Choosing the Cheapest Auto Insurance for Your Needs

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Cheapest Auto Insurance

Whether it’s your first time looking for an auto insurance provider or you think you’re paying too much with your current provider, this article will help you when it comes to choosing the cheapest auto insurance that’s right for your needs.

Being as there are tons of articles out there that provide a definition of each type of auto insurance coverage, I’m not going to do that. Instead, I’ll be providing information that will help you decide if that coverage is worth the extra expense for you. If you’re not familiar with what each coverage is, Insurance's auto insurance term glossary gives a great explanation of each coverage and many other terms.

Before you continue on, note that many states have minimum auto insurance coverage requirements, so before you even start your comparison shopping, check your state’s minimum requirements and make note of them to ensure you at least have what’s required by law.

Choosing the Cheapest Auto Insurance — Table of Contents

Select the Cheapest Auto Insurance Coverage With the Best Value for You
Decide Which Auto Insurance Limits & Deductibles Are the Best Value for You
Customize Your Auto Insurance With Add-ons That Are Worth the Extra Cost
Check for These Discounts When Shopping for the Cheapest Auto Insurance Coverage
Ask These Important Questions Before Buying Auto Insurance Coverage
Ensure You’re Getting the Cheapest Auto Insurance for Your Needs With These Tips
Shop for the Cheapest Auto Insurance Deal

Select the Cheapest Auto Insurance Coverage With the Best Value for You

Liability is the most affordable of all coverages and is required by all states except New Hampshire.

Comprehensive and collision coverage isn’t required by any state, but if you finance or lease your vehicle, the company you finance or lease with requires you to have it.

If you own your vehicle, it’s up to you whether you buy collision and comprehensive coverage. Although both coverages cost more, having them could definitely save you money if your car is damaged.

When Collision and Comprehensive Coverage Isn’t Worth the Investment:

If the cost of coverage is more than 10% of your vehicle’s value, this coverage isn’t worth it since the auto insurance company will only pay up to the actual cash value of your vehicle. For instance, if Kelly Blue Book shows that your car is worth $1,500 (10% = $150) and you’re paying or will pay $200 per year for collision and comprehensive coverage, you’d be paying more than your vehicle’s value. In a case such as this, you can save more money by starting an emergency car repair or replacement savings account.

The only other instance when investing in collision and comprehensive auto insurance coverage may not be worth the extra cost is if you have a big enough savings account that you could afford to buy a new vehicle or pay the entire repair cost of your current vehicle should something happen.

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Decide Which Auto Insurance Limits & Deductibles Are the Best Value for You

When selecting the cheapest auto insurance coverage for your needs, keep in mind that collision and comprehensive have deductibles that you’ll be able to choose. The most common deductible choices are $250, $500 and $1,000. Naturally, the higher your deductible the cheaper the coverage will be. However, opting for the highest deductibles in order to get a more affordable price on each coverage, may not be the best choice.

A deductible is a cost you will pay if you have to file a claim. Once you pay your deductible, the insurance will cover the rest. So, for instance, if the damage to repair your vehicle ends up being $4,000.00 and you have a $1,000.00 deductible, you pay the $1,000.00 and the insurance pays the remaining $3,000. Yes, your insurance still pays the most, but would you be able to fork out $1,000 right then and there, and if you could, what impact would that $1,000 have on your finances?

Tips to Help You Pick Your Auto Insurance Deductibles

If you really need your premiums for collision and/or comprehensive coverage to be the lowest you can get them, go for the highest deductible. However, if you go this route, you should immediately start an emergency savings account and make sure you keep at least $1,000 in the account so that if you have to file a claim, you’ll be able to pay the deductible without hurting your monthly household budget.

Are you a good driver who has never had an accident or rarely has to file a claim? If so, the higher deductible for collision coverage could be the best option to save you money.

If you’re a good driver but frequently have to file claims because of vandalism, weather, other “acts of God” or thieves stealing your vehicle, you’d most likely save more money by opting for the lowest deductible for comprehensive coverage and the highest for collision.

Maybe you tend to have more wrecks than usual and/or back into stationary objects such as mailboxes or poles a lot, but you never or hardly ever have to file a comprehensive claim. In this case, your best money-saving option may be to choose the lower deductible for collision coverage and the higher deductible for comprehensive.

Now that you know more about selecting the best auto insurance deductible, let’s discuss limits.

An auto insurance coverage limit is the maximum amount an insurance company will pay for medical expenses and property damages. Most insurers break the maximum bodily injury limits into two dollar amounts: per person and per accident (e.g. $250,000/$500,000).

As with deductibles, you can select the maximum limits you want for bodily injury liability, property damage liability, uninsured motorist bodily injury liability and medical payments. However, you can’t buy less than your state’s minimum requirement, but you can pay more for higher limits.

Deciding Which Auto Insurance Limits are Best for You

If you injure someone with your vehicle, the driver, passengers or pedestrian who sustained injuries could sue you. That being said, you want to ensure the limit you choose for bodily injury liability is high enough to protect your assets. For example, if you’re home is worth $50,000 and your limit is less than that, you could lose your home. Knowing this, if you have assets such as a home, vehicle(s), savings account(s) and/or investments that are worth quite a bit and you don’t want to risk losing them, your best choice here is to choose a limit that exceeds what your assets are worth.

