Comparison shopping is crucial if you want to save money on car insurance. Here’s why: Insurers look at similar factors, but they have their own “secret sauce” when it comes to setting rates. So two companies can charge wildly different rates for the same driver. Auto insurance prices tend to inch up over time, but they can also go down. By shopping around, you might find that your current insurer offers the cheapest rate for you, or you might find that it’s time to switch.Several factors go into an auto insurance rate: ZIP code, marital status, annual mileage, driving history and vehicle make, year and model. In most states, your gender and credit history could also be used to determine rates.
When it comes to setting up your coverage, put your Liability to at least $100,000 for bodily injury to one person, $300,000 to cover all involved in an accident and $100,000 for property damage. If you purchase a separate umbrella insurance policy, you can ramp up your liability coverage across the board—and you can get a lot of liability coverage for a relatively low cost. The first $1 million of coverage generally runs $200 to $400 a year; the next $1 million is an additional $75 to $100.
Full auto coverage consists of three parts: liability, collision and comprehensive. Liability coverage protects you if you injure or kill someone or damage another person’s property, you are required to have at least your state’s minimum recommended coverage. Collision coverage helps pay for damages caused in an accident involving another car or an object such as a tree, while comprehensive coverage kicks in if your car suffers a theft loss is stolen or your car is damaged by a fallen tree, a hailstorm, vandalism or another event.
You’re required to have full auto coverage if you have an auto loan or if you lease your vehicle from the dealer. When it comes to older vehicles, the amount of coverage you need depends on the numbers. If the value of your car has gone down enough, then it may be time to drop collision and possibly comprehensive coverage, too. Keep in mind if you buy a pre-owned vehicle that fits this description, your lender will require full coverage until the loan is paid off.
Discounts to look for:
- Multi-policy discount
- Multi-vehicle discount
- Homeowner discount
- Good driver discount
- Good student discount
- Driver’s education discount
- Distant student discountAuto-pay discount
- Paperless billing discount
- Military discount
- Vehicle safety discount
- New car discount
- Low annual mileage discount
- Accident-free discount
- Defensive driving course discount