesn’t cover TNC drivers when they’re on duty, so it’s definitely not a great option for Uber or Lyft drivers.
Travelers: Best for Hybrid-Electric Vehicles
At 10 percent, Travelers has the highest discount for electric or hybrid vehicles, making it the best insurance company for these types of cars. To apply, it’s as simple as enrolling your hybrid or electric car with Travelers and requesting the discount.
Travelers also has 11 other car insurance discounts, including driver training, early quote, multi-car, and new car discounts. If you prefer use-based insurance, Travelers also covers you through their PHYD program, called Intellidrive.
How does it work? After using Travelers’ telematics device or Intellidrive phone app for 90 days, it will calculate how safe or unsafe of a driver you are. If you are determined to be a safe driver, you can get from 15 to 20 percent off your premium.
However, having only 12 discounts means that Travelers is the lowest discount-provider on this list, so if you’re looking to get as many discounts as possible for your car insurance, you’ll be better off looking at our other options.
Geico: Best Annual Rates
Geico has the lowest annual rates for non-military drivers, averaging $2,145 for good drivers and $5,665 for teens. Not only does this make Geico an affordable care insurance option, the company also offers the third-highest number of discounts of all the companies on our list, with a total of 15.
To make your life easier, Geico’s website even classifies each of their discounts by type, and they list the average savings of each so that you know how much you’re saving before even applying.
Geico also offers a PAYD insurance option through its DriveEasy program, but since it’s a new venture for the company (they announced it in 2019), it has fewer reviews than all the other telematics insurance programs that we evaluated. This isn’t necessarily bad, but a long history can help determine reliability or the lack thereof.
QuoteWizard: Best Marketplace
QuoteWizard isn’t an insurance company per se, rather, it works as a middleman between you and potential car insurance companies instead.
What makes QuoteWizard unique is not only its large list of partners (29 in total) but also that its quoting process doesn’t ask you to include your social security number or your driver’s license number. Typically, car insurance marketplaces ask for your social security number and driver’s license number to check your credit score and your vehicle record, but QuoteWizard is an exception.
Additionally, QuoteWizard’s website lets you compare all their partners head to head, explaining their pros and cons, complaint data for each, financial ratings, and even their discount availability. Simply choose the companies that you want to compare, and QuoteWizard will break down all of this information, allowing you to make a more informed decision.
However, since QuoteWizard is an aggregator, it doesn’t provide quotes directly, but rather sends all the information you input on its website to its partner list, who in turn provide personalized quotes for you over phone or email. This means that by using QuoteWizard, you are deliberately consenting for other companies to contact you, so if this seems too invasive for you, we don’t recommend you use this website.
How to Find High Quality & Cheap Car Insurance Rates
For the companies here, we focused on two factors: discount availability, where you can apply to as many as you qualify for, and telematics-based programs that either offer cheaper insurance alternatives (PAYD), or provide additional discounts to your premiums (PHYD).
We also looked at companies that offered more than just discounts, such as extra coverage or added benefits at little to no extra cost. Examples of this are rideshare insurance, accident forgiveness, roadside assistance, and free apps for added benefits.
To offer as much discount potential as possible, we looked for car insurance companies with a minimum of 11 available discounts. On average, each discount can save you between 1 and 3 percent off your premiums, but there are some discounts out there that can help you save as much as 30 percent.
It’s very important to note, however, that discount availability and percentages vary greatly from state to state, so it’s very important to contact each company you’re interested in to verify what discounts are available in your area, and how much you’d save if you qualify for them.
Furthermore, company websites might sometimes omit some of their discounts because they’re either new, they need to be asked for over the phone, or because they’ve simply forgotten to add them. For this reason, you should always be willing to call car insurance companies and ask whether there are any other hidden discounts you might qualify for.
Phone representatives are very knowledgeable of all the discounts their company has to offer, so they’ll be able to comprehensively list all those available to you, as well as give you an estimate of how much you’ll be saving overall.
A popular trend among car insurance companies, usage-based insurance is divided into two types: pay-as-you-drive (PAYD) and pay-how-you-drive (PHYD) insurance. The first one is a great option for seniors, students, or any other user who rarely drives the car, since PAYD insurance only charges you for how many miles you drive per day, in addition to a standard monthly fee.
Mileage fees are usually capped at 150 per day, so driving beyond that typically won’t cost you extra.
PHYD, on the other hand, focuses solely on your driving habits, so the more careful that you are, the higher your discounts. If you choose PHYD, you need to keep an eye on various factors to assure that you get the highest discounts possible.
These include: the miles that you drive, accidental or hard stops, whether you drive during the day or night, and whether you follow the speed limit.
But how do companies even know how many miles you drive daily, let alone your driving habits? This is done through a telematics device that’s provided by insurance companies, either through a plug-in device under the hood or a smartphone app. These will measure all of the mentioned factors and then deliver the data to the insurance company for analysis. The less you drive or the more careful you are when you do, the more you’ll save.
You should be aware that all telematic devices need to be calibrated to your vehicle, and this process can take from three to four weeks. This means that if you want to benefit from use-based insurance, you will have to exercise patience.
Extra Coverage and Benefits
Having discounts and various insurance options is great, but can companies offer more? Yes, they can — and they usually do, which is why we also focused on finding companies that balanced discounts and usage-based insurance with additional perks for free or at a price.
These include: additional coverage, like rental car insurance, traveler’s expense, ridesharing, and roadside assistance as well as uncommon discounts like hybrid vehicle and military discounts, and other benefits like a rewards program with monthly or yearly rewards, such as Progressive’s accident forgiveness.
Watch Out for Price Optimization
Among the most mischievous trends that exist in the car insurance industry is what is known as prize optimization. As of 2020, this practice has been banned in 20 US states, since its primary purpose is to profit from customers who rarely switch between insurance companies.
Through price optimization, companies gather all your personal data that isn’t necessarily connected to your driving habits, which may include your web browsing history, shopping behavior, social network interactions, and even your online mail subscriptions. With this, they create an algorithm to determine how likely you are to drop them and subscribe to another insurance company.
If this sounds very invasive, it is. But here’s the kicker: if they conclude that you’re unlikely to leave them for another company, they’ll take advantage of your loyalty and begin increasing your premiums by small amounts on a monthly or yearly basis. If you see your rates go up without a reason, contact your car insurance company immediately.
Summary of our Cheap Car Insurance Companies
- Progressive: Best for Students
- State Farm: Best for Rental Car Options After Accidents
- Liberty Mutual: Best Discount Variety
- Root: Best for Safe Drivers
- Travelers: Best for Hybrid-Electric Vehicles
- Geico: Best Annual Rates
- QuoteWizard: Best Marketplace