The property damage liability limit is the maximum amount the auto insurance company will pay to repair or replace someone else’s property resulting from an accident that you cause. Let’s say you cause an accident where more than one vehicle is involved. This coverage is not a maximum per vehicle, so whatever limit you select for this coverage will be the maximum amount your insurer will pay, and if that amount doesn’t cover the total repair and/or replacement cost of all vehicles, you’ll be responsible for the remaining amount.

If uninsured motorist bodily injury liability isn’t required by your state, you have good health insurance and/or have an auto insurance policy that offers personal injury protection, you can opt-out of this. One thing to note is this coverage also pays the medical expenses for any passengers with you during an accident, so if you don’t have this coverage or the personal injury protection, your passengers will have to pay their own medical expenses.

Medical payments, sometimes referred to as MedPay, pays for basically the same thing as personal injury protection. The difference between the two is personal injury protection pays for lost wages, psychiatric treatment, rehab, funeral expenses if the accident is fatal and house cleaning services as well as childcare if your injuries are severe enough where you’re not able to execute these duties. In addition, personal injury protection has a deductible that you must pay and medical payments have no deductibles.

If you live in Michigan, you don’t need medical payments. The reason for this is because this state has no limits when it comes to paying medical expenses.

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Customize Your Auto Insurance With Add-ons That Are Worth the Extra Cost

Roadside assistance

Many times this add-on can be a lot cheaper through an auto insurance provider than a club such as AAA, so be sure to compare the annual costs as well as the services you’ll receive and choose the one with the most savings.

If you purchased a new vehicle, chances are this service is covered through the warranty. If that’s the case, there’s no need to pay extra to add this to your auto insurance policy.

Gap Insurance

This is definitely great protection to have and worth the investment if your vehicle is leased or financed. For instance, let’s say you finance a vehicle for $20,000 and three months later you total it. You would still have to pay for the remaining loan amount plus interest. If you have only paid off $1,500 and your insurance company values your totaled car at $15,000, then you’ll be responsible for the additional $3,500 plus interest. However, with the gap insurance, you pay nothing.

Rental

Auto insurance companies that offer this add-on pays rental car expenses when your vehicle is in the repair shop. Unless you tend to have wrecks often, this extra expense isn’t really necessary since your vehicle repairs may only take a few days or week, so what you’d pay monthly for this extra coverage option would exceed the cost to rent a car on your own from an emergency saving account.

You could also save money by driving another vehicle that you have. If you don’t have an extra vehicle, maybe you know a friend or family member who has one they’d lend you if you needed it.

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Check for These Discounts When Shopping for the Cheapest Auto Insurance Coverage

Auto insurance companies offer discounts that can save you money on your policy. Depending on the number of deductions you qualify for, you could save as much as $250!

Some of the common auto insurance discounts you may qualify for include:

  • Safety features
  • Security features
  • New car
  • Good grades
  • Multi-car
  • Having additional insurance policies with the insurer
  • Good driving record
  • Low annual mileage
  • Defensive driving lessons
  • Military
  • Senior
  • Auto payments
  • Paperless billing
  • Pay in full

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Ask These Important Questions Before Buying Auto Insurance Coverage

Once you’ve narrowed your selections based on your auto needs and budget, check each company’s website for the answers to the following questions. If you can’t find the answers on their site, contact the company.

  1. Does the policy protect all drivers in your household? Also, will it protect anyone outside your household who borrows your car or has to drive for you in case of an emergency?
  2. Will your auto policy cover you if you drive someone else’s vehicle?
  3. Do you get to choose the repair shop if you have to file a damage claim?

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Ensure You’re Getting the Cheapest Auto Insurance for Your Needs With These Tips

If you’re insuring an older car with a low resale value, liability insurance costs less and is probably a better option for you.

Before you purchase a policy from the company you’ve chosen, read the policy in full to ensure everything you want is there and that you understand it all. If you have any questions about anything in the contract, be sure to get the answers to your questions first.

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Shop for the Cheapest Auto Insurance Deal

Since pricing for coverage varies based on the make, model and year of your vehicle, your location, age, credit history, accident history, and other personal factors, you can request quotes and compare policy benefits through a comparison site s. However, this can be time-consuming and opens the door for you to receive a lot of spam emails and telemarketing calls because the information you give is usually shared with several auto insurance companies.

If you’d rather save some time and prefer not to be bombarded with spam and sales calls, I recommend going through Gabi, and here’s why:

  • You’ll get the cheapest rate for the exact coverage that you have now.
  • Gabi uses advanced technology to automatically gather information from your current policy, saving you from having to manually enter the information.
  • You can sit back and relax while they do the policy and price comparison for you.
  • They don’t sell or share your personal information, which eliminates those annoying spam emails and telemarketers.
  • They’ll save you the most money by automatically reviewing your rates to ensure you always have the cheapest auto insurance.
  • After you’ve selected the coverage you want, you can buy it directly through Gabi, and they’ll even cancel your current policy for you!

Naturally, if you have a newer car, you’re going to pay more for insurance coverage than you would if you had an older car.

Regardless of the age of your vehicle, Gabi is the best option when it comes to ensuring you get the cheapest auto insurance for your needs.

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